The reason I have chosen this topic has been in my mind for many years now and in fact, I have around more than 100 legal case study to share which have always brought me to the question as to “why business entities don’t realize the value of Legal in their business” and when this was asked to those clients who are part of 100 legal case study the reply received was costs attached to Legal but the most important reply was “never thought that getting legal advice will be of any help” and further some of the states that they believed they could handle the issue better on their own without having legal background”. Hence, I thought of penning down my views to readers and business entities of “how to know the value of Legal in their business” or can say “Valuation Statistics in their Business”
Case Study No. 2
“A” purchased the Residential House worth “Rs. 28 Crores” at Bandra-Kurla for Flat No. A-24 and without even showing the documents to any Legal Attorney or else executed the Agreement for Sale and got the same Registered. Please note that this was “Under-Construction”. Thereafter, “A” decided to go with upper floors and requested the Builder to change in Flat from A-24 to A-48, and accordingly, the Builder then executed the Cancellation Deed and executed Agreement with Registration for Flat A-48. Before this Agreement for A-48 was done, “A” took the Loan for Flat No. A-24. It is pertinent to note that once the Agreement was signed and Registered for A-48, “A” got the surprise call stating of Flat A-48 being already allotted to the third party as barter system by Builder and then this matter went to court and even after three years there was no resolution and then “
A” approached us for legal advice. Upon asking why no legal advice was taken getting into this confusing agreement, “A” state of never thought off and now looking at huge loss of money and no flat. However, due to negotiation at our end and making the case strong to “A”, the matter got settled but “A” had to pay Rs. 7 Crores as Loan to Builder for paying the third party and now though the Flat is in possession with “A”, this deal has been a huge loss.
Calculating the Loss:
• Rs. 28 Crores was paid in the year 2017 and no Flat possession was received till the Year 2020
• Rs. 7 Crores additional paid to Builder as interest-free loan to get the possession of Flat
• Rs. 8 Lakhs towards Legal Costs
• Rs. 1.5 Crores to the Society for the Builder not paying the Dues for Flat A-48 and A-24
• Rs. 50 Lakhs as a reserve account
• And a concern all the way if any act of Builder is done in this deal
• Interest @ 15% on Rs. 28 Crores and other payments made
This all if could have done with prior Legal Advice, I am pretty much sure this could have not been the case but the habit of avoiding taking legal help out of any reasons are the main reasons for the monetary loss in any dealings.
What prior Legal Advice could have done?
• Reading the Builders Agreement for Flat A-24 and A•48
• Ensuring Clauses providing safety to “A”
• Ensuring proper Agreement is executed for Advance Loan to the builder of Rs. 7 Crores
• Ensuring proper documents be done for property purchase
• Take appropriate legal remedy to ensure property safe and secure and money too
The above factual story is a very common example of how to avoid spending small legal expenses; a proposed business deal ran into huge losses. One has to understand and realize that “LEGAL SPENDING IS ALWAYS EXPRESSED AS A PERCENTAGE OF THE BUSINESS REVENUE”.