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INDIAN CORPORATE LAW: Contract Drafting: Indian Style

indiacorplaw.blogspot.com/2012/12/contract-drafting-indian-style.html

Dec 14, 2012 - The examples he cites include “unless repugnant to the context or meaning ... vswami said... Reproduce below, what i wrote in the article, INVESTOR PROTECTION - A MYTH? ... deed), just as in any other contract agreement, in the initial paragraphs, are set out the ... Subscribe to: Post Comments (Atom) ...

INDIAN CORPORATE LAW: Bombay High Court ...

indiacorplaw.blogspot.com/.../bombay-high-court-pronounces-on-fdi.ht...

May 29, 2015 - vswami said. ... of legal drafting of private contract agreements, between two parties, ... Apart from the largely noted deficiency in drafting, another root ... on a transaction intended to be covered in any such agreement . .... Post a Comment .... Agreements and Takeover Regulations · Consilience 2015: Net ...

 TOI

http://vswaminathan-swamilook.blogspot.in/2014/07/realty-fast-forward.html

Two flats merged into one must get tax exemption: Bombay ...

timesofindia.indiatimes.com › City › Mumbai

- If two adjacent flats are bought from different people through two agreements ... Two flats merged into one must get tax exemption: Bombay HC.

Reasoning: Per Layout Plans,  to have only one common  kitchen ?!

itatonline

CIT vs. Excel Industries Ltd (Supreme Court)

(Click Here To Read More)

Further, as the dispute was only as to the year of taxability and as the rate of tax remained the same the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. It is hoped that the Revenue implements its litigation policy a little more practically and a little more seriously.

clumsy drafting

not all angles kept in view
impulsive jegislation
tax audit
previous instences glare >
S 80 J x S 80K

<> year in which to adjust
     - ideal to ensure on day one while accounting / audit of accounts

 http://articles.timesofindia.indiatimes.com/2012-10-22/personal-finance/34652460_1_earnest-money-tangible-asset-cost-price


http://www.deccanherald.com/content/287837/buy-lose-entire-earnest-money.html

 

http://taxguru.in/income-tax-case-laws/interest-delay-buy-process-part-sale-consideration.html

<> Xcerpts:

..........the assessee received additional amount of 7,07,76,547/- and net amount after deduction of TDS at Rs.  4,10,50,397/- on account of interest @ 15% per annum. The Assessing Officer while completing assessment treated the said amount of 7,07,76,547/- as interest income and taxed the same @ 48%. The assessee challenged the order of the Assessing Officer before the CIT(A) inter alia contended that the additional consideration received from Castrol UK is exempted under the provisions of Article 13(4) of Indo Mauritius Treaty because the said amount was nothing but capital gain arising to the assessee from transfer of shares. Alternatively the assessee contended that the receipt of the amount in question is not the interest under Article 11 of the Indo Mauritius Treaty because it is not an income from debt claim and there is no debtor-creditor relationship between the assessee and Castrol UK. The CIT(A) did not accept the contention of the assessee and upheld the action of the AO.

In the case of CIT Vs Govinda Choudhury and Sons (supra) the Hon’ble Supreme Court has decided the nature of income received as interest as under:

“This brings us to a consideration ofthe second question. The sum of Rs. 2, 77,692 was received by the assessee as interest on the amounts which were determined to be payable by the assessee in respect of certain contracts executed by the assessee and in regard to the payments under which there was a dispute between the two parties. The assessee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts, he has also to face disputes with the State Government and he has also to reckon with delays in payment of amounts that are due to him. If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to thi assessee’s receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held, to say that this interest is totally de hors the contract business carried on by the assessee. It is well settled that interest can be assessed under the head “Income from other sources” only if it cannot be brought within one or the other ofthe specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as “income from other  sources”. The second question is, therefore, answered in favour ofthe assessee and against the Revenue.”

7. In the case in hand the interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration. Therefore, we held that the additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest. The other decisions relied upon by the assessee are not applicable on the facts of the case because in those cases the issue was either the interest received on delayed trade receipts and therefore there was no dispute of revenue or capital receipt or the payment was as compensation for delay in construction.

The directions given were, inter alia, as under:

“In the light of above observation, forfeited amount is not liable to be taxed as income or chargeable gain under the provisions of the act till there is sale of property. The legal position to this effect is supported from provisions of sec. 51 of the Income Tax Act, 1961 and various judgments referred to above.

However, the Assessing Officer is required to ensure that as and when the property is sold, the forfeited amount is adjusted towards the cost of the property for the purpose of computation of capital gain. Moreover, if the AO chooses to treat the forfeited amount otherwise she may do so after recording proper reasons in the body of the assessment order and after meeting out the legal position on the issue.”

..........

.........Hence, we do not find any infirmity in the Ld. Commissioner of Income Tax (Appeals)’s direction that “as directed by the Addl. Commissioner of Income Tax, earned money so received and forfeited is to be adjusted against the cost of property and capital gain is to be worked out on the basis of the resultant cost as and when the property is sold. Accordingly, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) and decide the issue in favour of the assessee.”

9. Before us, the learned counsel for the appellant/revenue sought to invoke the provisions of section 56(2)(vi) of the said Act. However, we find that this plea had not been raised before the Tribunal. Consequently, we are not inclined to entertain this plea of the learned counsel for the appellant. Even otherwise, before a plea based on section 56(2)(vi) of the said Act can be taken, a foundation has to be laid that the transaction was without any consideration. No such foundational plea had been taken before the Tribunal. Apart from this, we find that the Tribunal has rightly noted that the provisions of section 51 of the said Act would come into play as it specifically covers this type of a transaction. Once the transaction has been held to be genuine, there is no question of the transaction being without any consideration. Consequently, we find no merit in the revenue’s appeal, much less any substantial question of law for our consideration. The appeal is dismissed.

http://taxguru.in/income-tax-case-laws/forfeited-earnest-money-arising-property-sale-agreement-liable-tax.html

Insert>

·  Income Tax : Capital Gains - Transfer u/s 2(47) - whether receipt of advance against agreement of sale (duty registered) would constitute transfer or relinquishment of the asset and extinguishment of any right - held No - Tri

IT : Where assessee received only a meagre amount out of sale consideration and had not parted with possession of property, transaction could not be treated as transfer within meaning of section 2(47)

IT : Deletion of addition in hands of recipient cannot be a ground to disallow expenditure incurred by assessee for business purpose

IT : Expenditure incurred in earlier years for setting up business cannot be allowed as deduction

IT : When assessee had incurred expenditure wholly and exclusively for purpose of business, it could not be disallowed on reason that it was not stipulated in memorandum of understanding

IT : In real estate business, payment of sub-agents' fee is allowable

IT : Expenditure incurred by assessee engaged in real estate business towards consultancy services provided by architect with regard to site plan, etc., was allowable

IT : Expenditure incurred by assessee for keeping constant surveillance over its land was allowable as business expenditure

■■■

[2013] 32 taxmann.com 373 (Hyderabad - Trib.)

IN THE ITAT HYDERABAD BENCH 'A'

Mali Florex Ltd.

v.

Deputy Commissioner of Income-tax*

CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SAKTIJIT DEY, JUDICIAL MEMBER

IT APPEAL NOS. 891 & 1017-1018 (HYD.) OF 2011
[ASSESSMENT YEARS 2007-08 & 2008-09]

SEPTEMBER  28, 2012 

Living 'midst of 'terrorism" in its ugliest sense >

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Kenya mall hostage crisis continues, toll 59

< To modify a memorable quote (to suit the context): The very enormity and variety of the challenges facing the world community are such as to touch the least tender to tears and the most incredulous to prayer. Shall we (the still remaining/residue of right- minded citizens around the globe) maintain discipline - at any cost and by all means open to humans to have an effective resort or recourse to- or witness revival off and on, nay continuance, of such barbarous . Outlandish and inhuman behaviour, on the part of the limited creations no longer fit to be called - humans.

<>  http://in.news.yahoo.com/nairobi-killings-indian-shot-couldnt-answer-query-islam-045803343.html

ICL TODAY >

1. Ambiguity regarding Consent Settlements - whether resolved?

2. Damodaran Committee Report: Impact on Impulsive Law Making

'Impulsive Law Making' - Pending a close reading of the subject report, the special committee is seen to have pinpointed and sharply focused on as to why Consultative approach for law making  IS IMPERATIVE.

Following / taking cues from an out-of-box view, wish to stress that, likewise, but in no small measure,'Impulsive adjudication' is strongly objectionable and hence requires to be eschewed in the overall public interest, - not only in the interests of the individual parties to any case taken up to a court for adjudication' . To be precise, in one's well - thought -out / logically founded long conviction, extraneous individual human nature such as 'emotions' , for instance, ought not come into play in court adjudication.

As is recalled, there has been a growing thinking and belief that old case law must be given a quietus/ ignored, if that is justified should regard be had to the so called 'modern day' practices and life style, - not barring such practices as are not compatible with what the law, in letter and spirit, clearly ordains.

Looking back, in a tax case, the apex court had an occasion to go into the aforesaid aspect and voice ints opinion against the undesirability of the jurists/judiciary being driven by and influenced by an 'emotional' approach and 'moral' considerations.Suggest to go through the judgment in re. T A Quereshi v CIT (2006) 287 ITR 547; and  the own study thereof vide the published article in, - (2007) 160 Taxman 145.

Based on hopes on hopes, one is entitled to believe that, no right-thinking person, especially having a truthful experience and exposure to the matter of adjudication on issues, more so those having a passion to keep self updated and thereby remain ideally 'euipped', might not have failed to take a conscious/anxious  note of some of the recent opinions handed down by the apex court of the land.

< may be contd.

Cross Refer:

A.  RELATED PREVIOUS BLOGS:

http://vswaminathan-swamilook.blogspot.in/2013/09/flat-occupasny-ownership.html

http://vswaminathan-swamilook.blogspot.in/2013/05/hsg-socities-mc-et-al-contd.html

B.  Other SC Judgments in re.   .... / Rulings Against,-

Sale by / under an instrument of GPAA

Saleability of  'parking space' by builder

Hill Properties Ltd vs. Union Bank (Supreme Court)

September 20th, 2013

Occupancy rights in flat conferred by Articles of Association confer ownership rights in flat. Restriction on transferability of flat in Articles of Association is void

<> T A Quereshi v CIT (2006) 287 ITR 547; and  the own study thereof vide the published article in, - (2007) 160 Taxman 145.

APEX COURT’S OBSERVATIONS

3. On further appeal, the Apex Court has held that the view taken by the High Court cannot be sustained, on the ground of the following observations:

". . . The High Court has adopted an emotional and moral approach rather than a legal approach. We fully agree with the High Court that the assessee was committing a highly immoral act in illegally manufacturing and selling heroin. However, cases are to be decided by the Courts on legal principles and not on one’s own moral views. . . ." [Para 15]

Presumably, the cited observations are not intended to be read and understood in isolation, without having due regard to the context. Coming from the highest Court of the land, they ought not to be, for obvious reasons, construed to have thrown up any doubt on, or undermined, the commonly ingrained faith or belief that the so-called legal principles, to be worthy of such a description, need to be founded on moral principles. For, legal principles sans moral sanction or overtone might, from the point of view of public interest and social good, prove nothing but useless tinsel.

******

Of course, as to what precisely are the legal principles, that the Apex Court refers to or would have had in mind, is not discernible from a plain reading of the judgment. By inference, however, what the Court has meant to say is that in deciding the subject issue, the relevant propositions thus far settled by case law ought to have been kept in view and taken into account by the High Court. Some such settled propositions may be set out as under:

u The Court ought not, under any circumstances, substitute its own impressions, ideas or notions of justice in place of the legislative intent as are available from a plain reading of the statutory provisions.

u The taint of illegality or wrongdoing associated with income, profits or gains is immaterial for the purpose of taxation.

u Income-tax law is not necessarily restricted in its application to lawful businesses only. Profits from an illegal activity

    are equally chargeable, and as such, losses arising therefrom are allowable.

The extract from the Apex Court’s judgment of the relevant paragraphs furnished above, ostensibly throws light on the aforesaid aspect :

'Flat' -Occupancy = Ownership !

Top-up

LCI

Checklist for action under SARFAESI Act

cpsramachary@gmail.com

http://vswaminathan-swamilook.blogspot.in/2013/09/flat-occupasny-ownership.html

http://vswaminathan-swamilook.blogspot.in/2014/06/on-law-and-case-law-on-flatsapartments.htm  

http://vswaminathan-swamilook.blogspot.in/2014/03/97th-amndmt-serial-no-4-th-amndmt-vat.htmll

http://taxguru.in/corporate-law/occupancy-flat-equal-ownership-sc.html

itatonline.org » Hill Properties Ltd vs. Union Bank (Supreme ...

 

 

 

BS

Get valid agreement before sharing rented apartment If found with invalid one, the landlord will be in trouble and the tenant could face eviction

"Police verification is mandatory for every tenant. “Police verification indicates the tenant comes from a safe background. Police verify this from a criminal angle. Therefore, this will not only be good for the landlord, but also the tenant,” says Choudhary. Proof of the verification has to be provided to the housing society."

Heard of; more so ever acted upon ?

toi

Oct 9

• Buying a property: Read the sales agreement carefully

Related Articles

1. Four things to consider before buying distressed property
2. How to buy a flat and not lose sleep
3. How to buy a flat and not lose sleep in Mumbai
4. What sellers & buyers should do when property papers are lost
5. Levying TDS complicates the home buying process

*Sale of residential property and tax

AT
Oct 4

Flat owners pay extra 2% for registration: Chennai

<> Puzzling; not only the new levy, bout even the new scheme of things, if any, as envisaged !

Read CREDAI's version, which is primas facie misconceived ?

Confederation of Real Estate Developers’ Association of India (CREDAI) Tamil Nadu chapter president N Nandakumar said, “In terms of cost, there is an increase which customers have to bear. But there is a reward in the form of better title for their assets”. Till now, a registered deed used to be created for a new building only when resale of the property took place. A first buyer never used to get a title deed for his constructed immovable house in the state, unless the builder or the buyer insisted on registering the property after completion of the project. The only registered document one used to hold was the one for the UDS. - See more at: http://www.accommodationtimes.com/real-estate-news/flat-owners-pay-extra-2-for-registration-chennai/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AccommodationTimes+%28Accommodation+Times%29&utm_content=Yahoo%21+Mail#sthash.7c9LLldz.dpuf

Confederation of Real Estate Developers’ Association of India (CREDAI) Tamil Nadu chapter president N Nandakumar said, “In terms of cost, there is an increase which customers have to bear. But there is a reward in the form of better title for their assets”. Till now, a registered deed used to be created for a new building only when resale of the property took place. A first buyer never used to get a title deed for his constructed immovable house in the state, unless the builder or the buyer insisted on registering the property after completion of the project. The only registered document one used to hold was the one for the UDS.

- See more at: http://www.accommodationtimes.com/real-estate-news/flat-owners-pay-extra-2-for-registration-chennai/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AccommodationTimes+%28Accommodation+Times%29&utm_content=Yahoo%21+Mail#sthash.7c9LLldz.dpuf

Confederation of Real Estate Developers’ Association of India (CREDAI) Tamil Nadu chapter president N Nandakumar said, “In terms of cost, there is an increase which customers have to bear. But there is a reward in the form of better title for their assets”. Till now, a registered deed used to be created for a new building only when resale of the property took place. A first buyer never used to get a title deed for his constructed immovable house in the state, unless the builder or the buyer insisted on registering the property after completion of the project. The only registered document one used to hold was the one for the UDS.

- See more at: http://www.accommodationtimes.com/real-estate-news/flat-owners-pay-extra-2-for-registration-chennai/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AccommodationTimes+%28Accommodation+Times%29&utm_content=Yahoo%21+Mail#sthash.7c9LLldz.dpuf

Confederation of Real Estate Developers’ Association of India (CREDAI) Tamil Nadu chapter president N Nandakumar said, “In terms of cost, there is an increase which customers have to bear. But there is a reward in the form of better title for their assets”. Till now, a registered deed used to be created for a new building only when resale of the property took place. A first buyer never used to get a title deed for his constructed immovable house in the state, unless the builder or the buyer insisted on registering the property after completion of the project. The only registered document one used to hold was the one for the UDS. - See more at: http://www.accommodationtimes.com/real-estate-news/flat-owners-pay-extra-2-for-registration-chennai/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AccommodationTimes+%28Accommodation+Times%29&utm_content=Yahoo%21+Mail#sthash.7c9LLldz.dpuf

Will this festival seasons witness rise in property transactions?

Conference on International Real Estate Marketing & Legal Documentation efficacious achievement in Ahemdabad


Building terrace open to all residents: High Court

<previous
For Comments Updated refer>

Damodaran Committee Report: Impact on Impulsive Law Making

For sake of completing, but with a view to saving self from the hassle of freshly drafting for the purpose, it is recommended to look up the Blog @

http://vswaminathan-swamilook.blogspot.in/2013/09/icl-today.html.

The observation of the court on the grounds of which the point of issue is seen to have been decided against Hill Properties, the appellant, reads: 

“Occupancy rights in flat conferred by Articles of Association confer ownership rights in flat. Restriction on transferability of flat in Articles of Association is void.”

While references have no doubt been made to the special law governing flats, being units of a ‘building’, the appellant , it is noted, has not argued, much less in detail, the legal implications of the special law; hence not gone into by the lower court, and also by the apex court. To one’s understanding, the clinching proposition of law enunciated / accepted in decided cases, also for tax purposes, is this: Even in cases where flats have been acquired following strictly the procedure laid down by the special law, the property rights, particularly ‘absolute ownership’ rights in the “land and building”, of which the flat forms a part, vests with the ‘company’ or ‘society’ as formed and registered as per the special law by the flat buyers jointly as a community.  

For instance, the stated proposition, it is observed, has been reiterated, with no reservation, also in the SC case in deciding the issue of ‘saleability’ of parking spaces to individual flat buyers, against the builder/seller.

On the facts and circumstances as understood, in the Hill Properties case, it is not, it appears to be more than obvious, such a company as envisaged by the referred special law for flats.    

If the foregoing and several other considerations were to be borne in mind, as of now, to say the least, it is anybody’s guess whether the view the court has taken in re. Hill Properties would come to be reviewed by the SC itself; that is, if and when the occasion next arises and the whole matter is called upon to be given a fresh look and examination having regard to the attendant legal principles.

Over to law pundits, for useful add-on / rejoinder, if any.

LCI
Sept 26

Queer !>

Conversion of an existing society to section 25 company - by Ganesh Verma

Taxmann

SC : Flat owner can sell or mortgage his flat to seek borrowings without permission of society 

SG

On Hill Prop.

Occupancy Right In Flat Is Equal To Ownership: SC

1. Occupancy Right In Flat Is Equal To Ownership: SC | TaxGuru

   

   

taxguru.in/corporate.../occupancy-flat-equal-ownership-sc.html‎

by Sandeep Kanoi - in 158 Google+ circles

5 days ago - Most of the flat owners purchase the flat by availing of loan from various banking institutions by mortgaging their rights over the purchased flat.

1. 
   

   Occupancy Right In Flat Is Equal To Ownership: Supreme Court

   

   finance.groups.yahoo.com/group/ICAI_CIRC_MEERUT.../111684‎
   

   
   

   7 days ago - Dear Subscriber,. The following important judgement is available for download at itatonline.org. Hill Properties Ltd vs. Union Bank (Supreme ...

xcerpts
<13. Reference may also be made to another judgment of this Court in DLF Qutub Enclave Complex Educational Charitable Trust Vs. State of Haryana, (2003) 5 SCC 622, wherein this Court held that the right of transfer of land indisputably is incidental to the right of ownership and such a right can be curtailed or taken away only by reason of a Statute. In our view, the Articles of Association of a Company have no force of a Statute and that the right of Respondent No.5 to mortgage could not have been restricted by the Articles of Association.>

BL

Sept 21

Bank bosses behind bad loans

< Corruption at the top

The ethics code is based on the principle that directors, and more so the CMD, owe a fiduciary duty to place the interest of all the stakeholders above their own and conduct transactions in a manner that does not create any conflict of interest situation.
But behind every stressed asset there is either the personal interest of a CMD, director or chartered accountant, or the involvement of joint interest. But they seldom get punished. Instead, the honest executive is made the sacrificial goat. Corporate lending decisions are invariably made by CMDs in their personal chambers and pushed through the system, overriding a genuine credit proposal secured through sincere efforts. ........>

< Loan defaults spark Rangarajan-Ranjit Sinha debate; CBI boss ...

Anyway related to the same topic as in Hill Properties ! 

<previous

1. Hill Properties Ltd , Mumbai vs Department Of Income Tax on 16 ...

   

   indiankanoon.org/doc/197575308/‎
   

   
   

   Jul 16, 2010 - IN THE INCOME TAX APPELLATE TRIBUNAL. 'H' BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT AND SHRI T.R. SOOD, AM.
2. 
   

   Hill Properties Ltd. vs Union Bank Of India & Ors. on 11 September ...

   

   indiankanoon.org/doc/100761564/‎
   

   
   

   Sep 11, 2013 - REPORTABLE. IN THE SUPREME COURT OF INDIA. CIVIL APPELLATE JURISDICTION. CIVIL APPEAL NO. 7939 OF 2013. (Arising out of ...

 

 

Hill Properties Ltd vs. Union Bank (Supreme Court) >>>>

Xecrpts

<On appeal by Hill Properties to the Supreme Court HELD

The right, title & interest over a flat conveyed is a species of property, whether that right has accrued under the provisions of the Articles of Association of a Company or through the bye-laws of a Cooperative Society. Flat owners’ right to dispose of its flat is also well recognized, and one can sell, donate, leave by will or let out or hypothecate his right. By purchasing the flat, the purchaser, over and above his species of right over the flat, will also have undivided interest in the common areas and facilities, in the percentage as prescribed. Flat owners will also have the right to use the common areas and facilities in accordance with the purpose for which they are intended. It is too late in the day to contend that flat owners cannot sell, let, hypothecate or mortgage their flat for availing of loan without permission of the builder, Society or the Company. Neither the Companies Act nor any other statute make any provision prohibiting the transfer of species of interest to third parties or to avail of loan for the flat owners’ benefit. A legal bar on the saleability or transferability of such a species of interest will create chaos and confusion. The right or interest to occupy any such flat is a species of property and hence has a stamp of transferability. The Articles of Association of a Company have no force of a Statute and the right of the shareholder to mortgage could not have been restricted by the Articles of Association (Ramesh Himatlal Shah Vs. Harsukh Jadhavji Joshi (1975) 2 SCC 105 followed).>

Related  >?

Shantikumar D Majithia vs. DCIT (ITAT Mumbai)  U/s 2(22)(a), any distribution by a company of accumulated profits, whether capitalized or not, constitutes “dividend” if such distribution entails the release by the company to its shareholders of all or any part of the assets. As the assessee received the occupancy rights to the flat in perpetuity and…

ITAT Order in re. Shantikumar D Majithia vs. DCIT (ITAT ... - TaxGuru

Supra :

rder in re. Shantikumar D Majithia vs. DCIT (ITAT Mumbai)- A ...

taxindia› In Income Tax | Articles › ITAT judgments‎

12. In

Ramesh Himatlal Shah

’s case (supra), this Court

has clearly delineated the legal principle which is as

follows :-

“20. Multi-storeyed ownership flats on cooperative

basis in cities and big towns have come to stay

because of dire necessity and are in the process of

rapid expansion for manifold reasons. Some of

these are: ever growing needs of an urban

community necessitating its accommodation in

proximity to cities and towns, lack of availability of

land in urban areas, rise in price of building

material, restrictions under various rent

legislations, disincentive generated by tax laws

and other laws for embarking upon housing

construction on individual basis, security of

possession depending upon fulfilment of the

conditions of membership of a society which are

none too irksome. In absence of clear and

unambiguous legal provisions to the contrary, it

will not be in public interest nor in the interest of

commerce to impose a ban on saleability of these

flats by a tortuous process of reasoning. The

prohibition, if intended by the legislature, must be

in express terms. We have failed to find one.”

13. Reference may also be made to another judgment of

this Court in

DLF Qutub Enclave Complex Educational

http://www.itatonline.org

Page 11

11

Charitable Trust Vs. State of Haryana,

(2003) 5 SCC

622,

wherein this Court held that the right of transfer of land

indisputably is incidental to the right of ownership and such

a right can be curtailed or taken away only by reason of a

Statute. In our view, the Articles of Association of a

Company have no force of a Statute and that the right of

Respondent No.5 to mortgage could not have been

restricted by the Articles of Association.

14. We find that neither the Companies Act nor any other

statute make any provision prohibiting the transfer of

species of interest to third parties or to avail of loan for the

flat owners’ benefit. A legal bar on the saleability or

transferability of such a species of interest, in our view, will

create chaos and confusion. The right or interest to occupy

any such flat is a species of property and hence has a stamp

of transferability and consequently we find no error with the

warrant of attachment

itatonline
(comments)

<The grounds of the apex court ruling are noted to have been summed up in Para 14 , which reads:
Q

14. We find that neither the Companies Act nor any other statute make any provision prohibiting the transfer of species of interest to third parties or to avail of loan for the flat owners’ benefit. A legal bar on the saleability or transferability of such a species of interest, in our view, will create chaos and confusion. The right or interest to occupy  any such flat is a species of property and hence has a stamp of transferability and consequently we find no error with the warrant of attachment.
UQ

On a quick reading and understanding, the legal implications of the State law specially governing “Flat” are not seen to have been argued, hence not been addressed and gone into. May be, courts could be expected do so, in the other cases, e.g. in the tax case of Shantikumar D Majithia vs. DCIT (ITAT Mumbai), in further proceedings, had it been pursued, and happens to be pending. For related info. and clues, it may be found worthwhile to look up the personal Blog,-
@ http://vswaminathan-swamilook.blogspot.in/2013/09/icl-today.html
And the contents of the in-side material

< Is Inserted to serve as An Open Invitation To Law Experts/ Activists to Explore !

<<For an elaboration of the viewpoints, but as a shortcut to saving self from the hassle of freshly drafting for the purpose, it is recommended to look up the Blog @
http://vswaminathan-swamilook.blogspot.in/2013/09/icl-today.html.
On the point of civil law in issue, the crux of the opinion the SC has handed down deciding it against Hill Properties, the appellant, reads:
“Occupancy rights in flat conferred by Articles of Association confer ownership rights in flat. Restriction on transferability of flat in Articles of Association is void.”
Going by one’s knowledge of the settled position in property law, the conventionally accepted concepts of “occupancy rights” and “ownership rights” do not connote or have the same or identical implications or consequences. There is no gainsaying that, as such, regardless of the compulsions of whatsoever nature, there could conceivably no case for holding that those two types of property rights are not basically and fundamentally distinct.
No doubt, references have been made to, and inspiration sought to be drawn from, the special State enactments (and other rules), governing flats, being units of a ‘building’. However, so far as could be seen, the appellant , has not argued, much less in detail, the peculiar legal implications of the special law; hence, not gone into by the lower court, and also by the apex court.
To one’s understanding, the clinching proposition of law enunciated / accepted in decided cases, also for tax purposes, is this: Even if it is case where flats have been acquired following strictly the procedure laid down by the special law, the admitted position is that the property rights, particularly “absolute ownership’ rights” in the “land and building”, of which the flat forms a part, vest with the ‘company’ or ‘society’ as formed and registered as per the special law by the flat buyers jointly as a community;- not in the individuals in possession. Should that be so, and on that premise, it seems inconceivable that in a case where there is no such company (“association”) constituted by the occupants of flats in a building as per the special law, different considerations would come into play.

Digressing for a while, for instance, the above stated legal position, it is observed, has been reiterated, with no reservation, also in the SC case in deciding the issue of ‘saleability’ of parking spaces to individual flat buyers, against the builder/seller.

In the Hill Properties case, on its facts and circumstances as understood, it has, even otherwise, not been anybody’s stance that it is such a company as envisaged by the referred special law for flats.

If the foregoing and several other considerations were to be borne in mind, as of now, to say the least, it is anybody’s guess whether the view the court has taken in re. Hill Properties would come to be reviewed by the SC itself; that is, if and when the occasion next arises and the whole matter is called upon to be given a fresh look and examination having regard to the attendant legal principles.

Over to law pundits, fervently wishing for useful or helpful contribution, by way of add-on / rejoinder, if any. >

KEY NOTE (Car Parking Woes):

Stilt parking ruling by supreme court

Ball of controversy Set Rolling ; still kept rolling, simply to gather more and more mug, with no stopping of it ?

Not any way to apply to an Apt. Complex, if duly constituted, formed and final conveyance effected as per the law....

Lest, Problems in a longwinding‘Q’ galore?!

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