WHETHER VALID?

VALID / VOID / VOIDABLE  AGREEMENTS

The following questions/issues regarding a Society allotment/Sale is very beautifully discussed in a case law – decision delivered by Justice N.Kumar-High Court of Karnataka:

Whether the Sale Deed executed by the Society in favour of a non-member is void or voidable?

• Whether the sale deeds executed by the Society represented by its office bearers contrary to bye law 36 is valid or void?

• Whether the Sale Deed executed by the Society in favour of its member in respect of the sites for which the Society had already executed sale deed in favour of non-member is void or voidable?
• Whether the cancellation deeds executed unilaterally by the society is void or voidable? In order to answer these questions one should have a clear distinction between the legal terms such as valid, void and voidable: A valid agreement is one, which is enforceable by law as a contract, by the parties to the agreement. A void agreement is one, which does not exist in the eye of law, and therefore fails to receive any legal recognition or sanction.  In legal parlance it is a nullity or non-est.  It is not a contract at all.  It would be automatically null and void without more ado.  Its existence or continuation has no value, as you cannot continue a nullity. If a statute specifically provides that a contract contrary to the provisions of the statute would be void, it is no contract in the eye of law, it is void ab intio, and the said agreement is unenforceable in law.

In between these two extreme positions, lies the voidable agreement.  In law it exists and also recognized.  It is a contract.  It can also be enforced.  But because of some defect in its origin, at the option of the party to the agreement, it is liable to be cancelled or set aside.  In other words, a voidable agreement is one which is void or valid at the election of one of the parties.  However, it is valid, till, it is declared void by a competent Court of law, in a manner known to law.  Therefore, it is not a nullity or non est.  It is valid and good unless avoided.

Sale of Site belonging to Co-operative Society in favour of non-members is Not expressly prohibited by Bye laws of Society the object of selling sites to non-members is to raise money to pay loan to Corporation the Object behind sale neither illegal nor against interest of members of society Sale was for a valid consideration sale deed executed by society in favour of non-members cannot be said to be void Said agreement is not forbidden by law or is of such a nature that it would defeat provisions of any law -  not immoral or opposite to public policy.  It is enforceable.

[for more detailed information on above questions- kindly refer 2008(5) AIR  Kar R 120]

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Dear Readers,

Its a requirement of a common man now a days to know about the formalities and legal implicationsinvolved in buying and selling of Properties. As well as to take proper precautions before entering into any binding Contract or Agreement regarding the transfer of property. Here I would like to make you aware of the legal formalities as well as the legal implications and the legal entanglements you will land up if you are not aware. As usual I would like to give useful links on the topic to help the people globally who visit my site.

TRASFER OF PROPERTY DEFINED?(Section 5)

Transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons (or to himself) and one or more other living persons and to transfer property is to perform such act.

In this section  living person includes a Company or association or body of individuals whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by Companies associated or bodies of individuals.

WHAT MAY BE TRANSFERRED?(Section 6)

Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force:

(a) The chance of any hei9r-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature cannot be transferred.

(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby.

(c) An easement cannot be transferred apart from the dominant heritage

(d) All interest in property restricted in its enjoyment to the owner personally cannot be transferred by him

(e) A right to future maintenance in whatsoever manner arising secured or determined cannot be transferred

(f) A mere right to sue cannot be transferred.

(g) A public office cannot be transferred nor can the salary of a public Officer whether before or after it has become payable.

(h) Stipends allowed to military naval, air force and civil pensioners of the Government and political pensions cannot be transferred.

(i) No transfer can be made

(1)In so far as it is opposed to the nature of the interest affected thereby or

(2)For an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act 1872

(3)To a person legally disqualified to be transferee.

(j) Nothing in this section shall be deemed to authorize a tenant having an untransferable right of occupancy the farmer of an estate in respect of which default has been made in paying revenue or the lessee of an estate under the management of a Court of Wards to assign his interest as such tenant, farmer or lessee.

It is open to the donor to transfer by gift the title and ownership in the property and at the same time reserve its possession and enjoyment to herself during her lifetime. There is no prohibition in law that ownership in a property cannot be gifted without its possession and right of enjoyment .

PERSONS COMPETENT TO TRANSFER(section 7)

Every person competent to contract and entitled to transferable property or authorized to dispose of transferable property not his own is competent to transfer such property either wholly or in part and either absolutely or conditionally in the circumstances to the extent and in the manner allowed and prescribed by any law for the time being in force.

OPERATION OF TRANSFER (Section 8)

Unless a different intention is expressed or necessarily implied a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof.

Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer and all things attached to the earth

And where the property is machinery attached to the earth, the movable parts thereof.

And where the property is a house the easements annexed thereto the rent thereof accruing after the transfer and the locks, keys bars doors windows and all other things provided for permanent use therewith.

And where the property is a debt or other actionable claim the securities therefore (except where they are also for other debts or claims not transferred to the transferee) but not arrears of interest accrued before the transfer.

ORAL TRANSFER(Section 9)

A transfer of property may be made without writing in every case in which a writing is not expressly required by law.

CONDITION RESTRAINING ALIENATION(Section 10)

Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him provided that property may be transferred to or for the benefit of a woman (not being a Hindu, Muhammadan or Buddist) so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.

RESTRAINT REPUGNANT TO INTEREST CREATED(Section 11)

Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.

(Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property nothing in this section shall be deemed to affect any right which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof).

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