Sale of site by a society to a non-member


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 initio, 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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