2.1 Some years ago, the collector woke up from slumber and
started demanding that sale of all apartments /offices situated in buildings
constructed on land leased by the collector, should be done only after obtaining
a prior ‘No Objection Certificate’ from him. It went without saying that this
NOC was given only after payment of the ‘Collector’s Charges’ which were based
on the area of the property transferred. Thus, an NOC was required for
transferring a flat on any of the collector’s lands, e.g., at Nariman Point,
Cuffe Parade, etc., and this was proving to be a hurdle for several property
transactions.
2.2 A few months ago, the Revenue and Forest Department
issued a circular which simplified the process of conveyance of immoveable
properties in the state. It stated that it is possible to register a property
without waiting for a no-objection certificate from the various authorities,
e.g., the collector, etc.
2.3 However, the collector’s circular was still valid and
subsisting. A recent Bombay High Court decision in the case of Mr. Aspi Chinoy v
State of Maharashtra, Writ Petition No. 713 of 2001, has quashed the impugned
circular of the collector. The court held that the state government does not
have the right to ask the petitioner to seek its prior approval before entering
into the transaction. Therefore, it does not have any power to demand any
premium before transferring the flat. The petition is allowed. Hence, no
permission, either of the state government or of the collector, is necessary. In
this case, the petitioner had paid the premium which had been demanded.
Accordingly, the amount of the premium was refunded with interest at the rate of
8% per annum from the date of deposit till refund, and payment was to be made
within a period of two weeks from the date of disposal of the writ petition.
This is a very good decision by the Bombay High Court. The court order does not
specify what happens to other flat owners who also have paid such premium; would
their premiums, collected by the collector, also be refunded?
3.1 A single judge of the Bombay High Court, in a very recent
decision delivered on 5th December, 2009, in the case of Acknur Constructions P
Ltd v Sweety Rajendra Agarwal & Others, Suit 1404 of 2009, held that even if one
member of a co-operative housing society objects to a redevelopment, then the
redevelopment would be stalled. In this case, a majority of the flat owners had
assented to the redevelopment but a small minority had objected to the same.
Actually, four out of its twelve members had objected to the development on
grounds that the redevelopment was not in the society’s interest. The developer
went to court seeking a stay on the objections of the minority and permission to
continue with the redevelopment work.
3.2 The High Court refused to permit the developer to
continue with the work. According to the court, the builder had failed to make
out a prima facie case that he could remove members or that the agreement was
binding on all members. Further, the developer has no higher right than that of
the society. It held that the activity should not compromise the rights of the
members and must always safeguard the existence of the society. It held that it
was difficult to contend that a minority in number cannot obstruct the
implementation of the development agreement. It also held that the co-operative
society movement is a socio-economic and moral movement to fulfill the
constitutional aim of distribution of wealth and is not a profit-making
activity.
3.3 In a subsequent decision of the larger bench (which
included the Chief Justice) of the Bombay High Court, in the case of Girish
Mulchand Mehta v Mahesh M Mehta, Appeal No 338 of 2009, delivered on 10th
December, 2009, the Bombay High Court has taken an exactly contrary view.
In this case, the court held that the general body of the
society is supreme and had taken a conscious decision to redevelop the building.
The general body of the society thus has also resolved to appoint the developer.
The members of the society were bound by the said decisions. The general body of
the society has approved the terms and conditions of the development agreement
by an overwhelming majority. Merely because the terms and conditions of the
development agreement are not acceptable to the appellants, who were a minority
(only two out of twelve members), that by itself cannot be the basis for not
abiding by the decision of the overwhelming majority of the general body of the
society. It further laid down a principle that that once a person becomes a
member of the cooperative society, he loses his individuality with the society
and he has no independent rights except those given to him by the statute and
bye-laws. The member has to speak through the society or rather the society
alone can act and speaks for him qua the rights and duties of the society as a
body. It is not open to the court to sit over the said wisdom of the general
body as an appellate authority. Merely because some a minority of members
disapprove of the decision, cannot be the basis to negate the decision of the
general body, unless it is shown that the decision was obtained by fraud or
misrepresentation or was opposed to some statutory prohibition. In this case,
the general body had taken a decision after due deliberations for over five
years to redevelop its property. Even with regard to the appointment of the
Respondent No.1 as the developer, the decision had been taken by the general
body of the society after examining the relative merits of the proposals
received from the developers and interviewing them. Thus, the court upheld the
majority’s verdict.
3.3 It is being respectfully submitted that the single judge’s decision needs a rethink and that the larger bench’s decision is more rational. Can one individual hold the entire society to ransom? If yes, then what is the meaning of a majority? What if one cankerous individual refuses in the hope of making some extra personal gains? Does not the principle of the socio-economic movement also require that col-lective good should be placed over individual gains and losses?
IV. Demolition of Illegal Construction
4.1 A very important decision was rendered by the Bombay High Court in the case of a writ petition filed by Sudhir M. Khandwala, Writ Petition No 1077 of 2007. The case pertained to the demolition of illegally constructed build-ings and the petition was filed by flat owners seeking respite from the BMC’s orders. The High Court refused to stay the demolition and refused to regularise the unauthorized construction.
4.2 The Division Bench held that while consider-ing such matters, not only the interests of the petitioners but also of those residing in the nearby areas should be taken into account. The court came down harshly on the petitioners and held that “….if they purchase flats without
bothering to make enquiries and seeking details of the construction, then they are themselves to blame. If they are carried away by the brochure and the public advertisements and do not make such inquiries they cannot turn around and seek assistance of the courts.”
4.3 The court further held that every application for regularisation is to be viewed on a case-to-case basis and that there is no blanket rule that allows all applications to automatically accepted and approved. Essential supplies like power, water and infrastructure are scarce and unauthorized construction adds to the burden on these facilities. Hence, the BMC can refuse to regularize a particular application. The court upheld the demolition order for 17 out of 24 floors.
4.4 This decision is a wake-up call for all flat buyers. It is very important for buyers to check whether or not the title documents of the building and various permissions are in order. A reputed solicitor’s certificate would be helpful. Further, while dealing with buildings constructed on forest land, CRZ land, etc., the buyers should be extra cautious.
Registration Fees
5.1 The Maharashtra State Government has issued a notification a few weeks ago which states that the Rs. 30,000 cap on registration fees has been removed. Registration fees in the state were 1% of the fair market value of the property or Rs. 30,000, whichever was lower. Thus, even if the registration fees were coming to Rs. 1,00,000, they would be capped at Rs. 30,000. Accordingly, now, the combined amount of the stamp duty and registration fees would be 6% (5% + 1%) of the fair market value. The FMV would be computed as per the Stamp Duty Ready Reckoner. The state government had earlier issued a similar notification which was subsequently withdrawn.
5.2 Such a move by the government would act as a dampener to flat purchasers. Registration is a service by the government and not a tax. It is unfortunate that the government is us-ing registration of documents as a means of increasing the state’s revenue.
VI. Information about Tenants
6.1 The Thane police has made it mandatory for owners of a home, club, hotel, hospital, etc., to give information about foreign nationals residing in their premises.
6.2 The owner of such premises is required to intimate the nearest police station about any foreigner arriving at their premises within 24 hours of their arrival. The police has issued this notification under Section 144 of the Criminal Procedure Code which empowers the issuance of such orders in urgent cases of nuisance or apprehended danger. Failure to do so may entail prosecution of the owners.
VII. Eviction of Tenant from Commercial Premises
7.1 The Supreme Court, in the case of Ashok Kumar vs. Ved Prakash (CA 8417 of 2009), has held that a tenant can be evicted from not only residential premises but also commercial premises to meet the bona fide requirements of the landlord for self-occupation. This was a case under S.13 of the Haryana Urban (Control of Rent and Eviction) Act, 1973. S.13 of this Act is as hereunder:
“Eviction of tenants-
1) A tenant in possession of a building or rented land shall not be evicted therefrom except in accordance with the provisions of this section.
2) A landlord may apply to the controller for an order directing the tenant to put the landlord in possession-
b) in case of residential building, if-
i) he requires it for own occupation, is not occupying another residential building in the urban area concerned and has not vacated such building without sufficient cause after the commencement of 1949 Act in the said urban area.”
7.2 In this case, the two courts had ordered eviction of the tenant/appellant from a shop constructed on the ground floor at a plot in Gurgaon district in Haryana.
However, the tenant challenged the eviction and the judgments of the two courts on the ground that under Section 13 of the Haryana Urban (Control of Rent and Eviction) Act, 1973, a tenant can be evicted only from residential premises.
7.3 The Supreme Court held that there cannot be any discrimination vis-a-vis residential and non-residential premises for evicting a tenant, as otherwise it would be a violation of Article 14 (equality before law) of the Constitution.
It dismissed the appeal filed by the tenant challenging the eviction order passed by the Rent Controller and affirmed by Punjab and Haryana High Court.
The apex court held that if the landlord is able to prove his bona fide needs, the tenant can be evicted not only from residential premises but also commercial premises.
This judgment would have far reaching con-sequences in all the states which have Rent Control Acts since almost all of them contain provisions similar to S.13 of this Act. S.16(1) of the Maharashtra Rent Control Act, 1999 provides that a landlord may recover possession if the premises are reasonably and bona fide required by the landlord for occupation by himself. The wordings used in this section are much broader than those under S.13 of the Haryana Act. Further, the definition of the word ‘premises’ in S.7 means ‘any building’. Hence, under the Maharashtra Act, a land-lord could have recovered possession even of a commercial property. The position has now become clearer by virtue of the Supreme Court’s decision.
