VOID AGREEMENTS AND CONSIDERATION

VOID AGREEMENTS AND CONSIDERATION

                            

  

VoidAgreements

Clause (e) of Section 2 of Indian Contract Act 1872, defines an agreement as every promise and every set of promises forming consideration of each other in an agreement. Agreements are instruments wherein two or more parties agree over something, to do some work, to sell or purchase a property. The essential requirement of an agreement are consideration and objects.

VoidAgreements are those agreements which cannot be enforced in any court of law. An agreement not enforceable by law is said to be void. An agreement which does not comply with the mandatory provisions of a statute is void. If, in an agreement,  consideration or  a part of consideration or the object is unlawful,  such an  agreement is a void agreement. Neither of the party to the agreement can seek remedy for violation of such an agreement in any court of law.

The status of an agreement withoutconsideration

In general, any agreement without consideration is void. Section 25 of Indian Contract Act 1872, has certain exceptions to this general rule and the following agreements without consideration are not void:

a) An agreement which is made in writing registered and made out of natural love and affection by a person standing in a near relationship;

b) An agreement which is promise made to compensate for something done for the promisor by a person voluntarily. The compensation may be  whole or in part; and

c) An agreement which is a promise to pay a debt which is barred by limitation. Such a promise must be in writing and signed by the concerned person or his authorized agent. The debt may in whole or in part.

Whether a gift without consideration is Void ?

By gift one transfers the property without consideration. It is a unilateral act of one person. It is not a contract between parties. Section 25 of the Indian contract Act provides that the provisions of the section do not affect the validity of any gift actually made as between the donor and  donee, through no consideration is passed.

Consideration at most times is the market value of the property. The Indian contract Actsimply states that  agreements without consideration are void. The Act does not refer to adequacy of consideration. It is matter between the parties to the agreements to decide the amount of consideration. The testing factor is whether the consent was given freely for inadequate consideration. The courts will take inadequacy of consideration in determining whether consent was given freely or not in resolving the disputes. But the agreements cannot be void on the basis of inadequate consideration alone.

Can an agreement restrain a person from seeking legal remedy ?

As stated earlier, if the object of an agreement is unlawful, such an agreement is void. Any agreement which restrains any party to the agreement from enforcing his rights by the usual legal proceedings in the  ordinary courts or tribunals or which limits the time within which he may enforce his rights is void.

The consideration and objects are lawful unless,

1) They are forbidden by laws in force.

2) They are of such nature that if permitted they would defect the provisions of any law.

3) They are fraudulent.

4) They involve or implies injury to the person or property of another.

5) The courts regards them as immoral or opposed to public policy.

Suppose in an agreement to sell, there is a clause that the vendor shall complete the sale transaction within three months of the date of agreement to sell, but fails to comply with this requirement.  Whether the agreement would become void and unenforceable?

Non-complianceof a clause in the agreement to sell would not make the agreement void. The vendor has legal remedy open to him upto three years from the date of such alapse.

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Advocate S. Selvakumar

VIOLATION OF BUILDING BYELAWS

VIOLATIONOF BUILDING BYELAWS

                              

Bangalore is one of the fastest growing cities of India. The reasons for such a fast growth could be attributable mainly to the development of I.T. hub, pleasant climatic conditions and better educational and employment opportunities. Because of high influx of people to the city, there is a great demand for house and house sites in Bangalore.  This, in turn, has lead to the steep rise in the property values here.

Building byelaws are introduced to regulate construction activities, to prevent construction of buildings in a haphazard manner and to provide better civic amenities. Zoning regulations are also introduced with the same motive and to regulate the land use, control of density of population and to develop the city in an orderly way. However, these building bye-laws and zonal regulations are not strictly followed by the people presumably on the ground that the restrictions imposed are nothing but hindrance in exploitation of the property to the full extent and thereby they construct their buildings at their will. In so doing, they do not mind to forego certain prescribed civic amenities such as having broader roads, playgrounds, parks and other civic amenities.

Broadly, we may classify the violations into three categories viz., violation of Floor Area ratio, violation of site set back and violation of plot coverage. Violation of any one of these three violations would deprive the land owner of completion certificate.

FloorArea Ratio

Floor Area Ratio (F.A.R) is prescribed separately for intensely developed area, moderately developed area and sparsely developed area. Earlier, F.A.R. used to be high in more intensely developed central areas in view of land values and lower F.A.R. in the suburbs where land values are less. But presently it is on the reverse pattern and the policy is to fix less F.A.R. in the central area to enable decongestion and higher F.A.R in the suburbs to encourage development where the traffic and other problems are less.

Non-adherenceof sanction plan restrictions and set back

The building bye-laws prescribe for certain set backs on   sides of the building to facilitate the people to have proper light, ventilation, privacy and to save them from dust and traffic noise. While framing the building bye-laws, the civic authorities also keep in mind the future land requirements for broadening roads. It is noticed that people violate building bye-laws by way of additional floor construction, site set back construction, and providing stair case on the site set back area, balcony area to be converted into living rooms.

Land  use

The Zonal Regulations of the Comprehensive Development Plan of Bangalore prescribe different land uses like; residential, commercial, land for civic amenities etc., for systematic development of the locality. But, it is noticed that the residential buildings situated along the main roads and the roads nearer to commercial area are developed and utilized as commercial property. Even several industries also do crop up in these localities in gross violation of zonal regulations. Similarly, residential or commercial buildings do crop up in civic amenities sites meant for parks, play grounds, schools, green belt areas etc.

Sanction Plan for additional constructions

If a part of the building is constructed with deviations, the owners of such property hesitate to approach the plan sanctioning authorities whenever they intend to put up further construction on the property for approval of  sanction plans for the reason that deviations will be noticed during inspection by these authorities and thereby proceed to make further construction without the sanction plan. Such people try to develop rapport with the concerned municipal authorities and put up additional constructions without sanction plan.

The reason for violation of building bye-laws and sanction plans by the people is that most of the land owners/builders want to exploit their land to an optimum extent because the residential and commercial properties do fetch high return.  Presently, in Bangalore there is a steep rise in land value, say Rs.5,000/- per sq.ft. on an average.

In a large number of cases, deviations and violations take place with the active support of the officials and the local politicians. Only in rare cases when it is brought to the notice of the competent authority of deviations, action would be initiated by the concerned authorities against which action the land owners knock the doors of the courts and in many such cases courts do grant stay.  Thereupon, the building owners do enjoy the property for long period despite violation of the bye-laws since it would take long time for the court to dispose of the matter.

Remedies

Violation of bye-laws, deviations of sanction plan, zonal regulations etc., cannot be allowed to be continued for long since it is an unhealthy trend. Therefore, the following suggestions may help in curbing violations of the bye-laws etc.

Userfriendly bye laws

The building byelaws and zonal regulations of the Comprehensive Development Plan  should be user friendly and acceptable to the majority of the public. Further, the byelaws should not consist of too many technical jargons but should be simple to enable the common man to understand and follow. Byelaws should be suitable to the local conditions failing which there would be violation of such laws.

Strictenforcement

When once user friendly building byelaws with simplified  procedure for  sanction of building plans are introduced, there should be deterrent punishment if the property owners deliberately deviate  from the sanctioned plan or construct their buildings without the sanction of the competentauthority.  It may be kept in mind that unless strict enforcement of the zonal regulations and building bye-laws is carried out in letter and spirit, there is every likelihood of people violating even the user friendly byelaws.

Accountability  of Engineers

Construction of a building generally takes not less than a year.  During this time, frequent visit by the concerned area engineer and supervisor to find out whether the construction is according to sanction plan etc., would prevent violations of the regulations by the land owners.  Instead of this, the municipal authorities conduct raids after several years of such construction putting the people to a great hardship and embarrassment. To avoid such a situation, strict enforcement of visit by the concerned engineer must be introduced and if any deviations are noticed later on, the concerned engineer should be made accountable for allowing such deviations and action initiated against him for dereliction of his official duty.

Impositionof heavy penalty for deviations

As a onetime relief, for the existing buildings all deviations in building bye-laws, plans and zona lregulations could be permitted with different slabs of penalty for such violations. The higher the violation, more the penalty. Once user friendly bye-laws are introduced, there should be no leniency whatsoever and every deviation should be punished with severe penalty. 

The building byelaws need revision whenever there is change in the C.D.P. of the city. The committee constituted to prepare the byelaws should comprise of not only the experts in the field but also the different sections of the public so that the matter could get debated from different angles before arriving at a conclusion. Thereupon, the draftbyelaws should be circulated amongst the public to solicit the views and suggestions from people of different walks of life. The print and visual media can play a greater role in this regard. A team of technical officials consisting of town planners, architects, and civil engineers can be formed to educate the people on the need for adherence of the byelaws  while at the same enlightening the public of the punishment for violations. Similarly, area committees consisting of revered citizens and the representative of the resident’s welfare associations may be constituted to monitor violations.

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Advocate S. Selvakumar

VERIFY THE DOCUMENTS BEFORE PURCHASE OF THE PROPERTY

VERIFY THE DOCUMENTS BEFORE PURCHASE OF THE PROPERTY

                           

A clear and marketable title of property free from encumbrance would provide the owner a rightful ownership of such property and the possession of the property could be either physical or constructive. 

The foremost requirement to be exercised by the intending purchaser of property is to thoroughly scrutinize the title deeds of the property. There is no particular yardstick prescribed to trace out the title and, therefore, it depends upon the diligence and application of mind of the person who scrutinizes the documents. Scrutiny of documents is a specialized work and only persons who are well versed in scrutiny of property documents can analyse and give a clear opinion. Generally speaking, origin of the property, subsequent transfers and the present status are the three most important aspects which are taken into consideration to trace the title of a property. 

Modes of acquisition 

There are different modes of acquisition of property by any individual. Some of the modes of acquisition of property are Grant Land by the Government, allotment made by the Government / Various Autonomous bodies / Housing Societies, etc., acquisition of property under a Will, by purchase or inheritance. 

If the property is a Grant Land or allotted by any authority, then the Grant Certificate or Allotment Letter issued by the Competent Authority is necessary, apart from the other relevant documents. In the case of acquisition of property under a Will or by way of purchase, Gift, Exchange, Partition, Release, Settlement or inheritance, it is necessary to scrutinize and verify all the relevant documents of 42 years prior to the date of the present transaction to ascertain the transactions which have taken place during this period. This will enable the purchaser to make sure of the valid title of the vendor. At the same time, genuinenesshttp://www.advocateselvakumar.com/ of the relevant documents at the time of transfer of property during this period has to be diligently examined. 

The next important step is to examine the present status of the property i.e. who is the present owner, whether his / her name has been recorded in the revenue records of the concerned Authority and whether property taxes are being paid by the owner periodically. 

Identification of the Property

The third step is identification of the property which is very important and a must. The purchaser should not only get the property identified but also should compare the description of the property shown in the document with the actual. Accurate details pertaining to the number assigned to that particular property, its extent, boundaries, name of the Village or Municipal Council or any Autonomous bodies within whose limits the said property falls are required to be ascertained. If the building exists on the particular property, then details pertaining to the existingbuilding and whether the building is constructed in accordance with the building sanction plan and relevant Bye Laws of the concerned Authority has to be mentioned. Measurements mentioned in the document should tally with the physical measurements. In case the physical measurement mentioned in the document is less than the actually physical area available, the actual area available is to be considered for the purpose of payment and documentation. Normally, the purchaser shall pay either for the measurements mentioned in the documents or the actual physical measurement, whichever is less. 

Nature of Title

Nature of title such as tenancy right, occupancy right, possessory right, full ownership is also another important aspect which requires search and examination since the persons having some interest or right over the property are necessarily to be made as parties to the transaction, sale or mortgage. 

Tenanted property

If the property is tenanted, then it is very important to get confirmed from the tenant that there is no litigation pending between the vendor and the tenant pertaining to the ownership of the property or the tenancy rights. Further, it is also necessary to convey the tenant about the proposed sale transaction and to attorn the tenancy in favour of the purchaser. 

Conversion
Normally, agricultural lands cannot be put to use for non-agricultural purposes. To put to use the agricultural land for non-agricultural purposes it is mandatory to get the agricultural land converted for utilization for non agricultural purposes. However, there are certain exceptions to this mandatory requirement and the agricultural land can be put to use for non-agricultural purposes with the specific order of the competent authority. The special enactments applicable to grant lands also require to be looked into. Further, it is also necessary to find out from the Land Acquisition Department whether the property in question is under the orders of acquisition by the Government and whether any notification to this effect has been issued. by the Government. 

Encumbrance certificate

Verification of encumbrance certificates is a part of scrutiny of property documents to rule out any subsisting encumbrance over the property. But, such certificates cannot be totally relied upon since there are instances wherein transactions duly registered in the concerned Sub Registrars office are not reflected in the E.Cs issued by the department. In such cases it is necessary to do the search in the office of the Sub Registrar, on payment of the prescribed fees. 

Minors interest

In cases of sale of ancestral property, it is necessary to find out whether the vendor has a clear title over the property and there are no claims of minors interest. If the property proposed to be conveyed is ancestral property, then the involvement of Minors interest is very common. In cases where minors interest are being transferred or conveyed, permission from the court for conveying the property is mandatory under the provision of Guardianship and Wards Act. If the property is conveyed in contravention of the provisions of this Act, then such conveyance can be challenged by the Minor within three years from the date of his attainingmajority or from the date of getting knowledge of such a sale. 

Thus, for purchase of property it is necessary to verify as to how the vendor has acquired the property. Only upon being satisfied about the valid title of the vendor, the purchaser can negotiate and enter into an agreement of sale with the vendor. It may be noted that if the property is a composite property, then most of the owners will retain the original title documents and only Xerox copies of such documents will be delivered to the purchaser. 

Since scrutiny of property documents is technical in nature, utilization of services of an experienced advocate in property matters would help the purchaser immensely and while scrutinizing the documents the advocate shall be able to decide as to which documents are to be in original and which could be certified copy or Xerox copy.

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Advocate S. Selvakumar

VALUATION OF PROPERTIES – A BANKER’S VIEWPOINT

VALUATION OF PROPERTIES – A BANKER’SVIEWPOINT

               

             

Whenever a client approaches Bank seeking credit facilities from the Bank, invariably securities are insisted upon. Sometimes, loans are sanctioned on the value of movable assets and advances area unit collaterally secured by equitable  or easy mortgage of lands/buildings. generally facilities extended by one Bank are taken by another Banker, not exclusively with reference to the previous securities given by the purchasers but with respect of the assets generated out of Bank’s finance.

In essence, valuation of the properties is associate vital operates inside the day-to-day disposal business of the Banks.  Even to defend the assets charged to the Bank or funded by the Bank, insurance policies got to be taken and for that purpose to boot valuation is needed.

Usually, the value of a property depends upon the materials of that it’s created of, the ageof the property, the geographic location, the encompassing developments, the neighborhood, etc.  One necessary issue that contributes to the value of a property is that the clarity of title of itsowner and also the encumbrances riding thereon.

Some folks have a conception that a appraiser want solely to require care of the fabric and placement facet and it's not his orbit to appear into the title facet of it. However the conception isn't correct because the title to the property incorporates a touching on its valuation.  A property infested with long-drawn litigations or varied claims won't actually, fetch the value it'd have otherwise got with a transparent title.  Similarly, a property occupied will not be able to command the same value if it's owner occupied, since the customer should pay right smart quantity of money and additionally time to induce vacantpossession of the property.  Thus, possession of the property is as title thereto whereas inward at its worth.  Hence, whereas crucial the value of a property, the appraiser have to be compelled to detain his mind the devolution of title, the specific possession of the property, varied claimants over it like minors or court orders adversely affecting possession and title to the property.

A valuer, whereas assessing a property, have to be compelled to ascertain the custody of the primary title deeds to ascertain the probability of equitable mortgages over the property.  Discreet searches inside the Sub-Registrar’s work, Taluk/ Municipal Offices and also the Offices of various Township/Development Authorities that have a bearing on the native administration of the property for ascertaining whether or not the property is made on any reserved space or prohibited space or the likelihood of a buying deal by regime – of those factors have a bearing on the valuation of the properties.

In one instance, once the valuation of the property was done by one appraiser for ‘X’Bank, another appraiser of the same Bank seen the same set of documents were deposited with another institution and additionally the said institution has already place the same property for auction.  Such things can happen once there are made-up set of documents given as security.

In another incident, it happened that except for being multiplicity of institutions claiming to possess taken mortgage of the property, there happened to be multiple persons bearing the same name as patron and once the Bank determined to need possession of the loaded down property, they will not do thus as a result of the identity of the property that of the owner of the property could not be tallied as a result of the person alleged to have loaded down the property denied even having gone to the Bank in question and lodged a police report.

Apart from such risks in identity of property and its holder, the appraiser ought to be further careful whereas submitting his report on valuation. though it's a necessity for the appraiser to enquire regarding the genuineness of the owner of the property and additionally the property in question, he have to be compelled to submit his report back to the concerned authority, ideally head to go or with ample care to avoid interpolations.  In one instance, a Bank entrusted the valuation of secured property to its empanelled appraiser but later it transpired that the actual valuation and additionally the report on valuation accessible to the concerned authority varied really wide and iniquity was suspected.

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Advocate S. Selvakumar

WRITING A WILL

WRITING A WILL

                     

                      

We have heard so many stories pertaining to Will, in real life and seen depicting dramas in movies. But do we really know what it exactly means the way it has to be made, different kinds of Will and the Execution in the article, we give you a broader picture about the Will. A Will is a private and confidential document written by a living person declaring as to how he would like to disperse and distribute his properties according to his wish, after his death. It is the final expression of the person's desire existing at the time of his death. The person who makes a Will is called a Testator (male) or Testatrix (female).

A will comes into effect after the death of the Executor. Until then, the document can be changed, revoked, modified or substituted according to the wishes of the Testator. During his lifetime, a Will is just a document, revocable at any time, having no legal effect whatsoever. The Indian Succession Act Governs it.

Codicil:
A Codicil is a document, which alters or adds any provision to the Will or rectifies any mistakes in the Will. It is not an independent document like a Will but a part of it. It is an annexure to a Will. However, it must be executed in the same manner as the Will.

Certain distinctive features can establish the authenticity of a will. the distinctive features of a will are that, it is the declaration of the intention of the testator as to disposal of his property after his death; that the will is revocable; that it would be operative after the death of the testator and that the legality of the property is such that the testator could himself have disposed it when he was alive.

The person who makes a will must be in his senses. He shall write his will while in sound mind and health, on his own wish and without pressure from any person with respect to his property, which he desires to bequeath. A deaf and dumb or blind person too can make a will provided he or she is able to know and understand the nature, content and effect of the will. A very old person can make a will only if he can understand the impact and import of his writing. A person, who is mentally ill or under intoxication, cannot make a will in such a frame of mind.

Own Language:

A Law has not prescribed any particular form for writing a will. The language used must be simple, clear, unambiguous and easily understandable by common man and to the point. If a will is not in clear terms the interested parties can challenge it in any Court of Law. A will is written in the first person. It has no standard form. a common form of will must have the date and place of execution; the name and address of the testator, a clause revoking previous wills and codicils, a clause pertaining to the appointment of Executors and Trustees, specific mention of the names of the family members, details of the movable and immovable properties, clear cut particulars as to who gets what, a clause pertaining to the testator's soundness of mind and health and his knowledge of what he/she has written.

The testator at the end of the writing should sign it. it should be attested by at least two persons, who have seen the testator putting his signature on the will. The attesting witnesses must put their signature in the presence of the testator. The testator can preserve the Will either in a sealed cover with himself or in a safe deposit vault or with a trusted person. He can register the Will in the presence of the Registrar or Sub-Registrar of concerned area. Even it can be kept under the safe custody of the Registrar or Sub-Registrar.

A will can be written and executed on a piece of paper. It may be handwritten or typed or computer printed. It neither needs stamp duty nor is it necessary to register even if it relates to immovable property. Though it is not necessary to register a will, it is always better to get it registered. This will come handy to obtain a probate if the original is lost. However, registration of a will is optional.

While executing awill, care must be taken to ensure that there are no additions or alterations in it. If additions or alterations are there the executor must ensure that the testator properly initials them. This is very necessary to avoid unwanted suspicion about its credibility. During his lifetime, the testator can always revoke his will even though the will is said to be irrevocable. But revocation must be according to law. If there are two wills, the later one cannot revoke the previous one. There are different types of wills. Oral will, holograph will, mutual will, joint will, contingent will, privileged will and unprivileged will.

Oral Will:Oral Will is applicable to Muslims only. It is otherwise called Hiba.

Holograph Will:Holograph Will means a Will written in Testator's own handwriting generally. After the Will is written, the Testator has to sign it and get his signature attested. This will without signature and attestation is invalid.

Mutual Will:Two persons, generally Husband and Wife, are involved in making a Mutual Will. In this Will, the Husband and Wifemutually agree to bestow upon each other the reciprocal benefits in each other's property, subject to other clauses in the Will.

Joint Will:It takes two or more persons to execute a Joint Will. This Will is made to dispose of their joint or separateproperties jointly. Any one of them or the Survivor can revoke the Will. In such an event, if one Testator dies the Will will be considered as his Will and when the other dies it will again be considered as the Latter's Will.

Contingent Will: It is another kind of Will, which comes into effect on the happening of an event or condition. It is a Will to do or not to do something if some event does or does not take place.

Nomination: Statutory Institutions like Government Departments, Public Sector Corporations, Post Office, LIC, Nationalized Banks provide for a Policy Holder or a Fixed Deposit Holder, an option to propose his or her Nominee in the event of death. In that event, the benefits will go to the Nominee. Nomination is generally in the nature of a Will and restricted to each item of Policy or Security.

Privileged Will:A Soldier, Airman, or a Seaman engaged in warfare or adventure is allowed to make a Privileged Will. The privileges given among other things are that the Will can be written or oral. If the Testator writes a Will, it need not be signed by him and attested by a Witness. If some other person writes it in whole or in part, it must carry Testator's Signature, but witness attestation is not necessary.

Unprivileged Will: It is a Will not made by a Soldier, Airman or Seaman. Anyone who is a major can make this Will. He must be a person of sound mind and in case of ill health; he must understand what exactly he is doing. The Succession Act recognizes Privileged Will and an Unprivileged Will. A Will must contain a stipulation with regard to Testator's debts and liabilities. These will have first charge on the Testator's estate.

The Succession Act gives priority in payment towards funeral expenses; hospital and medical expenses incurred before Testator's death; expenses pertaining to legal matters like obtaining probate and court expenses; payment of wages to persons employed by the Testator before his death, payment of income tax and other statutoryliabilities; secured and ordinary debts. Only after meeting these liabilities the Testator can make a Will. Therefore, the Testator must ensure that his estate is financially sound to take care of his debts and liabilities, before writing his Will.

Muslim Will:Under the Muslim Personal Law, a Muslim can make a Will orally or in writing and there is no form as such for writing. If the Will is in writing it need not be signed or attested. A person major in age and of Sound Mind can make a Will and he can dispose of all or any part of his property by Will. However, there are a few restrictions.

A Muslim can alter his Will during his lifetime or cancel any inheritance.A Will may be declared invalid if the person after making the Will becomes insane and remains so till his death.Similarly, a Will which is conditional or the future inheritance would also become invalid in the eyes of Law. 

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Advocate S. Selvakumar