Right to occupy flat includes right to transfer - SC
THE shareholders of the Company were allowed to use and occupy the flats in a building owned by the Company. One of the shareholders mortgaged a flat to a Bank and on default of payment, the Bank attached the flat. The Company filed a suit before the Bombay High Court contending that the shareholder of the Company has only a right to occupy the flat and has no right to mortgage the same to the Bank without permission of the Company. The High Court was not impressed and so the Company is before the Supreme Court.
The Supreme Court observed,
"The right, title, interest over a flat conveyed is a species of property, whether that right has been accrued under the provisions of the Articles of Association of a Company or through the bye-laws of a Cooperative Society. The people in this country, especially in urban cities and towns are now accustomed to flat culture, especially due to paucity of land. Multi-storeyed flats are being constructed and sold by Companies registered under the Companies Act as well as the Cooperative Societies registered under the Registration of Cooperative Societies Act, etc. Flats are being purchased by people by either becoming members of the Cooperative Society or shareholders of the Company and the flat owners have an independent right as well as the collective right over the flat complex. 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. These rights are even statutorily recognized by many State Legislatures by enacting Apartment Ownership Acts.”
The Supreme Court held, "The right or interest to occupy any such flat is a species of property and hence has a stamp of transferability.”