Claim of Adverse Possession by Co-operative Societies

By Bankimchandra P. Khona, Solicitors

1) In majority of the ownership flats buildings conveyance are not executed by the Builder or Developer or the Owner in favour of the Co-operative Society. Parties do not now desire to have conveyance as heavy stamp duty are payable in most of the cases which is financially not viable for the members of the Co-op.Society.

2) There has been some suggestions or contention by Co-op. Societies that because they are in exclusive use, occupation and possession of the building and property for last more than 12 years without any interruption or obstacles by the Owner or builder, they have become owners by adverse possession. Is this belief or contention correct?

3) For claiming title by way of adverse possession, it is necessary to have a decree of a Competent Court against the real owner of the property. Without such decree by the Competent Court, Society cannot be considered as owner of the Property. Next question arises is Society in the aforesaid facts of having in exclusive use, occupation and possession of the said property for more than 12 years can claim ownership by adverse possession? For getting title by the adverse possession it is necessary that such use, occupation and possession must be against the wishes of the owner. If the possession is given by the Owner or with consent of the Owner one cannot claim adverse possession. In cases of Co-operative Societies, the members have been given possession of their respective flats pursuant to the Agreement to purchase flats between the Owner and the Flat Purchaser or Developer and the Flat Purchaser wherein Developer has entered into an Agreement to purchase property from the Owner. Therefore, the possession given to the Flat Purchaser through whom the society claims is with consent and permission and in most of the cases by owner themselves and, therefore, it will not be possible for Society to claim adverse possession.

4) This idea has been suggested by some persons in cases where the conveyances are not being executed by the Owners and/or the builders. They believe that no stamp duty will be payable if they obtain such a decree from the competent court. There are some persons who are advocating collusive suits between the Society and the Owner and Developer and obtain Consent Decree Decree based on adverse possession or Ex-parte Decree. The question will arise whether such a Decree will attract stamp duty or not.

5) To answer this one has to look into Section 2 (g) of the Bombay Stamp Act which defines conveyance…..
” 2(g) ” Conveyance ” includes –
(i) a conveyance on sale,
(ii) every instrument,
(iii) every decree or final order of any Civil Court,
(iv) every order made by the High Court under section 394 of the Companies Act, 1956 ( in respect of amalgamation or reconstruction of Companies; and every order made by the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949 in respect of amalgamation or reconstruction of Banking Companies.)

by which property, whether movable or immovable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I;

Explanation :- An instrument whereby a co-owner of any property transfers his interest to another co-owner of the property and which is not an instrument of partition, shall, for the purpose of this clause, be deemed to be an instrument by which property is transferred inter vivos;)

6) Section 2 (g) (iii) provides that any Decree or final Order of any Civil court by which property whether movable or immovable or any Estate or interest in any property is transferred to, or vested in other person, inter vivos and which is not otherwise specifically provided for by Schedule – I. Such decree whereby Plaintiffs become owner by adverse possession will be a decree of a Civil Court by which immovable property will vest in a society. As per the said definition of conveyance for the purpose of stamp duty, the said Decree will be a conveyance and such decree will attract stamp duty as per the Article 25 of Schedule – I of Bombay Stamp Act which is same as stamp duty payable, if the conveyance of the property was to be executed by owner in favour of Co-operative Society.