Promise, Performance and Public Policy
Buyers should take utmost care because post-contract agonising is futile
 
In a perfect world, two plus two always equals four. Yet, in everyday lives, two plus two can be three plus one, or six minus two, or any of a myriad other combinations. Some judicial decisions, besides giving finality to a dispute, often, focus attention on little-known, or variedly understood, facts. This exercise helps in demystifying and, indeed, defogging of the law. It also adds another building block to the edifice of interpretation.
 
Recently, the Supreme Court ruled in an interesting case that could affect any of us. It decided in the matter of the Zoroastrian Cooperative Housing Society Ltd V/s District Registrar of Cooperative Societies (Urban). This case involved cooperative housing societies (CHS) and their members’ rights. The ever-shifting limits of ‘public policy’ also came under scrutiny. Like the never-ending debate on what constitutes ‘offensive’ material, ‘public policy’ was again under the scanner.
 
The concerned member had used the armour of ‘public interest’ to protect his contention. Wisely, the Court decided to be “… cautious in trying to ride the unruly horse of public policy.” The CHS was formed for ‘Parsis only’ and the managing committee had apprehensions that one member may alienate his share to a non-Parsi. The CHS had already litigated, to prevent such an occurrence, but had lost and appealed to the Supreme Court. Its contention was that the member had voluntarily become a member of the CHS and, therefore, he was duty-bound to follow the rules governing it.
 
Until now, the member had successfully invoked the secular provisions of the Constitution to argue his case—the ‘public policy’ gambit. He maintained that a restriction based on religious affiliation was violative of his fundamental right to do whatever he wanted to do with his property. If he could not do that, his ownership and enjoyment of the property was curtailed and his rights infringed upon.
The Supreme Court differed. It held that if a person enters into a contract, knowingly, willingly and of free choice, he must adhere to the rules of the CHS he has sought to join and which has accepted him. The Court “considered it a fallacy on the part of the member to challenge his voluntary surrender” at a later date. In other words, the member could not have the cake and eat it too.
 
The lesson here is that it becomes imperative for a prospective buyer to proceed with utmost care because post-contract agonising is futile. Study of specific bye-laws is a must. When one deals with property worth a few lakh rupees, professional advice, clear thinking and lack of haste will prove immensely valuable. To buy in haste and repent at leisure is not an option.
 
The Court has specifically held that “it is open to that community to preserve its culture and way of life” and, therefore, the issue here was neither one of Parsis nor of Bohris nor of Christians. Neither was it one of orthodoxy nor one of reformism. In the context of the judgement, the issue was simply one of the ‘law of the land’. One that would apply, notwithstanding the nature of the legal entity, be it a cooperative society or a limited company. It was purely one of a contract that had to be performed.
 
To sum up, one must understand that similar agreements and covenants imposing restrictions will stand the test. Many communities have taken advantage of concessional rates for land, to build houses and colonies for their members. The covenants between the authorities and the community members, especially the minority communities like the Parsis, Bohris and Christians, have been challenged periodically. With this judgement from the apex Court, such covenants will hold and, therefore, purchasers need to walk in with their eyes wide open.
 
(Bapoo Malcolm is a practising lawyer in Mumbai. Please email your comments to [email protected])
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