Flat owner can sell or mortgage his flat to seek borrowings without the permission of society

The Supreme Court held as under:

1) It was too late to contend that flat owners couldn’t sell, let out, hypothecate or mortgage their flats for availing of loans without permission of the builder, Society or the Company. So far as a builder was concerned, the flat owner would pay the price of the flat;

2) So far as a society or company was concerned, in which the flat owner was a member, he was bound by the laws or Articles of Association of the Company, but his right over the flat was exclusive. That right was always transferable and heritable. Of course, he would have charge over the flat if any amount was due to them of the flat;

3) Neither the Companies Act nor any other Statute has any provision prohibiting the transfer of interest to third parties or to avail of loan for the flat owners' benefit. A legal bar on the transferability of such a interest would create chaos and confusion. The right or interest to occupy any such flat was in respect of property and, hence, had a stamp of transferability - Hill Properties Ltd. v. Union Bank of India [2013] 37 taxmann.com 150 (SC)