Property encroachment by the neighbour – What are the legal remedies available?

Property encroachment by the neighbor – the legal remedies

A person buys a property either for investment or for own use. In both cases, one wants to reap the benefits which flow to the owner of the property. At the same time, it is vital that the owner remains vigilant and protect the property from illegal/unauthorized intrusions. In case the land/property is left unattended, especially as in case of NRIs, the chances are high that the unlawful occupants will take advantage of the same and encroach upon the property. 

Property encroachment occurs when a person without any authority or consent: 

  • occupies the property or
  • constructs some structure over the property of another person (owner)

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An addition made to one’s property which crosses the boundary and falls upon the property of another person in violation of his rights is property encroachment. For instance, a neighbour constructs a balcony /shed /garage which extends to the adjacent property.

Property encroachment can be intentional or unintentional. It is unintentional when boundaries are ambiguous. An action lies against the encroacher. 

There is a difference between trespass and encroachment. In trespass, it is the unauthorized interference of a person in the property. It is an unlawful entry into the property of another person. Construction of a structure etc. is not essential. On the other hand, property encroachment is not just an illegal entry but also changing the structure/status of the property.

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The rights and remedies available to the owner against encroacher are the same as in trespass. 

  • Trespass is both a civil and a criminal wrong. Under the Indian Penal Code, trespass with criminal intent is an offence. The law permits the owner to use force against the encroacher if justified by the circumstances. He can cause grievous hurt or kill the intruder. 
  • The owner has the right to protect his property by stopping the encroacher from invading his land. 
  • The owner can lodge FIR for criminal trespass.
  • The owner can file a suit for injunction. It is an order of the Court vide which the wrongdoer is asked to perform or restrained from performing a particular act. The directive can be temporary or permanent.  
  • The owner may also seek damages. It is an amount paid as compensation to the owner for loss suffered by him. Damages for mental harm are also permissible. 

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There are many factors which determine the relief to be granted. The court orders removal of encroachment if the injury caused to the owner is irreparable. Sometimes the encroachment is innocent. The hardship caused to the encroacher by removing the encroachment is much more than the loss to the owner. Then the Court may not order the removal of encroachment. 

The owner must possess title deeds and survey maps of the area. It will help to establish his claim against the encroacher.   

Prevention is better than cure. Therefore, it is advised to 

  • Regularly monitor the property
  • Be watchful towards the acts of the neighbours. 
  • Any settlement for allowing the use of one’s area by the neighbour should preferably be through a written agreement.

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NCLT and Must Know Facts

National Company Law Tribunal - Corporate Law

National Company Law Tribunal was formed on June 1, 2016. It is a quasi-judicial body for adjudicating disputes of civil nature arising under the Companies Act.  

Before the formation of NCLT, there were various authorities (e.g. Company law Board, Board of Industrial and Financial Reconstruction (BIFR)) dealing with company matters. The establishment of NCLT has consolidated the jurisdiction of such bodies. 

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Wide powers and Issues which NCLT deals with:

Establishment of NCLT has brought redressal of different kinds of corporate disputes under one umbrella. It deals in the following areas: 

  • All proceedings like arbitration, compromise, reconstruction and winding up under the Companies Act, are disposed of by the Tribunal.
  • It undertakes the proceedings under the Insolvency and Bankruptcy Code, 2016. It initiates the IRP – Insolvency Resolution Process when a company defaults to pay the creditors. Under this Code, a homebuyer can file a complaint before NCLT if the developer does not provide possession of the house as promised.
  • It handles the cases related to mismanagement and oppression of a company. The act complained of can be a past or present act. Ex-member of a company can also file a case. 
  • It also handles the cases of companies committing frauds and improprieties with their depositors and shareholders by drying out their investment. The tribunal awards compensation to these investors/depositors. Class action is permissible for giving relief to the depositors. 
  • If a company has been registered wrongfully or fraudulently, it has the power to investigate into the same and deregister the company
  • It can investigate into the affairs of the company if they are prejudicial to the public interest or to the interest of the company itself.  
  • Can change the financial year of the Companies.
  • Can convene General and extraordinary meetings of the company.
  • The Tribunal can declare the liability of the members to be unlimited. For conversion of a company from private to public limited, consent and confirmation of the Tribunal is required.
  • If the company refuses to register the transfer of a share, complaint lies to the Tribunal.
  • It has the authority to dispose of the cases pending before the earlier authorities. 

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Working of National Company Law Appellate Tribunal (NCLT)

It works like a regular court. It passes orders resolving disputes, imposes penalty and orders compensation. The orders of NCLT are appealable before National Company Law Appellate Tribunal. The appeal is filed within 45 days from the date of order. Further appeal lies to the Supreme Court.

Accelerated Dispute Resolution

There were multiple authorities for resolving the disputes related to a company. Resultantly, there used to be delayed and conflicting decisions. The delay hampers the growth of business and discourages investors. The significant benefits of NCLT are accelerated dispute resolution process and uniformity of decision.

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Transfer by Gift deed is not taxable

Transfer by Gift deed is not taxable

Gifts transactions are not taxable in the hands of the donor. For a donee, the gift deed transfer is taxable, but there are exceptions. 

Gifts are prevalent among family members or close relatives. It is one way of expressing love and affection. People also make gifts to save taxes as some of the Gift transactions are fully exempted from taxation.

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A person may gift any of the following:

A person may be an individual, HUF or an artificial juridical person like a company/firm. 

In India, we had a Gift Tax Act under which tax was levied on the gift. The donor had to pay the tax. But the said legislation was abolished. Now a provision has been made in the Indian Income Tax Act 1961, for taxing the gift transactions. The recipient of the gift has to pay tax. 

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The gift transaction is tax-free under certain circumstances: 

Gift of Cash:

If the aggregate value of the cash received in gift exceeds Rs 50,000 in a financial year, the recipient has to pay the tax on the amount received. The said amount is counted as his income under the head Income from other sources.

Gift of property:

  • The gift deed of immovable property has to be registered. The stamp duty is paid at the time of registration based on the market value of the property. The stamp duty payable differs from state to state.
  • If the property is received as a gift without consideration, the recipient pays the tax if the stamp duty value of the property exceeds Rs 50,000/-.
  • If the property is received without adequate consideration, the recipient pays the tax if the stamp duty value exceeds consideration amount by Rs 50,000/-. 
  • In the case of moveable property like shares, jewellery, etc., the recipient pays the tax if the fair market value of the property exceeds Rs 50,000/-.

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Some gifts are tax-free:

  • Any amount of gift if received from the relatives as defined in the Income Tax Act. A relative is specified in the Act and can be the spouse, sibling, sibling of the spouse, sibling of either parent, etc.
  • For NRIs and PIOs, the rules of FEMA will also apply. The definition of relatives is narrower under FEMA. For NRIs as a recipient, rules of remittance have to be kept in mind. The resident Indian who wants to gift an amount to an NRI, the said amount cannot exceed the permissible limits of remittance. 
  • Gift received on the occasion of marriage.
  • Gift received under Will or inheritance
  • Gift on the contemplation of death of the donor
  • Gifts received from any fund, foundation, medical institution, educational institution or university, or any charitable or religious trust. Gifts received from any person by the said institutions are also exempted. Such foundation, institution etc. must be registered under the Income Tax Act.

A person can use provisions relating to gifts for tax planning. These are certainly not meant for evading taxes.

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