MoU vs registered document of property

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Alok (Querist)
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20 April 2011 Hi,
I have recently resigned as a director from a pvt ltd company. I also have transferred my shares another shareholder. Few years back, all shareholders signed a MoU which indicates that the company is buying some land but registering them in the name of shareholders. I also have company land which is transferred from the shareholder to my name and I paid cash to him for this transfer. Land is registered in my name now, without any mention of company.
In view of MoU, who is the owner of this land ??
What is the legal validity of MoU against a registered property document ??

Please advise.

Thanks in advance

CS ,CMA Shambhu Kr. jha

CS ,CMA Shambhu Kr. jha (Expert)
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20 April 2011 Mr .Alok
your question is not clear . As far as company are concerned all asset & Liability should be in name of company and not shareholder , whatever MOU you all have signned have no importance in the eye of Law . As far as your piece of land are concerned that you purchsed from another shareholder will be legally , belongs to you and any MOU will not restrict you to get that .

Thanks

Alok

Alok (Querist)
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20 April 2011 Thanks Mr. Jha for your comment. Let me clear my point.
1. Asset (land) was registered in the name of directors (which are also shareholders) to avoid some stamp duty charges.
2. Initially, land was purchased and registered in the Director 1.
3. Director 1 transferred this land to me
4. I resigned and transerred my shares to Director 1.

Now, can company or Director 1 claim this land from me. Who is the owner of this land ??

Thanks in advance.

Alok

Alok (Querist)
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20 April 2011 I am the owner in the registy of property and there is no mention of the company/ MoU.
Could you please clarify on the ownership title in eyes of MoU.

Alok

Alok (Querist)
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18 August 2011 Apart from above information, following point about MoU is also mentioned in the Balance Sheet of 07-08, 08-09, 09-10:

"The company has bought land in its own name as well as in the name of directors/ shareholders. The company has signed a Memorandum of Understanding date 5th July 2007 with its Directors and Shareholders, for company land purchased in the name of individual Directors/ Shareholders, declaring that the land/ property bought in the name of Directors and Shareholders shall be the sole property of the company"

Does this restrict my ownership on land. Please clarify.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2024 In your situation, the key issue revolves around the ownership of the land given the Memorandum of Understanding (MoU) and the registered property documents. Here's a detailed analysis:

### Understanding the MoU vs. Registered Documents

1. **MoU vs. Registered Document:**
- **MoU:** A Memorandum of Understanding is a document that outlines the terms and conditions agreed upon by parties involved. However, an MoU is generally not legally binding and does not replace formal legal documents such as property registrations.
- **Registered Document:** The registered property document is the formal, legally binding record that establishes ownership of the property. Registration with the relevant authority (typically the local sub-registrar or land registry) provides legal validity and precedence over other informal documents like MoUs.

2. **Legal Validity of the MoU:**
- While the MoU states that land purchased in the name of directors or shareholders is to be considered company property, this declaration is not legally binding in terms of ownership unless it is incorporated into the formal property registration records.
- Since the land is registered in your name, the formal legal ownership is vested with you. The MoU, while indicating an intention or agreement, does not override the registered ownership.

### Ownership of the Land

1. **Registered Ownership:**
- Since the land is registered in your name, you are the legal owner of the property as per the registered documents. The MoU does not change the legal ownership established by the registration.

2. **Claims by the Company or Director 1:**
- If the company or Director 1 intends to claim the land, they would need to prove that the MoU or any other agreement legally entitles them to the property. Given that the MoU was intended to document the intention but not formally enforceable as a transfer of ownership, it might not hold up against the registered documents.

3. **Implications of MoU on Ownership:**
- The MoU might have been a formal declaration of intent or an agreement among parties, but it is not a substitute for formal legal documentation regarding property ownership. Since your name is on the registered property document, you hold the title.

### Additional Considerations

1. **Balance Sheet Mention:**
- The fact that the MoU was mentioned in the balance sheets indicates that the company recognized the arrangement. However, this acknowledgment does not legally alter the property ownership.

2. **Legal Recourse:**
- If there is a dispute, it would typically involve reviewing the MoU, company records, and registered documents. Legal advice from a property lawyer may be necessary to resolve any potential disputes.

3. **Transfer of Shares and Resignation:**
- Your resignation and transfer of shares to Director 1 does not affect the property ownership if the transfer was properly documented and executed.

### Conclusion

Based on the information provided:
- **You are the legal owner of the land** as per the registered property documents.
- The MoU serves as an internal company document outlining intentions but does not supersede the registered ownership.
- **The company or Director 1** would need to provide formal legal evidence or pursue legal action to claim the property if they believe there is a valid claim.

For a definitive resolution, consult with a property lawyer who can examine all documents, including the MoU and registered property records, to provide tailored legal advice.

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