A case for protection of ownership rights

A case for protection of ownership rights
In 2002, N LLC (the plaintiff) took legal action against the Moscow Registration Office to invalidate the act of state registration of title to non-residential premises performed by the Moscow Committee for Registration of Rights to Immovable Property and Transactions with It to the subject of the Russian Federation - the city of Moscow.
The plaintiff asserted that it had acquired the title to the disputed property on the date of transfer, namely on November 19, 1990, upon signing a sales contract with the Department of Buildings of the USSR State Committee for Education in accordance with the Fundamentals of Legislation of the USSR and Union Republics on Lease effective at that time.
The lawyers for the Bureau representing the interests of the third party Y Ltd. proved that under the then applicable law the Department of Buildings of the USSR State Committee for Education could not independently enter into an agreement of lease of immovable property with the right to buy out. The lease agreement with the right to buy out and the sale agreement could not entail the emergence of ownership rights of the Small Enterprise. In addition, the disputed building had been owned and used by Restaurant Y since the late 1950s.
The lawyers for the Bureau have accumulated a large number of archive documents and departmental acts for the period from 1949 until 1991 (before the building was transferred to the balance of the Moscow State Museum of Fine Arts). On the basis of the documents obtained from the State Archive of the Russian Federation, the joint archives of the DPR, the CBCTI archives, and the archives of the State Education Committee, the Firm's attorneys proved that the plaintiff could have been and was founded as a state union enterprise.
The lawyers for the Bureau proved the following. The state property in dispute could not have been transferred to the Plaintiff because the state enterprise could only own the property by right of economic management, therefore all transactions are invalid as contrary to legal requirements.
From the Provisional Statute of the Office, provided by the lawyers of the Bureau, it follows that the Office was created to maintain and repair the buildings on its balance sheet, as well as to rent out the premises. All the property was transferred to the Office on the right of Operational Management, hence it could not be alienated by it, in particular transferred to the ownership of a legal entity. Thus, the lawyers of the Bureau was able to prove that the Office of the State Education buildings could not enter into contracts of lease with the right to buy out.
Disputed building was transferred to the balance of the plaintiff for capital repairs in accordance with the direction of the First Deputy Chairman of the USSR State Education from 15.11.1990, which could not be the basis for transferring the disputed building into the ownership of the plaintiff, the more so that the lease agreement was signed on 12.11.1990.
Thus, in concluding a sale and purchase agreement on the disputed building the Directorate of Buildings of the USSR State Education Agency exceeded the authority conferred by the Decree and violated the provisions of the Statute, therefore, the contract of sale and lease agreement were null and void transactions and did not entail the emergence of ownership rights.
As a result, the claim was denied by a decision of the Moscow City Arbitration Court.

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