UP Apartment Act_a landmark judgement

M/s. Designarch Infrastructure Pvt. Ltd. and Another vs. Vice Chairman, Ghaziabad Development Authority and Others (14.11.2013 - ALLHC) : MANU/UP/1765/2013

Issues for Adjudication

42. Following issues have been raised by the petitioners for consideration of the Court:

        I.            Whether the original plan, which was shown to purchasers, could be amended without obtaining previous consent of intending purchasers as stated in proviso to Section 4(4) after 19.3.2010/July 2010?

      II.            Whether Purchasable FAR of 33% allows the builder to construct new stones in existing building to encroach common areas and facilities?

    III.            Whether the policy of Purchasable FAR is contrary to the Statute, illegal and liable to be struck down?

    IV.            Whether the builder is entitled to run community center as a private club or claim any part of common areas and facilities as private property? (In some cases the land is freehold)

      V.            Whether Section 14(2) gives any right to the builder to resist/disallow formation of a RWA by the apartment owners in Violation of Article 19(1)(c) of the Constitution of India?

    VI.            Whether intending purchaser under Section 4(4) would also include residents living in the same society who object to amendments in original plan after 19.3.2010/July 2010 with the concurrent reading of Section 41(3) of U.P. Urban Planning and Development 1973?

  VII.            Whether the builder can resist (deemed) handing over of common areas and facilities after formation of RWA or after obtaining completion certificate and how does Competent Authority enforce deemed handed over if the builder refuses to honor the law?

VIII.            Whether apartment owner would include spouses/major children/family members of apartment owners so as to enable them to become member of RWA or shall it be limited to blood relatives on the basis of SPA or no one can be passed on the power?

    IX.            Whether the Deputy Registrar can resist recognition to RWA on the ground that byelaws framed under the Rules can't be implemented without obtaining clarification from Registrar?

      X.            Whether declaration as provided under Rules in a mandatory obligation on part of all builder of buildings having more than 4 apartments constructed or under construction in the State of U.P. to be provided to the Development Authority and what consequences would follow for non-compliance?

43. In addition the following issues have also been raised for adjudication in these writ petitions:

Writ Petition No. 33826 of 2012, Designarch Infrastructure Pvt. Ltd. and another v. Vice Chairman, GDA and others

(1)    Whether the promoter can resist handing over of society to duly constituted RWA on the pretext that some members are not owners.

(2)    Whether the promoter can challenge orders passed by GDA to hand over complex to RWA alongwith maintenance deposit of 9.5 crores.

Writ Petition No. 46099 of 2012, Abhinav Jain v. State of U.P. and others

(1)    Whether additional constructions have been made without obtaining consent under the Act by amending the original map which was shown to the intending purchaser.

(2)    Whether the promoter has caused encroachment on common undivided open park area by constructing new buildings.

(3)    Whether purchasable FAR of 33% can be allotted to builder after allotment of flats and start of construction approving change in original plan.

64. To sum up the conclusions drawn by us are as follows:

(1)    The U.P. Apartment Act, 2010 and the U.P. Apartment Rules, 2011 provides for a complete code for regulating the rights, duties and liabilities and for resolving the issues and disputes between the promoters and the apartment owners. The Act has overriding effect under Section 31(1) over all other laws on the subject notwithstanding anything inconsistent therewith contained in any other law for the time being enforced.

(2)    The provisions of the Transfer of Property Act, 1882, in view of Section 29 of the U.P. Apartment Ownership Act, 2010, shall in so far as they are not inconsistent with the provisions of the Act apply to the transfer of any apartment together with its undivided interest in the common areas and facilities appurtenant thereto made by the owner of such apartment, where such transfer is made by sale, lease, mortgage, exchange, gift or otherwise as they are applied to the transfer of any immovable property.

(3)    The apartment owner under Section 3(d) will not only the person or persons owning an apartment or the promoter or his nominee in case of unsold apartments with an undivided interest in the common areas and facilities appurtenant to such apartment in the percentage specified in the Deed of Apartment and includes the lessee of the land on which the building containing such apartment has been constructed, where the lease of such land is for a period of thirty years or more; it includes the spouse and children of the apartment owner and a lawful tenant of the allottee/owner of the allotment, which will also include officer or employee of the company/firm or association, which owns an apartment under a valid allotment letter and its tenant. It will also include a person holding valid power of attorney of the allottee/owner of the apartment, where it is owned individually, jointly or in the case of a company/firm/society and occupied without any right of occupation either as family member, tenant, employee or person holding power of attorney will not be included in the definition of apartment owner.

(4)    The U.P. Apartment Act, 2010, which has come into force w.e.f. 19.3.2010 is applicable to all the buildings, which have three or more than three apartments intended for any type of independent use including enclosed spaces located on one or more floors to be used for residential or official purposes or for the purpose of practising any profession or for carrying on any occupation, trade or business, excluding shopping malls and multiplexes. The word 'apartment' includes any garage or room whether or not adjacent to the building in which such apartment is located, if it has independent access to public street, road or to a common area leading to such street, road, used for parking cars or for residence of any domestic aid. The garage or such rooms, however, do not have any independent status as apartment, to carry with it any rights of common areas and facilities.

(5)    Each of the chapters namely Chapter-II Duties and Liabilities of Promoters; Chapter III Right and Obligations of Apartment Owners; Chapter IV Ownership, Heritability and Transferability of Apartment; Chapter V Declaration of Building and Deed of Apartment; Chapter VI Association of Apartment Owners and Bye-laws for the Registration of the Affairs of such Association; Chapter VII Common Profits, Common Expenses and Other Matters, are independent and that the rights and liabilities under these chapters can be enforced independently unless these are essentially depending upon rights and liabilities in other chapters subject to Chapter VIII 'Miscellaneous' with the ultimate control of the State Government of which directions have to be carried out by the competent authority as defined in Rule 2(c) of the Rules, 2011.

(6)    Chapter V Declaration of Building and Deed of Apartment, carries within it the content, which fulfills the primary objective of the Act. The declaration under Section 12 falling in the said chapter, with which the complete information as provided in Form-A under Rule 3 of the Rules of 2011 with Annexure-A to F and Schedule A, must be enclosed as mandated by Section 13 with the deed of transfer, is mandatory for handing over possession of any apartment constructed after the commencement of the Act and also to get such transfer deed registered under the provisions of the Registration Act, 1908.

(7)    Under Section 5(1) of the U.P. Apartment Act, 2010 every person to whom any apartment is sold or transferred by the promoter shall subject to other provisions of the Act be entitled to exclusive ownership and possession of the apartment so sold or otherwise transferred. He is under sub-section (2) entitled to the exclusive ownership and possession of apartment and shall be entitled to such percentage of undivided interest in the common areas and facilities as may be specified in the deed of apartment and such percentage shall be computed by taking, as a basis, the area of the apartment in relation to the aggregate area of all apartments of the building. Such percentage of undivided interest under sub-section (3)(a) in the common areas and facilities shall have a permanent character, and shall not be altered without the written consent of all the apartment owners and approval of the competent authority, and which shall not be separated from the apartment to which it pertains. It shall be deemed to be conveyed or encumbered with apartment, even though such interest is not expressly mentioned in the conveyance or other instrument. The common areas and facilities under sub-section (4) cannot be transferred and will remain undivided with the apartment. These cannot be partitioned or subject to any division and will be enjoyed by the apartment owner under sub-section (5), without hindrance or encroaching upon the lawful rights of the other apartment owners.

(8)    The 'limited common areas and facilities', which are specified in writing by the promoter before the allotment, sale or other transfer of any apartment as reserved for use of certain apartment or apartments to the exclusion of the other apartments as defined in Section 3(s) and the 'independent areas', which have been declared but not included as common areas for joint use of apartments, and which may be sold by the promoter without the interference of other apartment owners under Section 3(p), must be clearly defined and delineated in the declaration under Section 12, failing which the promoter will not be entitled to claim these common areas and facilities to be limited or independent. Any dispute with regard to common areas and facilities, limited common areas and facilities and independent areas, and for its provisions in the declaration is subject to decision by the competent authority as defined under Rule 2(c) of the Rules of 2011. The failure to submit the declaration and its enclosure with the deed of transfer and its non-registration will disentitle the promoter from claiming common areas and facilities in the property in which the apartments are built to be limited common areas and facilities or independent areas.

(9)    The association of apartment owners is to be registered by the Registrar, Deputy Registrar or Sub-Registrar under the Societies Registration Act as amended in the State of U.P. If bye-laws are inconformity with the model byelaws as notified on 16.11.2011, the Registrar/Deputy Registrar/Sub-Registrar cannot refuse to register association on the ground that it contains less than minimum number of members of the society under the Societies Registration Act or that it does not comply with any of the provisions of the Societies Registration Act as amended in the State of U.P. The registration of the association is in compliance with the provisions of the U.P. Apartment Act, 2010, U.P. Apartment Rules, 2011 and model bye-laws. It shall be the joint responsibility of the promoter and apartment owners to obtain the registration. The Registrar/Deputy Registrar/Sub Registrar shall not refuse to register the association, if the promoter does not join even after one month's notice given by the apartment owners or 33% of the apartment owners, whichever is more. It is clarified that the completion of all infrastructure services and completion certificate from local authority will not be a ground to deny the registration, as the issuance of completion certificate depends on the steps to be taken by the promoter. The delay caused by him in obtaining such certificate will defeat the object of formation of the society and the enforcement of the rights and liabilities of the promoter and the apartment owners. In such case the society will be registered provisionally under the certificate to be given by the competent authority as defined in Rule 2(c) of the Act, who will give a time period to the promoter to provide all infrastructure services and to obtain completion certificate, failing which the promoter will invite the punishment for the offence as prescribed under Section 25 of the Act including the punishment of imprisonment under Section 25(1) of the Act.

(10)The 'competent authority' within the meaning of Rule 2(c) as defined will include Vice Chairman of the Development Authority in whose notified development area the building is situate or the Collector of the district, where no such development authority exists. In case of the Industrial Development Authority the competent authority shall be the Chief Executive Officer of the Industrial Development Authority. For the purposes of discharging functions and duties and resolving the disputes the competent authority will be entitled to delegate its powers to an officer not below the rank of Joint Secretary including Legal Advisor of the authority and any Sub Divisional Magistrate of the district in case of a district. The competent authority shall set up mediation and conciliation centres in each authority, or the district, which will resolve to mediate the disputes at the first instance between the disputing parties.

(11)Any dispute raised before the competent authority shall be decided by the competent authority or delegatee as provided above or his delegatee as provided above, to be decided by the officer notified by the State Government under Section 27(2) and (3) of the Act, before it is brought before the Court of law.

(12)The competent authority will also be entitled to verify the contents of the declaration under Section 12 of the U.P. Apartment Act, 2010 and to decide any question, which may arise out of such declaration.

(13)The model byelaws as notified on 16.11.2011 under sub-section (6) of Section 14 of the U.P. Apartment Act, 2010, if not approved and appended to the application for registration, made prior to the enforcement of the Act shall be adopted in the first meeting of the association of apartment owners and will be registered by the Registrar. Any amendment in the model bye-laws will be made in accordance with the Bye Law 58 of the Model Bye-laws to be approved by the owners representing atleast 2/3rd of the total number of units in the building with the prior approval of the competent authority and will thereafter be registered by the Registrar of Societies without insisting upon complying with the provisions of any other Act including Societies Registration Act as amended in the State of U.P. No alteration in the declaration given by the promoter under Section 12 shall be permitted except in accordance with the Act and for which the approval of the development authority or regulating authority in which such property is situate will be necessary and thereafter with the approval of the association of apartment owners by resolution passed by the apartment owners in which vote of promoter shall not be counted. The development authority or regulating authority may in such case demand a NOC from the apartment owners before allowing any alteration in the building plans as a condition for granting approval.

(14)The FAR or any additional FAR is a property, appended to rights in the property on which the building is constructed, and is thus a property in which the apartment owners have interest by virtue of the provisions of the U.P. Apartment Act, 2010. The purchase of additional FAR is not permissible to be appropriate by the promoter without any common benefits to the apartment owners. The consent of the apartment owners obtained by resolution in the meeting of the apartment owners by majority will be necessary for purchasing additional FAR. Its utilization will also be subject to the consent of the apartment owners.

M/s. Designarch Infrastructure Pvt. Ltd. and Another vs. Vice Chairman, Ghaziabad Development Authority and Others (14.11.2013 - ALLHC) : MANU/UP/1765/2013