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When it comes to the U.P. Apartment (Promotion of Construction, Ownership and Maintenance) Act 2010 (“the Act”) then the case titled M/s Designarch Infrastructure Pvt. Ltd. & Anr. v. Vice-Chairman, Ghaziabad Development Authority & Ors. is the landmark authority so far. Below is the summary conclusion of the judgment. It can be read the full text here.

What is the nature & effect of the Act?

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.

What is relation of the Act with the Transfer of Property Act ?

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.

Who are owners as per the U.P. Apartment Act ?

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 ofApartment and includes the lessee of the land on which the bulding 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 wihtout 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.

Applicability of the Apartment Act

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.

Chapters of the Apartment Act are independent of each other

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, 20

Role of Deed of Declaration in Apartments

Chapter V Declaration of Building and Deed of Apartment carries within it the content, which fulfils 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.

Ownership of Flat & proportionate common areas

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 the apartment and shall be entitled to such percentage of an 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 the apartment, even though such interest is not expressly mentioned in the conveyance or other instrument. The common areas and facilities under sub-section (4) can not be transferred and will remain undivided with the apartment. These can not 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.

Limited Commin areas and independent areas

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.

Formation & Registration of the Association of Apartment Owners

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 in conformity with the model bye-laws 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 a 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.

Registrar of Societies cannot deny registration of the owners association

The Hon’ble court has clarified that the completion of all infrastructure services and completion certificate from the 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.

Who is the Competent Authority under the UP Apartment Act?

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 situated or the Collector of the district, where no such development authority exists. In the 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.

Role of Competent Authority

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.

Resolution of Disputes raised by the Promoter or the Owners by the competent Authority

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.

Verification of the Contents of the Deed of the Declaration

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.

Model Bye-laws adoption & amendments

The model bye-laws 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 Byelaws to be approved by the owners representing at least 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.

Alteration in Deed of Declaration

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 situated will be necessary and thereafter with the approval of the association of apartment owners by a resolution passed by the apartment owners in which vote of the 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.

The purchase of additional FAR is not permissible to be appropriated by the promoter

The FAR/ FSI 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 an interest by virtue of the provisions of the UP 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.

With the above clarifications the Hon’ble court has directed:

• that the declaration will be submitted by the promoter under sub-section (1) of Section 12 in Form-A appended to the Rule with its Annexures ‘A’ to ‘F’ and Schedule ‘A’, by all the promoters in the State of U.P., who have completed or partly completed constructions of the buildings with more than three allotted or occupied apartments, with the Competent Authority within one month from the date of approval of the plans and where the building has been constructed or is under construction prior to the commencement of the Act and Rules, within 90 days,
• that in respect of all the buildings where 33% of the apartments have been occupied after its sale transfer or delivery of possession, the apartment owners, if they are in conflict with builders then they should get their association of apartment owners registered and
• thereafter raise the questions or disputes, if any, at the first instance in the meeting of the association of the apartment owners, but if the issue not resolved then
• the apartment owners or the promoter may make a complaint to the competent authority, who will first make an attempt to decide the matter with the help of mediation or conciliation process and thereafter pass reasoned orders after hearing the parties.
• Any party aggrieved with the decision may, thereafter, approach the Courts for redressal of their grievance.
  

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