This article is specific to laws in Uttar Pradesh and also has a video presentation | Download eManual on Apartment

Introduction

As per the information available on the Website of U.P. RERA there are around 2800 registered Group Housing projects.  Similarly, by an estimation, there would be around equal or more number of already existing Group Housing apartments in the State of Uttar Pradesh.  This means that there would be around and over 5000 registered Apartment Owners Association (hereinafter as “AOA”) in the State of Uttar Pradesh.  Considering such a large number of Apartment Owners Associations, the Uttar Pradesh Government has enacted and enforced Model Bye-laws for such Associations thereby providing uniform Bye-laws.  The Model Bye-laws provide for the method and procedure to be followed for conducting elections of the Board of Management and Office Bearers viz., President, Vice President, Secretary and Treasurer of an AOA.  There often remains ambiguity amongst the members of AOA with respect to the process and procedure of conduct of elections. 

By means of this article, the author is trying to answer certain frequently asked questions with respect to the elections of Board of Management of an Apartment Owners Association. 

Q. Who can be members of an Apartment Owners Association?

As per Bye-law 4, all persons who have purchased apartments in the concerned apartment condominium / Group Housing and executed the Deed of Apartment shall automatically become members of the Association of Apartment Owners of such Group Housing on payment of entrance fee of Rs.1000/-.  Further on transfer of an apartment the new purchaser automatically becomes a member of Apartment Owners Association only after payment of fresh entrance fee of Rs.1000/-.

There are many Group Housing projects in Uttar Pradesh where apartments have been handed over to the buyers but without execution of the Deed of Apartment (Sale Deed or Sub-lease Deed) because of, amongst others, non-grant of Completion Certificate to the project.  Under such circumstances, as per judgement of the Hon’ble Allahabad High Court in Design Arch case, the owners having possession of the apartments shall be treated as apartment owner and shall become members of the AOA.  As per the said judgment, the spouse, daughter, son and authorized representative of a company owning an apartment are also apartment owners.

Q. Are spouse, co-owner, daughter/son and authorized representative are also owners and member of AOA then who shall have the right to vote?

Right to vote shall always rest with one of the co-owners amongst in whose name the Conveyance Deed (Sale Deed or Sub-lease Deed) is executed.  Since there may be co-owners of an apartment and such situations are likely to arise.  As such, the Model Bye-laws provide for Bye-law 5.  The Bye-law 5 provide for the issuance of Share Certificate to the apartment where the apartment has been purchased jointly by two or more persons.  The person whose name stands first in the Share Certificate alone will have the right to vote and as such to stand in the elections. 

Soon after registration of Apartment Owners Association, it is the duty of the Board of Management to start membership drive and offer membership to each and every apartment owner by issuing a form for membership seeking therein informations like –

1. Date of Allotment
2. Date of Possession
3. Flat Number
4. Tower Number–
5. Name of first co-owner
6. Name of second co-owner
7. Name of third co-owner
8. Super area of apartment as per Allotment Letter / Conveyance Deed
9. Voting percentage as per Deed of Declaration
10. Percentage of undivided share in the land as per Deed of Declaration
11. Approved use of apartment (residential or commercial)
12. Value of apartment
13. Amongst co-owners whose name should be mentioned at first place as per Bye-law 5 in Share Certificate for voting purpose.
14. Signature of co-owners

On receiving such information as noted above (it is only indicative), the AOA should issue Share Certificate as soon as possible and in all circumstances before the next Annual General Body meeting. The Board should put the name of co-owner at first place in share-certificate as demanded by all the co-owners through the membership form. It is not necessary that the names of co-owners be put in the share-certificate in the seriatim as mentioned in the deed of the apartment.

It is obligatory on the part of Board of Management to issue Share Certificate and the copy of Bye-laws to each and every apartment owner taking the membership of the AOA by depositing the membership fee of Rs.1000/-.

Q: Who would be a voter in the first-ever election of an apartment owner association held for the formation of the AOA?

Ans: When steps are taken for the formation of an apartment owners association it is a voluntarily exercise and there is no office or office bearers, to do detailed documentation i.e. preparation of records etc. for neither there is any authority with any person nor there is any authenticity to check the records. As such, it is advisable and practical that in case of co-ownership of apartments the person having the first name in the conveyance deed (Sale/Lease Deed) or the allotment letter alongwith possession letter be given preference to vote and nominate in first election of the AOA. Once the association is registered and duly elected office bearers have taken charge then they may start the process of issuing share certificate as per bye-law 5 of the Model Bye-Laws under the UP Apartment Act, 2010 and then give right to any of the co-owner of the apartment to participate as voter in AOA elections. For issuance of the share certificate the definition of the apartment owner as given in section 3(d) of the 2010 Act r/w. judgment of Hon’ble Allahabad High Court in Designarch case has to be considered. In the share certificate name of the co-owner placed at the second number or thereafter in the conveyance deed can be placed at serial no.1 for the purpose of voting.

Q: Under what circumstances can the second co-owner participate in the first-ever election of an apartment owner association being held for the formation thereof?

Ans: If, the promoter and the residents are jointly forming the apartment owner association and there is a certified list of all the allottees of the apartment by the builder then in that scenario authority letter issued by the first owner may be treated as valid for voting rights provided that allowing second co-owner is allowed by the General Body Meeting called for the formation of the Association.

Q. What is the disqualification for an apartment owner from participating in annual voting?

As per Bye-law 7, there is only one ground for disqualification for an apartment owner disentitling him to vote in the election of members of the Board or to stand for election to such office, which is arrears of any sum due from him in respect of his contribution for common expenses for more than 60 days on the last day of the preceding year in which the election to Board would take place. Such dues should only be pending against the association.Any dues pending towards the Promoters will not disentitle an owner from voting or contesting.

Whether an apartment owner is required to vote only for electing the Office Bearers of the Board of Management or even for the agendas put forth in the General Body meeting?

As per Model Bye-laws the apartment owners are required only to vote for the election of members of the Board of Management and there is no provision which specifically calls for voting for passing the resolutions for or against in the agenda put forth in the General Body meeting.  However, if in the GBM it is requested by the present members of the Association that certain agenda is very crucial calling for participation of all the apartment owners then such agendas may be put to vote by all apartment owners through ballet paper on a future date.  Such contentious agenda may be like amending the Bye-laws, raising some new permanent structure within the common areas, etc. as may be decided within the General Body meeting.

Whether voting can be done in proxy?

It is provided in the Bye-law 10, votes will be cast in person except otherwise provided by resolution of the Association in the General Body meeting.  This means that there is should be agenda of voting through proxy in the General Body meeting and that should be allowed by majority of the apartment owners allowing proxy.   Without passing the resolution of proxy voting in a General Body meeting proxy voting cannot be allowed.

Whether authorized representatives of the owners are a proxy voters and can they be allowed to vote without resolution to allow a proxy vote in the election?

Any person other than the person having name as first owner (co-owner) in the Share Certificate does not have right to vote until and unless proxy voting is allowed by the GBM.  Even authorized representatives or power of attorney holders does not have right to vote without proxy voting have been allowed in the General Body meeting.    

How to start election process?

An election process is started under Bye-law 13 whereby the annual meeting of the association shall be called by the Board of Management with a prior notice enlisting therein the agenda of the meeting along with a clear agenda of the election, selection of Election Officer (from the members present in the Annual meeting), Declaration of Election Schedule.

Whether the election is to be held by raise of hand, voice vote or by ballot?

As per Bye-law 13 at the Annual General Body meeting of the association, the Board of Management shall be elected by ballot of the apartment owners.

Whether Board of Management can declare the Election Schedule in the General Body meeting?

There is no direction or bar restraining the Board of Management from declaring the Election Schedule in the General Body meeting.  As such, to have a fixed time schedule, the Board of Management can declare an Election Schedule in the General Body meeting itself. Such election schedule is to be complied by the Election Committee.

What would be the essential steps of an Election Schedule?

The essential steps for a free and fair election would include the following steps:

1. Publication of provisional voters list.
2. Time for raising objection/addition/deletion of voters.
3. Publication of final voters list
4. Filing of nomination/candidature
5. Scrutiny of candidates
6. Withdrawal of candidates
7. Publication of final list of candidates
8. Voting date

Who can appoint or select Election Committee to conduct the election as per the election schedule declared in the AGBM?

There is no Bye-law in the Model Bye-laws which provide for the appointment of the Election Committee for conducting elections and voting.  However, to ensure a free and fair election, general practice is followed of appointing an Election Committee in the Annual General Body meeting of the association from and amongst the members present in the meeting.  The Election Committee so appointed should aspire the confidence of the members of the association with respect to their integrity, knowledge about elections and Bye-laws of the association, neutrality towards candidates and uprightness.  The Election Committee appointed by the Board of Management independently will not aspire to be an independent committee, thereby jeopardizing from facing tenet of election i.e. free and fair election.

Whether the voting would be post-wise (for President, Vice President, Secretary and Treasurer) or for the Board of Management?

As per Bye-law 18, the Board of Management shall be elected by the members of the association by simple majority in the Annual General Body meeting.  The principal Office Bearers of the Association shall be a a President, a Vice President, a Secretary and a Treasurer, all of whom shall be elected from the Board.  The Board may appoint an Assistant Secretary, an Assistant Treasurer and such other office bearers as the Board may consider necessary.  Thus it is clear that the association will elect only the members of the Board.  The Board members amongst itself, in their first meeting post-election, will choose their Office Bearers viz., President, Vice President, Secretary and Treasurer.

What is the tenure of a Board of Management and what if any Board member resigns during mid-term of a Board?

As aper Bye-law 26(I), the term of the Office Bearers of the Board shall be one year.  In case of any vacancy cast by any reason than the removal of the office bearer by vote of the association such vacancy shall be filled by voting of the majority of the remaining office berarers even though they may constitute less than a quorum.

When to hold Annual General Body meeting of the Association for election?

As per Bye-law 26(I), the Annual General Body meeting of the association is to be held in the first quarter of each financial year.  It is generally known to the stakeholders that an AOA may have got registered in any of the remaining quarter other than first quarter of the first financial year and at the same time the term of the Board is also one year.  As such it may not be possible for the AOA registered in any other quarter of the financial year to conduct election in the first quarter as one year tenure may not be ending in the first quarter of the financial year.  A simple solution of such circumstances would be to pass a resolution in the General Body meeting either to shorten or extent the term of the first Board in such a manner that it may fall within the first quarter of the financial year or election may be conducted in the first quarter of the financial year and the elected members may join the Board after the expiry of the term of the outgoing Board of Management.

Whether election is to be held annually for all the seats of the Board of Management or for 1/3^rd seats of the Board of Management?

This question has not been completely decided by either any competent authority or by the Hon’ble High Court or Hon’ble Supreme Court.  However, the passing remarks against 1/3^rd election have been held in couple of judgments.  Ultimately the ratio of the judgments was not passed on such issue.  In the opinion of the author, annual elections should be held for the vacancies arising out of retirement of the 1/3^rd of Board members.  It is so because the term of the Board is only one year and the Board performs and manages certain basic facilities like electricity, water, security of such large Group Housing Society and as such the Bye-laws envisage a continuing Board without any break.  The Bye-laws envisages the rotating of retiring 1/3^rd of existing members and inducting 1/3^rd new members.  If a proper arrangement as per Bye-law 26(2) is made of retiring 1/3^rd members annually with a target to retire all members by the end of three years assuring thereby term of each elected member for three years then it would be in interest of everyone in the Group Housing.  A tenure of three years would assure the presence of certain persons in the Board with complete knowledge of all the functioning of basic and essential facilities in the Group Housing and assure smooth transition of the Board members without disrupting any basic and essential facilities of the apartment owners of the Group Housing. 

The Bye-laws are very clear that Board is the permanent Body and is not subject to dissolution.  However, 1/3^rd of the members retire every year and are replaced by newly elected members.  This way each member is elected for a term of three years provided an appropriate arrangement of retirement has been made by the Board and published for the information of the apartment owners.

What is the term of the Board and whether the Board become time barred (kalateet) post one year from the date of last election?

As per the proviso to Bye-law 26(I) it is the term of office of the office bearers of the Board which is for one year and not of the Board as Board of Management of an Apartment Owners Association is a permanent body and is not subject to dissolution.  It is provided specifically under Bye-law 26(III) that the office bearers shall hold office until their successors have been elected and hold their proximity.

Thus, from the combined reading of Bye-law 26 it is clear that a Board of Management never becomes time barred (kalateet) and it will be empowered to perform its functions until successors of the existing office bears hold their first meeting.

What would be the quorum for calling annual meeting or a special meeting or a regular meeting?

As per Bye-laws the presence in person of thirty percent of owners constitute the quorum.  If in any meeting of owners cannot be held for want of quorum the owners who are present  may adjourn the meeting to a time not less than 48 hours from the time of original meeting was called.  If at such meeting also, no quorum is present, the owners present in person being not less than two shall form the quorum.

Whether Election Schedule and Election Committee declared in the annual meeting can be challenged and proceedings thereof may be stayed by any authority or government agency?

Generally it is not in the interest of association or its members to challenge election process once same has been declared by the General Body meeting as such challenges are open only after the conclusion of the election in an election petition under section 25(1) of the Societies Registration Act.

Who can file nomination?

Every apartment owner / member of the association having its name in the final voter list (as per share certificate) can file nomination/ candidature for being elected as member of the Board even if such member has retired from the Board in the same year itself.  However, a Board member found guilty of misusing his post in its previous regime shall not be eligible for election.  The use of word ‘guilty’ here may be left to be determined by the General Body meeting.  To prove someone guilty of misusing the post during his previous term a report submitted by the investigation committee appointed by the President may be sufficient.

Whether voting is to be done on percentage basis or on the basis of one flat one vote?

As per Bye-law 8 voting shall be on percentage basis and the percentage of the vote to which the owner is entitled is the percentage assigned to the dwelling unit  or unit in the declaration.  In the case of Manish Kansal vs. State of Uttar Pradesh the Hon’ble High Court has held it to be a mandatory provision to be followed in the election of the Association.  Any association where the Deed of Declaration has not been assigned the voting percentage in the Deed of Declaration against each apartment, then as per judgment of the Hon’ble High Court in the case of Anurag Chowdhary vs. State of U.P. the association must file representation before the competent authority for correction of Deed of Declaration to include voting percentage of each and every apartment.