Act for your Ownership Rights

  • Abhishek Behl / FG
  • India
  • Apr 11, 2014

 

 

 

An order of the Gurgaon District Court has held that the registration of an Association under the Societies Act would first require the property to be brought out of the purview of the Haryana Apartment Owners Act 1983 - which provides for the overall framework for apartment complexes in the State. The Additional District Judge of Gurgaon, J B Gupta, gave this direction while hearing the petition of Silver Oaks Society versus Silver Oaks Condominium Association over the issue of registration of the Association under the Societies Act 2012. The case was filed by Silver Oaks Society to prevent the Condominium Association from getting registered under the Societies Act without taking consent and approval for the same from a General Body Meeting of the Association. Citing Section 14 of the 1983 Act, the judge mentioned in his Order that all the apartment owners may remove a property from the provisions of this Act by any instrument to that effect duly executed. Pooja Aganpal, lawyer for the Silver Oaks Society, says that the broader implication of this Order is that apartment associations need to get themselves out of the purview of the 1983 Act. However, there is no necessity to rush to get registered under the Societies Act 2012. Whenever any society prefers to opt for the Societies Act 2012, it will have to first get the approval of all its apartment owners - to get the property out of the purview of the Apartment Act 1983.

 

Aganpal says that they had originally filed the suit with Civil Judge, Gurgaon, who dismissed it with the plea that this case came under the purview of the Registrar of Societies and Firms. “We filed an appeal with the submission that this Apartment Association was still being governed by the 1983 Act, and still had not got itself registered under the Societies Act. We are happy that our contention has been upheld,” she adds. She adds that Associations do not have to fear that they will not be able to open a bank account without a (Societies Act) registration number – given by the Registrar. Bank accounts can be opened by an RWA by giving the Wasika number of a property - which is mentioned in the Deed of Declaration. Citing an anomaly in the functioning of the Societies Act 2012, Aganpal says that the entire premise of apartment associations running their condominiums and maintaining the complexes through profit generated from common areas, has been negated by this new Act. The Societies Act is meant for registering organisations that want to work on a no-profit principle. The fundamental basis of apartment associations as defined by the Apartment Act 1983 is on the basis of revenue and profit generation and its usage for the maintenance of the complex. An even more serious concern is that the Registrar of Societies and Firms is a quasi-judicial body that is run by government appointed bureaucrats, and once an apartment association gets itself registered with it the jurisdiction of the civil courts would be barred - under Section 89 of the Societies Act 2012. Making the import of this Section clearer, Aganpal says that if your rights are infringed under the Apartment Act 1983, the association or apartment owner can move the Court to get judicial recourse – the authenticity of allegations or a dispute can be proved through evidences. However, under the Societies Act, getting judicial recourse is a very long and time-consuming process, as appeals have to be made to the District Registrar, then to State Registrar, then to Registrar General of the State and finally to the government - which is the final authority on settling a dispute. No Court can be petitioned. All the decision-making and judicial authority is vested in the government-appointed bureaucrats and the political executive. This is also why apartment buyers have accused the state government of colluding with builders and giving them a backdoor entry to control the apartment associations – via the new Societies Act. With this new Act, the builders would be in a good position to (forever) control the common areas in the complexes - which house school buildings, clubs and shopping complexes, along with maintenance and service facilities.

Amit Jain, Director General of the Federation of Apartment Owners Association (FAOA), says that a number of aspects and provisions of the Societies Act, which have been made applicable to the Association of Apartment Owners, are not only inconsistent but also in contradiction with ownership, voting and management rights of apartment owners under the Apartment Owners Act. Advocate Aganpal says that the Societies Act provides for a ‘one flat one vote’ system, whereas the Apartment Act gives proportional voting rights - which ultimately have an impact on the ownership of common areas. The FAOA has also filed a petition in the Punjab and Haryana High Court, submitting that the provisions of the ‘The Haryana Registration and Regulation of Societies Act, 2012’ and the ‘The Haryana Registration and Regulation of Societies Rules, 2012’ are inconsistent with and override the provisions of the ‘The Haryana Apartment Owners Act, 1983’ and ‘The Haryana Apartment Ownerships Rules 1987’. Jain argues that there is a direct conflict between the provisions of both the Acts. As per FAOA’s submission, the Apartment Owners Act and the Rules 1987 are a complete code, which specifically set out the Law in respect of the ownership and administration of a property and every building constructed for the purpose of transfer of ownership of an individual apartment in a building constructed under a Licence issued under the Haryana Development and Regulation of Urban Area Act, 1975 and an Occupation Certificate obtained under the rules framed under the Punjab Scheduled Roads and Controlled Area Restrictions of Unregulated Development Act, 1963. Jain says that the Federation has even brought this to the notice of various authorities - like the Chief Secretary to the Government of Haryana, Sub-Registrar Gurgaon and District Registrar of Firms & Societies.


As per the Petition filed by the Federation, they have sought clarifications from the High Court on:

1) hether the provisions of the Haryana Registration and Regulation of Societies Act, 2012 are repugnant to and in conflict with the special law in force governing apartments in Haryana (i.e., the Haryana Apartment Owners Act, 1983)

2) hether provisions of the Haryana Registration and Regulation of Societies Act, 2012, a General Law, can override the provisions of the Haryana Apartment Owners Act, 1983, which is the Special Law in force governing apartments in Haryana

3) hether the entire premise and effect of the Apartment Ownership Act, an Act that is fine tuned to the peculiar needs of Group Housings, can be set aside by the bringing into force of a general Act for the registration of societies

4) hether the Societies Act can change/modify the voting rights of the apartment owners, which have already been provided in the Apartment Owners Act, the special Act dealing with apartments and the rights of their owners

5) hether the Registrar has the jurisdiction to directly interfere in the working of the Apartment Owners Association and to supersede the Governing Body of the Association - by appointing Administrators under Section 56 of the Societies Act.

The answer/Order will have far-reaching implications for the apartment owners in Gurgaon…and the builders.



Col BK Dhawan, Petitioner in the case, says that the Judge has clearly observed that until the property is removed from the purview of the Act of 1983, the same cannot be registered under some other  Act without approval of the General Body meeting or prior approval from all other members of  the Association. No decision can be taken by the respondent Association on its own. In the present case two Acts, namely Act of 1983 and Act of 2012, are involved. The Judge has further clearly  observed that from the perusal of Section 14, that for getting registered under some other provisions of law, first  the property has to be removed from the purview of the Act of 1983 - in accordance with the provision of this Section; and it also needs compliance with Section 7 of the Act of 1983. The matter now stands subjudice, and therefore no action can be taken by Silver Oak Condominium Association for switching over to the Society Act 2012 till the matters are finally resolved.


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