Rights of Apartment Owners on Common areas and facilities in the Township/Colony

DLF Limited ….. Appellant

Versus

Manmohan Lowe and others…..Respondents

Facts of the case:

The appeal arises out of a writ petition filed by the Apartment owners of Silver Oaks Apartments, DLF Qutub Enclave, Phase-1, Gurgaon, seeking a writ of certiorari to quash the declaration dated 19.04.2001 filed by the Appellant, on the ground that the same is not in conformity with Section 3(f) of the Haryana Apartment Ownership Act, 1983 (for short “the Apartment Act”) since the appellant failed to include certain areas of the complex as “common areas and facilities” within the declaration, thereby effectively depriving the apartment owners of their rights over the same. The Division Bench of the Punjab and Haryana High Court accepted their contention and held that the apartment owners are entitled to undivided interest in common areas and common facilities under Section 6 of the Apartment Act and would be vitally affected if those areas are not declared as common areas. The Court also held, inter alia, that the competent authority under Section 3(i) of the Apartment Act is under an obligation to decide the objections of the apartment owners to the declaration filed by the colonizer appellant hereinabove. Aggrieved by the same, this appeal has been preferred by the colonizer (DLF Ltd).

Appeal allowed and some relevant portion of the Order dated 10.12.2013 by Hon’ble Supreme Court:

Ownership Vs. User:

“36. We have clearly indicated that the ownership right over the land earmarked for schools, hospitals, community centers and other community buildings referred to in Section 3(3)(a)(iv) of the Development Act vests on the colonizer. That ownership can be divested, as already indicated, by the colonizer through a declaration under Sections 11 to 13 read with Section 3(f) of the Apartment Act. The colonizer has to provide those facilities in discharge of its legal obligations under the Development Act and the Act itself has recognized its or his legal ownership over the area set apart for those facilities under Section 3(3)(a)(iv) of the Act. All the same, the right to enjoy those facilities referred to in Section 3(3)(a) (iv) of the Development Act, whether shown in the declaration or not, under the Apartment Act, cannot be restricted or curtailed and the apartment owners have no other right, except the right of “user”. Community centers, nursery schools, shops etc., therefore, being part of the approved layout plans by the DTCP, can be used by the apartment owners and, being part of the larger colony, are intended for independent use of all the apartment owners having direct exit to common areas, to the public street, road, etc. All those facts would indicate, so far as apartment owners are concerned, they have only a right of user, so far as the facilities provided under Section 3(3)(a)(iv) of the Development Act are concerned.

37. Learned counsel for respondents sought to argue that the Silver Oaks Apartments is a ‘gated’ colony and, therefore the developments which have taken place inside the boundary walls of that colony are to be treated as parts of internal development works and, therefore, these are parts of common areas. In this very direction, it was further submitted that these are the necessary and essential facilities which have to be provided to the flat owners by the developers, for the common use of the flat owners. Though, this argument appears to be attractive, it has no merit when we examine the nature of structures developed by the developer i.e. the appellant to which it is claiming its exclusive right. These structures are two nursery schools, three shops and one community centre, which cannot be treated as “common areas and facilities” within the definition of Section 3(f) of the Act. As already pointed out above, they are parts of planning for larger area, which plans were submitted by the appellant. It is not meant for the exclusive use of the flat owners of Silver Oaks Apartments. Position would have been different had these been integral parts of the facilities, in the sense that these facilities are essential for the enjoyment of the flats.

38. Common passages, staircases, lifts etc. are the examples of such common areas and facilities. Likewise, stilt parking area may be treated as part of common areas and facilities, in certain circumstances. Here these structures are the part of the larger area of about 130 acres in respect of which 7 licenses were obtained for development of the colony. Silver Oaks Apartments, which comprises of 14.75 acres, is only a part thereof. The nursery schools, shops and community centre are meant for the development of the entire colony and are not confined only to these apartments, as already noted in detail above. Further, as per our detailed discussion hereinabove, it is clear that the developer is given right to transfer these “community buildings and community centers”. Likewise, even schools cannot be termed as part of “integral development” use whereof would be confined to residents of these apartments. Even the shops which are inside the boundary walls have their opening from outside to enable the shopkeepers to cater to the customers not only from these apartments, but outsiders as well. Therefore, on these facts, we are not impressed by the argument predicated on “gated colony”.

Cost not on Apartment owners:

39. We have found that the Colonizer is legally obliged under Section 3(3)(a)(iv) of the Act to construct at his own cost the community and commercial facilities stipulated therein and an agreement has to be entered into by the Colonizer with the DTCP under the Development Act by which the Colonizer is prohibited by law from recovering the cost of providing those facilities from the apartment owners.

Section 3(3)(a)(iv) of the Development Act read with the above-mentioned clauses in the agreement would indicate that ownership of the portion of the land set apart for the common areas and facilities referred to therein vest with the Colonizer so also the obligation “at his own cost” to provide those facilities in the land set apart for the said purpose. The Colonizer cannot recover cost of land or the amounts spent by him for providing those facilities from the apartment owners. It is for the said reason that clause 7 of Section 3(f) of the Apartment Act has not made it obligatory, on the part of the Colonizer to include the “community and commercial” facilities in the declaration. If the colonizer includes the same within the declaration, then Section 6 of the Apartment Act will kick in, consequently, the apartment owners would be entitled to the undivided interest in respect of the community and commercial facilities provided therein without bearing the cost incurred by the colonizer in purchasing the land and the cost of construction.

In our view, the colonizer could not have included the community and commercial facilities referred to in Section 3(3)(a)(iv) of the Development Act, because the same is meant for the benefit of the entire colony, not merely the flat/apartment

Owners in one part of the colony since they form part of the lay out plans duly approved, which takes in plotted area and the group housing societies area as well.

Some relevant Sections of the Haryana Apartment Ownership Act, 1983 for the reference as under:

3. Definitions- In this Act, unless the  context otherwise requires.---

(a) “Apartment” means a part of a property, intended for any type of  independent use, including building having one or more rooms with enclosed spaces located on one or more floors or any part or parts thereof, to be used for residence, office or for practicing any profession or for carrying on any occupation, trade, business or manufacturing or  other uses relating to Information Technology or for such other type of  independent use, as may be prescribed, with a direct exit to a public street, road or highway or to a common area leading to such street, road or highway and includes any garage or room (whether or not adjacent to the building in which such apartment is located) provided  by the colonizer/owner of such property for use by the owner of such apartment for parking any vehicle or for the residence of any person employed in such  apartment, as the case may be.

Explanation.- For the purpose of this clause as “colonizer” shall have the same meaning assigned under the Haryana Development and Regulation of Urban Areas Act, 1975 (8 of 1975);

(b) “apartment owner” means the person or persons owning an apartment and undivided interest in the common areas  and facilities in the  percentage specified and established in the declaration;

(c) “apartment number” means the number, letter combination thereof designating the apartment in  the declaration;

 (d) "association of apartment owners” means all the apartment owners acting as a group in accordance with the bye-laws and the declarations;

(e) “building” means a building containing five or more apartments or two or more buildings, each containing two or more apartments, with a total of five or more apartments for all such buildings and comprising a part of the property;

(f) “common areas and facilities” unless otherwise provided in the declaration or lawful amendments thereto, means.-

(1) the land on which the building is located;

(2) the foundations, columns, girders, beams, supports, main walls, roofs, halls, corridors lobbies, stairs, stair ways, fire escapes and entrances and exits of the building;

(3) the basements, cellars, yards, gardens, parking area and storage spaces;

(4) The premises for the lodging of janitors or persons employed for management of the property;

(5) installation of central services such as power, light, gas, hot and cold water, heating, refrigeration, air conditioning  and incinerating;

(6) the elevators, tanks, pumps, motors, fans, compressors, ducts and in general all apparatus and installations existing for common use;

(7) such community and commercial facilities as may be provided for in the declaration; and

(8) all other parts of the property necessary or convenient to its existing maintenance and safety or normally  in common use;

(g) “Common expenses” means-

(1) all sums lawfully assessed against the apartment owners by  the association of apartment owners;

(2)expenses of  administration, maintenance, repair or replacement  of the common areas and facilities;

(3) expenses agreed upon as common expenses by the association of apartment owners;

(4) expenses declared as common expenses by the provisions of this Act, or by the declaration or the bye-laws;

(h) “Common profits” means the balance of all income, rents, profits and revenues from the common areas and facilities remaining after  the deduction of the common expenses;

(i) “Competent authority” means Chief Administrator, Haryana  Urban Development Authority in respect of the Area developed by the said Authority constituted under sub-section (1) of section 3 of the  Haryana Urban Development Authority Act, 1977 (13 of 1977) till maintenance of that area remains with the said Authority, Director, Urban Development Department, Haryana, in respect of the other area falling  within the municipal limits and Director, Town and Country Planning Department, Haryana  in respect of the other area falling outside the municipal limits and includes a person for the time being appointed by State Government, by notification, to exercise and perform all or any of the powers  and functions of the competent authority under this Act and the rules made thereunder;}

(j) “Declaration” means the instrument to be executed and got registered in the prescribed  form and includes the amended declaration;

(jj) “Flatted factories” means a group of small industrial units located in multi-storeyed buildings sharing common services and facilities and having their undivided share in the land;

(jjj) “Integrated commercial complex” means building (s) containing apartments sharing common services and facilities and having their  undivided share in the land and meant to be used for office or for  practicing any profession or for carrying on any occupation, trade,  business or such other type of independent use as may be prescribed;

(k) “Joint family” means an  undivided  Hindu family and in the case of  other persons, a group or unit, the members of which are by custom jointly in possession or residence;

(l) “Limited common areas and facilities” means those common areas and  facilities designated in the declaration and reserved for use of certain apartment or apartments to the exclusion of other apartments;

(m) “Majority” or” majority of apartment owners” means the apartment owners with 51% or more of  the votes in accordance with the  percentage assigned in the declaration to the apartments for voting purposes;

(n) “Person” includes a joint family;

(o) “Prescribed” means prescribed by the rules made under this Act;

(p) “Property” means  the land,  the building, all improvements and structures thereon,  owned in free-hold or held on lease or as occupant under any law relating to land revenue and all easements, rights and appurtenances belonging thereto and all articles of personal property intended for use in connection therewith (XXX).

4. Status of Apartments-

Each apartment together with its undivided interest in the common areas and facilities, appurtenant to such apartment, shall for all purposes constitute heritable and transferable immovable property within the meaning of  any law for the time being in force in the State of Haryana.

5. Ownership of apartments. –

(1) Each apartment owner shall be entitled to the exclusive ownership and possession of his apartment in accordance with the declaration.

(2) Each apartment owner shall execute a deed of apartment in relation to his apartment in the manner prescribed.

6. Common Areas & Facilities-

(1) Each apartment owner shall be entitled to an undivided interest in the common areas and facilities in the percentage expressed in the declaration. Such percentage shall be computed by taking as a basis the value of the apartments in relation to the value of the property; and such percentage shall reflect the limited common areas and facilities.

(2) The percentage of the undivided  interest of each apartment owner in the common areas and facilities as expressed in the declaration shall have a permanent character and shall not be altered without the consent of all of  the apartment  owners and expressed in an amended declaration duly executed and  registered as provided in this Act. The percentage of the undivided interest in the common areas and facilities shall not be separated from the apartment to which it appertains and 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.

(3) The common areas and facilities shall remain undivided and no apartment owner or any other person shall bring any action for partition or division or any part thereof unless the property has been removed from the provisions of this Act as provided in sections 14 and 22. Any covenant to the contrary shall be null and void.

(4) Each apartment owner may use the common areas and facilities in accordance with the purpose for which they are intended without hindering or encroaching upon the lawful rights of the other apartment owners.

(5) The necessary work of maintenance, repair and replacement of the common areas and facilities and the making of any addition of improvements thereto shall be carried out as provided herein and in the bye-laws.

(6) The association of apartment owners shall have the irrevocable right, to be exercised by the Manager or Board of Managers thereof, to have access to each apartment from time to time during reasonable hours as may be necessary for the maintenance, repair and replacement of any of the common areas and facilities therein or accessible therefrom or for making emergency repairs therein necessary to prevent damage to the common areas and facilities or to another apartment or apartments.

Some Relevant sections of The Haryana Development and Regulation of Urban Areas Act, 1975

3) After the enquiry under sub-section (2), the Director, by an order in writing, shall—

(a)   grant a licence in the prescribed form, after the applicant has furnished to the Director a bank guarantee equal to twenty-five per centum of the 1[ estimated cost of development works in case of area of land divided go proposed to be divided into plots or flats for residential, commercial or industrial purposes and a band guarantee equal to thirty-seven and a half per centum of the estimated cost of development works in case of cyber city or cyber park purposes.] as certified by the Director and has undertaken—

(i) to enter into an agreement in the prescribed from for carrying out and completion of development works in accordance with the licence granted ;

(ii) to pay proportionate development charges in the external development works as defined in clause(g) of section 2 are to be carried out by the government or any other local authority. The proportion in which and the time within which, such payment is to be made shall be determined by the Director ;]

(iii) the responsibility for the maintenance and upkeep of all roads, open spaces, public parks and public health services for a period of five years from the date of issue of the completion certificate unless earlier relieved of this responsibility and thereupon to transfer all such roads, open spaces, public parks and public health services free of cost to the Government of the local authority, as the case may be ;

(iv) to construct at his own cost, or get constructed by any other institution or individual at its cost, schools, hospitals, community centres and other community buildings on the lands set apart for this purpose, or to transfer to the Government at any time, if so desired by the Government, free of cost the land set apart for schools, hospitals, community centres and community buildings, in which case the Government shall be at liberty to transfer such land to any person or institution including a local authority on such terms and conditions as it may deem fit ;

(v)  to permit the Director or any other officer authorized by him to inspect the execution of the layout and the development works in the colony and to carry out all directions issued by him for ensuring due compliance of the execution of the layout and development works in accordance with the licence granted :

Provided that the Director, having regard to the amenities which exit or are proposed to be provided in the locality, is of the opinion that it is not necessary or possible to provide one or more such amenities, (a) may exempt the licensee from providing such amenities either wholly or in part ;(b) refuse to grant a licence, by means of a speaking order, after affording the applicant an opportunity of being heard.