A battle royal for ownership rights
A much-anticipated case which could set a benchmark for resolution of ‘common area’ disputes in residential projects is coming up for a final hearing in the Supreme Court on July 23
Millions of apartment owners are waiting with bated breath for the Supreme Court’s verdict on a case involving realty major DLF and about 750 apartment owners in its prestigious Silver Oaks project in Gurgaon, slated for final hearing on July 23, 2013. DLF had appealed to the apex court for a solution following a Punjab and Haryana High Court verdict on September 9, 2009, upholding the Silver Oak residents’ plea to have school, shops and community centre as part of common areas and facilities in the project.
Between 1981-1982, the director general, town and country planning, Haryana, granted licences to DLF to develop 130.62 acres, comprising 14.75 acres for group housing and 115.87 acres for plotted colony. According to the group housing building plans which were finalised in 1995, DLF got the approval for constructing residential blocks, EWS flats, parking, shops, community centre, two primary schools etc among other facilities. However, since the realty major applied for a completion certificate on April 15, 1996, but didn’t file the deed of declaration (See Five Points) within 90 days after obtaining the certificate, the residents of Silver Oaks approached the Punjab and Haryana High Court seeking a direction to file the said declaration.
During the pendency of the petition, the developer filed the deed on April 19, 2001, which was challenged by the apartment owners as it did not include certain areas such as schools, shops, community centres as common areas and facilities and deprived the apartment owners their rights. “When a developer files a deed of declaration, the law requires him to demarcate the ‘apartment’, ‘common areas and facilities’ and ‘restricted common areas and facilities’. The flat owner gets exclusive rights over the apartment and undivided interest in common area facilities (the percentage is specified in the declaration). DLF did not include schools, shops and community centre in the common areas in the declaration and claimed exclusive ownership of these facilities which by rights belong to the residents. As far as the law is concerned, there is no ambiguity over the fact that schools, shops and community centre are a part of the common areas and facilities,” says Amit Jain, director general, Federation of Apartment Owners Association.
The Punjab and Haryana High Court had ruled in favour of the residents of Silver Oaks after debating whether the declaration filed by DLF was conclusive or could be questioned and whether the area of primary schools, shops and community centres could be treated as common area. In its ruling the HC had said, “The declaration must cetegorise the entire property into either apartments, common areas and facilities or limited common areas and facilities.”
Dismissing the allegations of all the residents, DLF had argued in the HC that the declaration deed it had filed was in consonance with statutory provisions of the Haryana building laws. The contested areas were not part of common areas and facilities and were owned by the developer, who could demarcate it as common area or sell it. DLF also cited the SC judgment in the DLF Qutab Enclave Complex Educational Charitable Trust vs State Of Haryana (2003) case and argued that it was not under any obligation (under the condition of licence as per the Haryana Development and Regulation of Urban Areas Act 1975 or under the provisions of The Haryana Apartment Ownership Act 1983) to declare the contested areas as common areas and facilities.
Challenging the HC judgment, DLF has raised several legal questions on the validity of the judgment, pleading that compelling it to categorise the whole property into ‘apartment’, ‘common areas and facilities’ and ‘limited common areas and facilities’ was contrary to the section 3 (f) of Haryana Apartment Ownership Act 1983 which itself did not compel the owner/developer of a building/property to divest its ownership right in community and commercial facility developed by it as part of its obligation under the Haryana Development and Regulation of Urban Areas Act 1975.
The residents then alleged that the developer had charged them money for super area for the construction of community buildings, shops, schools etc - and thus DLF could not claim exclusive rights over these. According to them, both the 1975 act and 1983 act had clear provisions for the developer to declare apartment, common areas and facilities and restricted common areas and facilities.
Says an RWA member from a group housing project, “If you see the Haryana Apartment Ownership Act 1983, it says ‘common profits means the balance of all incomes, rents, profits and revenues from the common areas and facilities”. It means that the RWA will lease out shops and schools and earn profits on them. The act also states that ‘the common profits of the property shall be distributed among, and the common expenses shall be charged to, the apartment owners according to the percentage of the undivided interest in the common areas and facilities.’ There is no ambiguity in anything.”
He also said that as the developer obtained a license to construct residential apartments it could not sell commercial units such as shops and schools. ATS Greens Gautam Budh Nagar Sector 20 Sector-25 Sector-61 Sector-62 Sector-93 Sector 82 Alpha-I (Gr Noida) Delta-II (Gr Noida) Sector 36 (Gr Noida) Sigma-4
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An RTI reply reveals that in its first draft reply to be filed in the Supreme Court, the DGTPC Haryana had decided to include schools, shops and community centres in common areas and facilities. Later it reversed its stance