MCS & MOFA Act, DCR, Panchsheel CHS vs promoter - Supreme court 2010 - Promoter can't sell Stilt or open parking
Supreme Court of India
Nahalchand Laloochand P.Ltd vs Panchali Co-Op.Hng.Sty.Ltd on 31
August, 2010
Author: R Lodha
Bench: R.M. Lodha, A.K. Patnaik
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2544 OF 2010
Nahalchand Laloochand Pvt.
Ltd. ...Appellant
Versus
Panchali Co-operative
Housing Society Ltd. ...Respondent
WITH
CIVIL APPEAL NO. 2545 OF 2010
CIVIL APPEAL NO. 2546 OF 2010
CIVIL APPEAL NO. 2547 OF 2010
CIVIL APPEAL NO. 2548 OF 2010
CIVIL APPEAL NO. 2449 OF 2010
CIVIL APPEAL NO. 2456 OF 2010
JUDGEMENT
R.M. Lodha, J.
Of these seven appeals
which arise from the judgment dated April 25, 2008 passed by the High Court of
Judicature at Bombay (Appellate Jurisdiction), five are at the instance of the original plaintiff and the other two are by the parties, who were not parties to the proceedings before the High Court or the trial court but they are aggrieved by the findings recorded by the High Court as they claim that these findings are affecting their rights.
Judicature at Bombay (Appellate Jurisdiction), five are at the instance of the original plaintiff and the other two are by the parties, who were not parties to the proceedings before the High Court or the trial court but they are aggrieved by the findings recorded by the High Court as they claim that these findings are affecting their rights.
The facts:
2. Few important questions
of law arise in this group of appeals. It will be convenient to formulate the
questions after we set out the material facts and the contentions of the
parties. The narration of brief facts from S.C. Suit No. 1767 of 2004 will
suffice for consideration of these appeals. Nahalchand Laloochand Private
Limited is a Private Limited Company. As a promoter, it developd few properties
in Anand Nagar, Dahisar (East), Mumbai and entered into agreements for sale of
flats with flat purchasers. The flat purchasers are members of Panchali
Co-operative Housing Society Ltd. (for short, `the Society'). The promoter
filed a suit before the Bombay City Civil Court, Bombay for permanent
injunction restraining the Society
(defendant) from encroaching upon, trespassing and/or in any manner disturbing, obstructing, interfering with its possession in respect of 25 parking spaces in the stilt portion of the building. The promoter set up the case in the plaint that under the agreements for sale it has sold flats in its building and each flat purchaser has right in respect of the flat sold to him and to no other portion. It was averred in the plaint that each flat purchaser has executed a declaration/undertaking in its favour to the effect that stilt parking spaces/open parking spaces shown in the plan exclusively belong to the promoter and that the declarant has no objection to the sale of such spaces by it. The defendant (Society) traversed the claim and set up the plea that the promoter has no right to sell or dispose of spaces in the stilt portion and that the undertakings given by the flat purchasers are not binding being contrary to law and based on such undertakings, the promoter has not acquired any right to sell stilt parking spaces.
(defendant) from encroaching upon, trespassing and/or in any manner disturbing, obstructing, interfering with its possession in respect of 25 parking spaces in the stilt portion of the building. The promoter set up the case in the plaint that under the agreements for sale it has sold flats in its building and each flat purchaser has right in respect of the flat sold to him and to no other portion. It was averred in the plaint that each flat purchaser has executed a declaration/undertaking in its favour to the effect that stilt parking spaces/open parking spaces shown in the plan exclusively belong to the promoter and that the declarant has no objection to the sale of such spaces by it. The defendant (Society) traversed the claim and set up the plea that the promoter has no right to sell or dispose of spaces in the stilt portion and that the undertakings given by the flat purchasers are not binding being contrary to law and based on such undertakings, the promoter has not acquired any right to sell stilt parking spaces.
3. The parties let in
evidence (oral as well as documentary) in support of their respective case.
4. On April 4, 2007, the
Presiding Judge, City Civil Court, Greater Bombay dismissed the suit with
costs.
5. The promoter preferred
first appeal before the High Court which was dismissed on April 25, 2008.
6. For brevity, we shall
describe Maharashtra Ownership Flats (Regulation of the Promotion of
Construction, Sale, Management and Transfer) Act, 1963 as
`MOFA', Maharashtra Ownership Flats (Regulations of the Promotion of
Construction, Etc.) Rules, 1964 as `1964 Rules', Development Control
Regulations for Greater Bombay, 1991 as `DCR', Maharashtra Apartment Ownership
Act, 1970 as `MAOA', The Maharashtra Regional and Town Planning Act, 1966 as
`MRTP Act' and Transfer of
Property Act as `T.P. Act'.
The summary of findings recording by the High Court:
7. While dismissing the
appeal, the High Court recorded the following findings :
7 The carpet area of any of
the 56 flats/tenements in Panchali building is not less than 35 sq. mtrs.
7 The parking space either enclosed or unenclosed, covered or open cannot be a `building'.
7 The parking space either enclosed or unenclosed, covered or open cannot be a `building'.
7 It is compulsory
requirement to provide for parking spaces under DCR.
7 It is obligatory on the
part of the promoter to follow the DCR. The agreement signed under MOFA between
the developer and the flat purchaser must be in conformity with the model form
of agreement (Form V) prescribed by the State Government.
7 The model agreement does
not contemplate the flat purchasers to separately purchase the stilt parking
spaces.
7 The rights arising from
the agreement signed under the MOFA between the promoter and the flat
purchasers cannot be diluted by any contract or an undertaking to the contrary.
The undertakings contrary to DCR will not be binding either on the flat
purchasers or the Society. 7 The stilt parking space is a common parking area
available and the developer is obliged to provide the same under the DCR when
the carpet area of the flat is 350 sq. meters It is not an additional
premises/area that he is authorized to sell either to flat purchaser or any
outsider. It is part and parcel of the Society building and it cannot be a
separate premises available for sale. As soon as the Corporation issues the
occupation certificate and the Society is registered, the building as well as
the stilt parking spaces, open spaces and all common amenities become the
property of the Society.
7 The stilt parking spaces
cannot be put on sale by the developer as he ceases to have any title on
the same as soon as the occupation certificate is issued by the Corporation and it becomes the property of the society on its registration. 7 The stilt parking spaces cannot be termed as `open/covered garages' and Clause 2 of the Model Agreement--Form V provides for sale of covered/open garage in addition to the flat/shop. 7 It is immaterial if the purchase agreement does not include stilt car parking spaces in the common area of amenities. The stilt car parking spaces is part of the common amenities and it cannot be treated to be a separate premises/garage which could be sold by the developer to any of the members of the society or an outsider.
the same as soon as the occupation certificate is issued by the Corporation and it becomes the property of the society on its registration. 7 The stilt parking spaces cannot be termed as `open/covered garages' and Clause 2 of the Model Agreement--Form V provides for sale of covered/open garage in addition to the flat/shop. 7 It is immaterial if the purchase agreement does not include stilt car parking spaces in the common area of amenities. The stilt car parking spaces is part of the common amenities and it cannot be treated to be a separate premises/garage which could be sold by the developer to any of the members of the society or an outsider.
7 Under MOFA, the
developer's right is restricted to the extent of disposal of flats, shops
and/or garages, which means that any premises which is included in the Flat
Space Index (FSI) can be sold by the developer/promoter. The stilt parking
space is not included in the FSI nor it is assessable for the Corporation
taxes.
The submissions:
8. Mr. Tanmaya Mehta,
learned counsel appearing for the promoter--Nahalchand Laloochand Private
Limited (appellant) contended that: the stilt parking space being `garage', as
an independent unit is covered by the definition of `flat' in Section 2(a-1) of MOFA; Section 2(a-1) creates an
artificial definition of `flat' and since in common parlance a
garage would not be considered as a flat, the legislature clarified and explained that the term `flat' means...... and `includes a garage'; as long as premises are covered from the roof or which have a covered roof and used for the parking of vehicles, that would qualify as `garage' and since stilt parking spaces are covered parking spaces and form part of the building, they fall within the definition of a `garage'; even if stilt parking spaces do not fall within the definition of `flat', they are nevertheless sellable as independent units since right to sell such spaces flows from the bundle of rights associated with ownership of the property and Sections 10 and 11 of MOFA read with Rule 9 of 1964 Rules are not exhaustive of the rights retained by the promoter upon execution of conveyance. Moreover, if stilt parking spaces are treated as `common areas' then the proportionate price for the same would have to be paid by each flat purchaser, irrespective of whether he requires the parking space or not and there may be situations where the number of parking spaces will not be equal to the number of flats and, thus, a person who has paid proportionate price for
the common parking space may find himself without parking space, even though he has paid for the same. Lastly, the learned counsel submitted that in any event the promoter undertakes that the parking spaces shall be sold only to persons purchasing flats within the subject layout, i.e. the purchasers of flats in the seven buildings which form part of the layout and exist in close proximity.
garage would not be considered as a flat, the legislature clarified and explained that the term `flat' means...... and `includes a garage'; as long as premises are covered from the roof or which have a covered roof and used for the parking of vehicles, that would qualify as `garage' and since stilt parking spaces are covered parking spaces and form part of the building, they fall within the definition of a `garage'; even if stilt parking spaces do not fall within the definition of `flat', they are nevertheless sellable as independent units since right to sell such spaces flows from the bundle of rights associated with ownership of the property and Sections 10 and 11 of MOFA read with Rule 9 of 1964 Rules are not exhaustive of the rights retained by the promoter upon execution of conveyance. Moreover, if stilt parking spaces are treated as `common areas' then the proportionate price for the same would have to be paid by each flat purchaser, irrespective of whether he requires the parking space or not and there may be situations where the number of parking spaces will not be equal to the number of flats and, thus, a person who has paid proportionate price for
the common parking space may find himself without parking space, even though he has paid for the same. Lastly, the learned counsel submitted that in any event the promoter undertakes that the parking spaces shall be sold only to persons purchasing flats within the subject layout, i.e. the purchasers of flats in the seven buildings which form part of the layout and exist in close proximity.
9. Mr. Pravin K. Samdani,
learned senior counsel for one of the appellants viz., Maharashtra Chamber of
Housing Industry adopted a little different line of argument. He contended that
the provisions of MOFA permit a promoter to sell garage/open/covered car parking
space along with the flat. His submission is that MOFA does not define the word
`garage' and that word has to be understood and interpreted in accordance with
the plain grammatical meaning and not with reference to DCR which have been
framed under MRTP Act having different legislative object. As to whether the
stilt parking spaces are `common areas', Mr. Pravin K. Samdani would submit
that MOFA does not list out the `common areas' and
`limited common areas' while MAOA does define these terms and parking spaces thereunder are `common areas and facilities' unless otherwise provided in the declaration by the owner of the property. Under MOFA, it is for the promoter and under MAOA, the declarant has to prescribe at the outset the `common areas' and `limited common areas'. He referred to Sections 3(2)(h), 4(1)(a)(v), 10 and 11 of the MOFA and submitted that the promoter must at the outset indicate the nature of organization (condominium or society or company) that would be formed at the time of sale of flats and on formation of such organization, the promoter joins such organization with a right and power to dispose of remaining flats that would include the remaining unsold open/covered parking space/garage and the organization is transferred unsold open/covered parking spaces only if all the flats have been sold by the promoter. Learned senior counsel would submit that it is wholly irrelevant whether stilt/podium/basement/covered car park attracts FSI or not but the only relevant criterion is whether the promoter has listed it as a part of common area or
not and if he has not done so then it is sellable. If he has listed it, then every flat purchaser is proportionately required to contribute for the same.
`limited common areas' while MAOA does define these terms and parking spaces thereunder are `common areas and facilities' unless otherwise provided in the declaration by the owner of the property. Under MOFA, it is for the promoter and under MAOA, the declarant has to prescribe at the outset the `common areas' and `limited common areas'. He referred to Sections 3(2)(h), 4(1)(a)(v), 10 and 11 of the MOFA and submitted that the promoter must at the outset indicate the nature of organization (condominium or society or company) that would be formed at the time of sale of flats and on formation of such organization, the promoter joins such organization with a right and power to dispose of remaining flats that would include the remaining unsold open/covered parking space/garage and the organization is transferred unsold open/covered parking spaces only if all the flats have been sold by the promoter. Learned senior counsel would submit that it is wholly irrelevant whether stilt/podium/basement/covered car park attracts FSI or not but the only relevant criterion is whether the promoter has listed it as a part of common area or
not and if he has not done so then it is sellable. If he has listed it, then every flat purchaser is proportionately required to contribute for the same.
10. In the appeal filed by
one Chirag M. Vora, Mr. Sunil Gupta, learned senior counsel appeared. He argued
that MOFA was enacted and enforced in the year 1963 as a regulatory piece of
legislation and barring the few aspects in respect of which MOFA makes specific
inroads into the rights of the promoter in the matter of construction, sale,
management and transfer of flats, all other aspects of the right of the
promoter who enters into contract with the flat purchaser remain unaffected and
undisturbed. His submission is that MOFA gives a wide meaning to the word
`flat' so that buildings of all permutations and combinations may be covered
within the scope of that Act and keeping in mind both the plain language of Section 2(a-1) as well as
the object of that Act, widest meaning to the word `flat' deserves to be given
so that the plain language is satisfied and also the object of the Act is
better subserved. He adopted the line of interpretation put forth by Mr.
Tanmaya Mehta that `garage' includes covered parking spaces and even open parking spaces and is a `flat' in itself under Section 2(a-1). Relying upon Barnett & Block v. National Parcels Insurance Company Ltd.1, learned senior counsel submitted that the minimum requirement of garage is that there should be roof (even if there are no walls) and for the purpose of MOFA, not only a covered parking space like a stilt parking space but also an open parking space is tantamount to `garage'. According to learned senior counsel the word `garage' is not to be read simply as another kind of user as contrasted with residence, office, showroom or shop or godown or industry or business rather it has to be read in contrast and juxtaposed against the expression `set of premises'; it is the alternative to the `set of premises' and not merely to the different users of the set of premises mentioned in Section 2 (a-1). Mr. Sunil Gupta, learned senior counsel would submit that each stilt parking space as well as each open parking space is a `flat' in itself de hors the other accommodations amounting to `flat' under Section 2(a-1) of MOFA. In support of his argument, he relied [1942] 1 All E.R. 221
upon a decision of this Court in the case of Municipal Corporation of Greater Bombay & Ors. v. Indian Oil Corporation Ltd.2. In the alternative, he submitted that if the stilt parking space or open parking space is not held to be a `flat' underSection 2 (a-1), still that space/area cannot be treated as part of `common areas and facilities'. Firstly, he submitted that common areas and facilities do not include garage/parking spaces and such parking spaces remain ungoverned by MOFA. Sections 3 and 4 of MOFA concern with matters pertaining to `common areas and facilities' but MOFA does not define the meaning of `common areas and facilities'. Section 3(2)(m)(iii) leaves it to the promoter to disclose to his flat purchaser the nature, extent and description of the common areas and facilities. Section 4, by mentioning a prescribed form of agreement, rather opened the possibilities for the promoter to continue to exercise his traditional and pre-Act right to dispose of such parking spaces according to his choice. The stilt/covered/open parking spaces do not figure as part of the common areas and facilities in any project and remain within 1991 Suppl. (2) SCC 18
the contractual, legal and fundamental rights of the promoter to dispose of the same in the manner in which he proposes and his customers accept. Section 16 of MOFA does not override this right of a promoter. Secondly, learned senior counsel would submit that the provisions of MOFA must not be made to depend on the provisions of some other enactment just because the subject matter of the two legislations appears to be the same. In this regard, he referred to Maxwell Interpretation of Statutes, 12th Edition, pages 69 to 70 and G.P. Singh on Principles of Statutory Interpretations, 8th edition, pages 150 to
Tanmaya Mehta that `garage' includes covered parking spaces and even open parking spaces and is a `flat' in itself under Section 2(a-1). Relying upon Barnett & Block v. National Parcels Insurance Company Ltd.1, learned senior counsel submitted that the minimum requirement of garage is that there should be roof (even if there are no walls) and for the purpose of MOFA, not only a covered parking space like a stilt parking space but also an open parking space is tantamount to `garage'. According to learned senior counsel the word `garage' is not to be read simply as another kind of user as contrasted with residence, office, showroom or shop or godown or industry or business rather it has to be read in contrast and juxtaposed against the expression `set of premises'; it is the alternative to the `set of premises' and not merely to the different users of the set of premises mentioned in Section 2 (a-1). Mr. Sunil Gupta, learned senior counsel would submit that each stilt parking space as well as each open parking space is a `flat' in itself de hors the other accommodations amounting to `flat' under Section 2(a-1) of MOFA. In support of his argument, he relied [1942] 1 All E.R. 221
upon a decision of this Court in the case of Municipal Corporation of Greater Bombay & Ors. v. Indian Oil Corporation Ltd.2. In the alternative, he submitted that if the stilt parking space or open parking space is not held to be a `flat' underSection 2 (a-1), still that space/area cannot be treated as part of `common areas and facilities'. Firstly, he submitted that common areas and facilities do not include garage/parking spaces and such parking spaces remain ungoverned by MOFA. Sections 3 and 4 of MOFA concern with matters pertaining to `common areas and facilities' but MOFA does not define the meaning of `common areas and facilities'. Section 3(2)(m)(iii) leaves it to the promoter to disclose to his flat purchaser the nature, extent and description of the common areas and facilities. Section 4, by mentioning a prescribed form of agreement, rather opened the possibilities for the promoter to continue to exercise his traditional and pre-Act right to dispose of such parking spaces according to his choice. The stilt/covered/open parking spaces do not figure as part of the common areas and facilities in any project and remain within 1991 Suppl. (2) SCC 18
the contractual, legal and fundamental rights of the promoter to dispose of the same in the manner in which he proposes and his customers accept. Section 16 of MOFA does not override this right of a promoter. Secondly, learned senior counsel would submit that the provisions of MOFA must not be made to depend on the provisions of some other enactment just because the subject matter of the two legislations appears to be the same. In this regard, he referred to Maxwell Interpretation of Statutes, 12th Edition, pages 69 to 70 and G.P. Singh on Principles of Statutory Interpretations, 8th edition, pages 150 to
160. He, thus, submitted
that for the purposes of understanding the meaning of `flat' underSection 2(a-1) of MOFA,
the provisions of MAOA may be looked at but there would be no justification in
understanding the expression, `flat' defined in MOFA with reference to MRTP
Act, DCR, rules related to FSI and the provisions concerning property tax in
the Bombay Municipal Corporation Act.
11. On the other hand, Mr.
Neeraj Kumar Jain, learned senior counsel and Mr. Umesh Shetty, learned counsel
for the Societies stoutly supported the view of the High Court. The issues:
12. In view of the
contentions outlined above, the questions that arise for consideration are :
(i) whether stand alone `garage' or in other words `garage' as an independent
unit by itself is a `flat' within the meaning of Section 2(a-1) of MOFA;
(ii) whether stilt parking space/open parking space of a building regulated by
MOFA is a `garage'; (iii) If the answer to aforesaid questions is in the
negative, whether stilt parking space/open parking space in such building is
part of `common areas and facilities' and (iv) what are the rights of the
promoter vis-`-vis society (of flat purchasers) in respect of open parking
space/s / stilt parking space/s.
13. All these questions
have to be considered in the light of statutory provisions. At this stage we
notice some of the provisions of MOFA. As regards other statutory provisions,
we shall refer to them wherever necessary.
Relevant provisions of
MOFA:
14. The definition of
`flat' in Section 2(a-1)
is most vital and during course of arguments it has been rightly said that
meaning of the word `flat' is the actual fulcrum of MOFA. Section 2(a-1) reads thus:
"S.2(a-1).- "Flat" means a separate and
self-contained set of premises used or intended to be used for residence, or
office, show-room or shop or godown or for carrying on any industry or business
(and includes a garage), the premises forming part of a building and includes
an apartment.
Explanation.--Notwithstanding that provision is made for sanitary,
washing, bathing or other conveniences as common to two or more sets of
premises, the premises shall be deemed to be separate and self-contained."
15. `Promoter' is defined
in Section 2(c) as under
:
"S.2(c).- `Promoter' means a person and includes a
partnership firm or a body or association of persons, whether registered or not
who constructs or causes to be constructed a block or building of flats, or
apartments for the purpose of selling some or all of them to other persons, or
to a company, co-operative society or other association of persons, and
includes his assignees; and where the person who builds and the person who
sells are different persons, the term includes both;"
16. The general liabilities
of the promoter are set out in Section 3. To the extent
it is relevant to the present case it reads thus :
"S.3.- (1) Notwithstanding anything in any other law, a
promoter who intends to construct or constructs a block or building of flats,
all or some of which are to be taken or are taken on ownership basis, shall in
all transactions with persons intending to take or taking one or more of such
flats, be liable to give or produce, or cause to be given or produced, the
information and the documents hereinafter in this section mentioned.
(2) A promoter, who constructs or intends to construct such block
or building of flats, shall--
(a) make full and true disclosure of the nature of his title to
the land on which the flats are constructed, or are to be constructed; such
title to the land as aforesaid having been duly certified by an Attorney-at-
law, or by an Advocate of not less than three years standing, and having been
duly entered in the Property card or extract of Village Forms VI or VII and XII
or any other relevant revenue record;
(b) make full and true disclosure of all encumbrances on such
land, including any right, title, interest or claim of any party in or over
such land;
(c) to (h) .....
(i) not allow persons to enter into possession until a completion
certificate where such certificate is required to be given under any law, is
duly given by the local authority (and no person shall take possession of a
flat until such completion certificate has been duly given by the local
authority);
(j) to (l) .....
(m) when the flats are advertised for sale, disclose inter alia in
the advertisement the following particulars, namely :-
(i) the extent of the carpet area of the flat including the area
of the balconies which should be shown separately;
(ii) the price of the flat including the proportionate price of
the common areas and facilities which should be shown separately, to be paid by
the purchaser of flat; and the intervals at which the instalments thereof may
be paid;
(iii) the nature, extent and description of the common areas and
facilities;
(iv) the nature, extent and description of limited common areas
and facilities, if any.
(n) sell flat on the basis of the carpet area only:
Provided that, the promoter may separately charge for the common
areas and facilities in proportion `to the carpet area of the flat'.
Explanation.--For the purposes of this clause, the carpet area of
the flat shall include the area of the balcony of such flat."
17. Section 4 of MOFA
mandates that promoter before accepting advance payment or deposit shall enter
into an agreement with the prospective flat purchaser and such agreement shall
be registered. It provides as follows:
"S.4.- (1) Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats all or some of which are to be taken or are taken on ownership basis, shall, before, he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent of the sale price enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the Registration Act, 1908" and such agreement shall be in the prescribed form.
"S.4.- (1) Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats all or some of which are to be taken or are taken on ownership basis, shall, before, he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent of the sale price enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the Registration Act, 1908" and such agreement shall be in the prescribed form.
(1A) The agreement to be
prescribed under sub- section (1) shall contain inter alia the particulars as
specified in clause (a); and to such agreement there shall be attached the
copies of the documents specified in clause (b)--
(a) particulars--
(i) if the building is to be constructed, the liability of the
promoter to construct it according to the plans and specifications approved by
the local authority where such approval is required under any law for the time
being in force;
(ii) to (v) .....
(vi) the nature, extent and description of limited common areas
and facilities;
(vii) the nature, extent and description of limited common areas
and facilities, if any;
(viii) percentage of undivided interest in the common areas and
facilities appertaining to the flat agreed to be sold;
(ix) statement of the use for which the flat
is intended and restriction on its use, if any;
(x) percentage of undivided
interests in the limited common areas and facilities, if any, appertaining to
the flat agreed to be sold;
(b) ..... "
18. Section 10 casts duty
upon the promoter to take steps for formation of co-operative society or
company, as the case may be. The said provision reads as follows :
"S.10.- (1) As soon as a minimum number of persons required
to form a Co-operative society or a company have taken flats, the promoter
shall within the prescribed period submit an application to the Registrar for
registration of the organization of persons who take the flats as a
co-operative society or, as the case may be, as a company; and the promoter
shall join, in respect of the flats which have not been taken, in such
application for membership of a co-operative society or as the case may be, of
a company. Nothing in this section shall affect the right of the promoter to
dispose of the remaining flats in accordance with the provisions of this Act.
Provided that, if the promoter fails within the prescribed period
to submit an application to the Registrar for registration of society in the
manner provided in the Maharashtra Co-operative Societies Act, 1960, the
Competent Authority may, upon receiving an application from the persons who
have taken flats from the said promoter, direct the District Deputy Registrar,
Deputy Registrar or, as the case may be, Assistant Registrar concerned, to
register the society :
Provided further that, no such direction to
register any society under the preceding proviso shall be given to the District
Deputy Registrar, Deputy Registrar or, as the case may be, Assistant Registrar,
by the Competent Authority without first verifying authenticity of the
applicants' request and giving the concerned promoter a reasonable opportunity
of being heard."
19. There is also
obligation cast upon promoter to execute the documents of title and convey to
the co-operative society or the company or an association of flat
purchasers/apartment owners, right, title and interest in the land and building
by virtue of Section 11 which
reads thus:
"S.11.- (1) A promoter shall take all necessary steps to
complete his title and convey to the organization of persons, who take flats,
which is registered either as a co-operative society or as a company as
aforesaid, or to an association of flat takers or apartment owners his right,
title and interest in the land and building, and execute all relevant documents
therefore in accordance with the agreement executed under section 4 and if no
period for the execution of the conveyance is agreed upon, he shall execute the
conveyance within the prescribed period and also deliver all documents of title
relating to the property which may be in his possession or power.
2. It shall be the duty of the promoter to file with the Competent
Authority, within the prescribed period, a copy of the conveyance executed by him
under sub- section (1).
3. If the promoter fails to execute the
conveyance in favour of the co-operative society formed under Section 10 or, as the
case may be, the company or the association of apartment owners, as provided by
sub- section (1), within the prescribed period, the members of such
co-operative society or, as the case may be, the company or the association of
apartment owners may, make an application, in writing, to the concerned Competent
Authority accompanied by the true copies of the registered agreements for sale,
executed with the promoter by each individual member of the society or the
company or the association, who have purchased the flats and all other relevant
documents (including the occupation certificate, if any), for issuing a
certificate that such society, or as the case may be, company or association,
is entitled to have an unilateral deemed conveyance, executed in their favour
and to have it registered.
(4) .....
(5) ....."
20. Section 16 of MOFA
provides that the provisions contained therein are in addition to the
provisions of the T. P. Act and shall take effect notwithstanding anything to
the contrary contained in the contract.
Re: question nos. (i) and
(ii):
(A) What is `flat'?
21. For proper
consideration of questions (i) and (ii) as afore-referred, it is of
considerable importance to ascertain the import and meaning of the term `flat'
defined in Section 2(a-1)
of
MOFA. Rather the answer to the questions presented for consideration must squarely or substantially depend on what is a `flat'. Justice G.P. Singh in the `Principles of Statutory Interpretation' (12th edition, 2010) says that the object of a definition of a term is to avoid the necessity of frequent repetitions in describing all the subject matter to which that word or expression so defined is intended to apply. In other words, the definition clause is inserted for the purpose of defining particular subject-matter dealt with and it helps in revealing the legislative meaning. However, the definitive clause may itself require interpretation because of ambiguity or lack of clarity in its language. In the `Construction of Statutes' by Earl T. Crawford (1989 reprint) at page 362, the following statement is made: ".......the interpretation clause will control in the absence of anything else in the act opposing the interpretation fixed by the clause. Nor should the interpretation clause be given any wider meaning than is absolutely necessary. In other words, it should be subjected to a strict construction."
MOFA. Rather the answer to the questions presented for consideration must squarely or substantially depend on what is a `flat'. Justice G.P. Singh in the `Principles of Statutory Interpretation' (12th edition, 2010) says that the object of a definition of a term is to avoid the necessity of frequent repetitions in describing all the subject matter to which that word or expression so defined is intended to apply. In other words, the definition clause is inserted for the purpose of defining particular subject-matter dealt with and it helps in revealing the legislative meaning. However, the definitive clause may itself require interpretation because of ambiguity or lack of clarity in its language. In the `Construction of Statutes' by Earl T. Crawford (1989 reprint) at page 362, the following statement is made: ".......the interpretation clause will control in the absence of anything else in the act opposing the interpretation fixed by the clause. Nor should the interpretation clause be given any wider meaning than is absolutely necessary. In other words, it should be subjected to a strict construction."
22. The definition of term
`flat' in MOFA at the time of its enactment was this: `flat' means a separate
and self- contained set of premises used or intended to be used for residence,
or office, showroom or shop or godown (and includes a garage), the premises
forming part of a building. By Maharashtra Act No. 15 of 1971, the definition
of `flat' got amended and the words `and includes an apartment' were inserted
after the word `building'. Thereafter by Maharashtra Act 36 of 1986, the words
`or for carrying on any industry or business' were inserted after the word
`godown' and before the bracketed portion `(and includes a garage)'.
23. Before we analyze Section 2(a-1), if we ask
what the term `flat' means, apart from the statutory definition, the reply must
be that though it has no uniform meaning but in its natural and ordinary
meaning, `flat' is a self contained set of premises structurally divided and
separately owned for dwelling. Concise Oxford English Dictionary (10th edition,
revised) explains `flat' --a set of rooms comprising an individual place of
residence within a larger building.
24. Webster Comprehensive
Dictionary; International edition (Vol. 1) explains `flat'-- 1. a set of rooms
on one floor, for the occupancy of a family; apartment. 2. A house containing
such flats.
25. In Stroud's Judicial
Dictionary (5th edition, Vol. 2), a reference has been made to the observations
of Somervell L.J, in Murgatroyd v. Tresarden, 63 T.L.R. 62 and it is stated;
the natural meaning of the word `flat' is a separate self-contained dwelling.
26. In Words and Phrases,
Permanent Edition, (West Publishing Company), Vol. 17, while dealing with the
term `flat' generally, it is stated :
"The word `flat' has no technical, legal meaning, so that a
court can pronounce absolutely one way or the other. A building is a `flat' or
not, and, where the testimony is conflicting, the question is one of
fact".
27. Advanced Law Lexicon by
P. Ramanatha Aiyar (3rd edition, 2005) explains the term `flat', in the
following way - `in the ordinary use of the term a flat is a self-contained set
of rooms, structurally divided and separately owned or let from
the rest of a building, which for the most part consists of other flats separated in like manner'.
the rest of a building, which for the most part consists of other flats separated in like manner'.
28. Reverting back to the
definition of the term `flat' under Section 2(a-1), for a
`flat' within the meaning of this definition clause, the set of premises has to
be a separate and self-contained that forms part of the building which is used
or intended to be used for residence or office, showroom or shop or godown or
for carrying on industry or business. Separateness of one premises from another
premises physically and also in use or intended use for one of the uses
specified in the definition clause containing the necessary facilities for
self-contained accommodation is sine qua non for a unit being covered by the
definition of `flat' occurring in Section 2(a-1) which
includes an `apartment'. In other words, it must be a separate unit conforming
to the description capable of being used for one of these purposes--namely,
residence, office, showroom, shop, godown or for industrial or business
purposes. Alternative uses in Section 2(a-1) do expand
the ordinary meaning of the term `flat' but nevertheless such
premises that form part of building must be separate and self- contained. A set of premises is called self-contained if it has the following basic amenities available: (a) sanitary;
premises that form part of building must be separate and self- contained. A set of premises is called self-contained if it has the following basic amenities available: (a) sanitary;
(b) washing, bathing and
(c) other conveniences (cooking etc.) for the use of its occupant/s although as
provided in the explanation appended to Section 2(a-1) such
provision may be common to two or more sets of premises. The nature of
construction and user are important features of this definition clause. A unit
or accommodation to fit in the definition of `flat' must meet twin-test namely:
(i) self contained test and (ii) user test. The other predominant
characteristic is that it must form part of a building. Crucially, for the
relevant premises to be `flat':
7 It must be a separate and self contained premises;
7 It must form part of building;
7 It must be used or intended to be used for any of the uses
namely--residence, office, showroom, shop, godown or for carrying on any
industry or business.
29. In the discussion made
above, we have not referred to the bracketed portion namely - `(and includes a
garage)' so far. What is the meaning and significance of this bracketed
portion? On technical linguistic basis, the bracketed phrase can only attach to
the word preceding it. That may not be happy construction nor such construction
by reading bracketed portion `(and includes a garage)' with the preceding word
`business' appropriately reflects the meaning of the phrase. The scope of the
bracketed phrase has to be seen in the context of the definition given to the
word `flat' which is true indication of intent of the legislature. It was
suggested by learned senior counsel and counsel for the promoters that the
phrase `and includes a garage' must be read with the `set of premises' and not
with the user. This does not appear to be a correct reading of the expression.
We are not persuaded to accept such construction. We think that statutory
definition of `flat' must be construed keeping in view the intent of the
legislature and the context of the statute and, seen thus, the phrase, `and
includes a garage' in the bracket does not bring in `garage' by itself within
the
meaning of word `flat'. If stand alone `garage' (or a garage by itself) were intended by the legislature to be a `flat' within the meaning of Section 2(a-1), that could have been conveniently conveyed by use of the expression `or garage' after the word `business' in the same breath as preceding uses. The bracketed phrase is rather indicative of the legislative intention to include a `garage' as appurtenant or attachment to a flat which satisfies the ingredients of Section 2(a-1). To this extent Mr. Pravin K. Samdani is right in his submission. It is clear to us that stand alone `garage' or in other words `garage' as an independent unit by itself is not a `flat' within the meaning of Section 2(a-1) and we answer question (i) in the negative. The judgment of Bombay High Court in Dr. K.R. Agarwal Vs. Balkrishna3 to the extent the expression `or garage' has been read after the word `godown' in para 5 (clause 2) of the report does not state the correct legal position in what we have already said above.
meaning of word `flat'. If stand alone `garage' (or a garage by itself) were intended by the legislature to be a `flat' within the meaning of Section 2(a-1), that could have been conveniently conveyed by use of the expression `or garage' after the word `business' in the same breath as preceding uses. The bracketed phrase is rather indicative of the legislative intention to include a `garage' as appurtenant or attachment to a flat which satisfies the ingredients of Section 2(a-1). To this extent Mr. Pravin K. Samdani is right in his submission. It is clear to us that stand alone `garage' or in other words `garage' as an independent unit by itself is not a `flat' within the meaning of Section 2(a-1) and we answer question (i) in the negative. The judgment of Bombay High Court in Dr. K.R. Agarwal Vs. Balkrishna3 to the extent the expression `or garage' has been read after the word `godown' in para 5 (clause 2) of the report does not state the correct legal position in what we have already said above.
(B) Whether stilt parking
space is a garage?
AIR 1972 Bombay 343
30. The next question is,
whether stilt parking space in a building regulated by MOFA is a `garage'. The
term `garage' has not been defined in MOFA and, therefore, we need to first
find out what is the extent and scope of that term in Section 2(a-1). The
general term `garage' is appropriated in English from the French language and
means `keeping under cover' or `a place for keeping' of wagons as well as
automobiles. Concise Oxford English Dictionary (10th edition, revised) explains
`garage'-- 1 a building for housing a motor vehicle or vehicles. 2 an
establishment which sells fuel or which repairs and sells motor vehicles.
31. Webster Comprehensive
Dictionary, International edition (Vol. 1) explains the word `garage'--a
building in which motor vehicles are stored and cared for.
32. Words and Phrases,
Permanent Edition, (West Publishing Company), Vol. 17, states that `garage'
generally is a station in which motorcars can be sheltered, stored, repaired,
cleaned, and made ready for use; it is also place for private storage for
motorcars; stable for motor cars.
33. The DCR define two
expressions `garage-private' and `garage-public' in Regulations 2(47) and 2(48)
respectively. According to these Regulations, `garage-private' means a building
or a portion thereof designed and used for the parking of vehicles and
`garage-public' means a building or portion thereof designed other than as a
private garage, operated for gain, designed and/or used for repairing, serving,
hiring, selling or storing or parking motor-driven or other vehicles. In our
view, we must give to the word `garage' occurring in Section 2(a-1) a meaning
that general public or for that matter a flat purchaser of ordinary prudence
would give to that word or understand by that word. Learned senior counsel Mr.
Sunil Gupta referred to Barnett and Block1 wherein Atkinson, J. stated as
follows:
"Now what is a garage? No evidence was given to suggest or
prove that the word "garage" in the trade had got any special
meaning, and it was agreed to take four dictionary definitions set out in the
agreed statement of facts. The four definitions were these. From the SHORTER
OXFORD DICTIONARY: "A building for the storage or refitting of motor
vehicles." From the NEW CENTURY DICTIONARY : "A building for
sheltering, cleaning or repairing motor vehicles. To put or keep in a
garage." From the NEW STANDARD DICTIONARY:
"A building for
stabling or storing of motor vehicles of all
kinds." From NUTTAL'S STANDARD DICTIONARY :
kinds." From NUTTAL'S STANDARD DICTIONARY :
"A storehouse for motor vehicles." Those are four
definitions from leading dictionaries all containing at any rate one word in
common, and that is "building." As there is no evidence as to how the
general public understand the word "garage," I suppose one is
entitled to use one's own knowledge. I am inclined to think that ordinary man
in the street does regard a garage as connoting some sort of a building; how
far he would go I do not know. I do not know whether he would think that there
should be a wall all round it, or whether it would be sufficient if there were
three sides walled in and a roof. I have one in mind where there is a row of
sheds without any protection in front, which are commonly spoken of as
"garages," but I am going to apply here the test suggested by counsel
for the insured. He said "A garage is a place where one can get reasonable
protection and shelter for a car." Can I say that you are getting
reasonable protection and shelter for a car, if there is nothing to protect the
car from above - if there is no roof of any sort? I think the ordinary man, as
counsel for the insurers suggested, who took a house with a garage, if he came
and found merely an open shed without any roof, would think he had been
swindled, however high the walls might be. I cannot think that one is entitled
to say that it is adequate or reasonable protection or shelter if there is no
roof; but this is worse than that, though I agree that the walls are very good
here. Wherever you put a car in this yard, in addition to there being no
shelter from above, there will be no shelter on two sides. That seems to me to
be really conclusive."
He, thus, submitted that
even a place with merely a roof may well be a `garage'. By placing reliance on
condition No. 2 in Form V of 1964 Rules, learned senior counsel submitted that
for the purposes of MOFA, even an open parking space is tantamount to a `garage'.
for the purposes of MOFA, even an open parking space is tantamount to a `garage'.
34. The relevant portion of
condition No. 2, Form V appended to 1964 Rules reads as under:
"2. The Flat Purchaser hereby agrees to purchase from the
Promoter and the Promoter hereby agrees to sell to the Flat Purchaser one flat
No. .......... of the Type .......... of carpet area admeasuring .......... sq.
meters (which is inclusive of the area of balconies) on .......... floor as
shown in the Floor plan thereof hereto annexed and marked Annexures D/Shop No.
.......... /covered/open Garage No. .......... in the .......... Building
(hereinafter referred to as "the Flat") for the price of Rs. ..........
including Rs. .......... being the proportionate price of the common areas and
facilities appurtenant to the premises, the nature extent and description of
the common/limited common areas and facilities/limited common areas and
facilities which are more particularly described in the Second Schedule
hereunder written. The Flat Purchasers hereby agrees to pay to that Promoter
balance amount of purchase price of Rs. .......... (Rupees ..........
...............) having been paid to the Promoter on or before the execution of
his agreement in the following manner."
35. We do not perceive any
force in the argument that open parking space tantamounts to a `garage' within
the meaning of Section 2(a-1)
read with condition No. 2 Form V of 1964 Rules. Can a person buying a flat for
residence or one of the uses mentioned in Section 2(a-1) really
think that open to
the sky or open space for parking motor vehicles is a garage? We do not think so. The word `garage' may not have uniform connotation but definitely every space for parking motor vehicles is not a garage. A roofless erection could not be described a garage. What is contemplated by a `garage' in Section 2(a-1) is a place having a roof and walls on three sides. It does not include an unenclosed or uncovered parking space. It is true that in condition No. 2, Form V the words `covered/open garage' have been used but, in our view, the word `open' used in the Model Form V cannot override the true meaning of term `garage' in Section 2(a-1). As a matter of fact, none of the provisions of MOFA regards `open garage' connoting `flat' or an appurtenant/attachment to a flat. We do not think undue importance should be given to word `open' which has loosely been used in condition No. 2, Form V. The true meaning of the term `garage' in Section 2(a-1), we think, is not affected by a Model Form V appended to the 1964 Rules.
the sky or open space for parking motor vehicles is a garage? We do not think so. The word `garage' may not have uniform connotation but definitely every space for parking motor vehicles is not a garage. A roofless erection could not be described a garage. What is contemplated by a `garage' in Section 2(a-1) is a place having a roof and walls on three sides. It does not include an unenclosed or uncovered parking space. It is true that in condition No. 2, Form V the words `covered/open garage' have been used but, in our view, the word `open' used in the Model Form V cannot override the true meaning of term `garage' in Section 2(a-1). As a matter of fact, none of the provisions of MOFA regards `open garage' connoting `flat' or an appurtenant/attachment to a flat. We do not think undue importance should be given to word `open' which has loosely been used in condition No. 2, Form V. The true meaning of the term `garage' in Section 2(a-1), we think, is not affected by a Model Form V appended to the 1964 Rules.
36. The question then is as
to whether the stilted portion or stilt area of a building is a garage under
MOFA. A
stilt area is a space above the ground and below the first floor having columns that support the first floor and the building. It may be usable as a parking space but we do not think that for the purposes of MOFA, such portion could be treated as garage. It was argued that the test accepted by Atkinson, J. in Barnett & Block1-that a garage is a place where one can get reasonable protection and shelter for a car--is satisfied by stilt car parking space and such space is a garage. We are unable to agree. The test accepted by Atkinson, J. in Barnett and Block1 also does not support this argument. Even as per that test a place having roof but offering no shelter or protection on two sides cannot be a garage. It is worth repeating what Atkinson,J. said, `....I am inclined to think that the ordinary man in the street does regard a garage as connoting some sort of building; how far he would go I do not know. I do not know whether he would think that there should be a wall all round it, or whether it would be sufficient if there were three sides walled in and a roof. I have one in mind where there is row of sheds without any protection in front, which are commonly spoken of
as "garages".' Atkinson,J. applied the test of `reasonable protection and shelter for car' as was suggested by the counsel for the insurer while construing the term `garage' in a policy of insurance. For the purposes of MOFA, and particularly Section 2(a-1), the term `garage' must be considered as would be understood by a flat purchaser and such person would contemplate garage which has a roof and wall on three sides. Our answer to question No. (ii) is, therefore, no. Re: question no. (iii) - Whether stilt parking spaces are part of `common areas and facilities'?
stilt area is a space above the ground and below the first floor having columns that support the first floor and the building. It may be usable as a parking space but we do not think that for the purposes of MOFA, such portion could be treated as garage. It was argued that the test accepted by Atkinson, J. in Barnett & Block1-that a garage is a place where one can get reasonable protection and shelter for a car--is satisfied by stilt car parking space and such space is a garage. We are unable to agree. The test accepted by Atkinson, J. in Barnett and Block1 also does not support this argument. Even as per that test a place having roof but offering no shelter or protection on two sides cannot be a garage. It is worth repeating what Atkinson,J. said, `....I am inclined to think that the ordinary man in the street does regard a garage as connoting some sort of building; how far he would go I do not know. I do not know whether he would think that there should be a wall all round it, or whether it would be sufficient if there were three sides walled in and a roof. I have one in mind where there is row of sheds without any protection in front, which are commonly spoken of
as "garages".' Atkinson,J. applied the test of `reasonable protection and shelter for car' as was suggested by the counsel for the insurer while construing the term `garage' in a policy of insurance. For the purposes of MOFA, and particularly Section 2(a-1), the term `garage' must be considered as would be understood by a flat purchaser and such person would contemplate garage which has a roof and wall on three sides. Our answer to question No. (ii) is, therefore, no. Re: question no. (iii) - Whether stilt parking spaces are part of `common areas and facilities'?
37. The High Court has held
that the stilt car parking spaces are part of the common amenities. Is the High
Court right in its view? MOFA does not define nor it explains `common areas and
facilities' though the said phrase is used at various places in that Act. Mr.
Pravin K. Samdani, learned senior counsel for Maharashtra Chamber of Housing
Industry submitted that following could be termed as part of the `common
areas':
7 15% Recreation Ground (RG) Area;
7 Recreational facilities and/or club
house on above
RG Areas;
7 Society Office;
7 Security guards cabin;
7 Common passage/lobbies;
7 Stair case;
7 Lift;
7 Terraces over the roof of the building;
7 Landings on each floor;
7 Columns and beams of the building
7 Playgrounds, if any.
According to him, the
following could be part of `Limited Common Areas':
7 Separate lift attached to a particular flat and/or certain
number of flats;
7 Terrace attached to a flat;
7 Servants toilet on each floor, meant
for the user
of the flats on
that particular floor;
The aforesaid list as suggested by the learned senior counsel, in
our opinion, is not exhaustive. It may not be out of place to refer to Section
3(f) of MAOA which defines `common areas and facilities' as follows:
"3(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 t he
buildings;
(3) the basements, cellars, yards, gardens, parking areas and
storage spaces;
(4) the premises for the lodging of janitors or persons employed
for the management of the property;
(5) installations 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 existence, maintenance and safety, or normally in common use;"
It is true that
interpretation clause or legislative definition in a particular statute is
meant for the purposes of that statute only and such legislative definition
should not control other statutes but the parts of the property stated in
clauses (2), (3) and (6) of Section 3(f) as
part of `common areas and facilities' for the purposes of MAOA are what is
generally understood by the expression `common areas and facilities'. This is
fortified by the
fact that the areas which according to the learned senior counsel could be termed as `common areas' in a building regulated by MOFA are substantially included in aforenoticed clauses of Section 3(f) of MAOA. Looking to the scheme and object of MOFA, and there being no indication to the contrary, we find no justifiable reason to exclude parking areas (open to the sky or stilted portion) from the purview of `common areas and facilities' under MOFA.
fact that the areas which according to the learned senior counsel could be termed as `common areas' in a building regulated by MOFA are substantially included in aforenoticed clauses of Section 3(f) of MAOA. Looking to the scheme and object of MOFA, and there being no indication to the contrary, we find no justifiable reason to exclude parking areas (open to the sky or stilted portion) from the purview of `common areas and facilities' under MOFA.
38. It was argued that
under MOFA it is for the promoter to prescribe and define at the outset the
`common areas' and unless it is so done by the promoter, the parking area
cannot be termed as part of `common areas'. We are quite unable to accept this
submission. Can a promoter take common passage/lobbies or say stair case or RG
area out of purview of `common areas and facilities' by not prescribing or
defining the same in the `common areas'? If the answer to this question is in
negative, which it has to be, this argument must fail. It was also submitted
that by treating open/stilt parking space as part of `common areas', every flat
purchaser will have to bear
proportionate cost for the same although he may not be interested in such parking space at all. We do not think such consideration is relevant for the consideration of term `common areas and facilities' in MOFA. It is not necessary that all flat purchasers must actually use `common areas and facilities' in its entirety. The relevant test is whether such part of the building is normally in common use. Then it was submitted that if a parking space is sold to a flat purchaser, it is to the exclusion of other flat purchasers and, therefore, logically also it cannot be part of `common areas'. This submission is founded on assumption that parking space (open/covered) is a `garage' and sellable along with the flat. We have, however, held in our discussion above that open to the sky parking area or stilted portion usable as parking space is not `garage' within the meaning ofSection 2(a-1) and, therefore, not sellable independently as a flat or along with a flat. As a matter of fact, insofar as the promoter is concerned, he is not put to any prejudice financially by treating open parking space/stilt parking space as part of `common areas' since he is entitled to charge
price for the common areas and facilities from each flat purchaser in proportion to the carpet area of the flat. MOFA mandates the promoter to describe `common areas and facilities' in the advertisement as well as the `agreement' with the flat purchaser and the promoter is also required to indicate the price of the flat including the proportionate price of the `common areas and facilities'. If a promoter does not fully disclose the common areas and facilities he does so at his own peril. Stilt parking spaces would not cease to be part of common areas and facilities merely because the promoter has not described the same as such in the advertisement and agreement with the flat purchaser. Although there is some merit in the contention of the appellant that High Court erred in placing reliance on the two aspects--namely, that the area of stilt parking space is not included in the FSI and such area is not assessable to the corporation taxes - in reaching the conclusion that stilt parking space is part of `common areas' but in our view even if these two aspects are excluded, in what we have discussed above stilt parking space/open parking space
of a building regulated by MOFA is nothing but a part of `common areas' and, accordingly, we answer question no. (iii) in the affirmative.
proportionate cost for the same although he may not be interested in such parking space at all. We do not think such consideration is relevant for the consideration of term `common areas and facilities' in MOFA. It is not necessary that all flat purchasers must actually use `common areas and facilities' in its entirety. The relevant test is whether such part of the building is normally in common use. Then it was submitted that if a parking space is sold to a flat purchaser, it is to the exclusion of other flat purchasers and, therefore, logically also it cannot be part of `common areas'. This submission is founded on assumption that parking space (open/covered) is a `garage' and sellable along with the flat. We have, however, held in our discussion above that open to the sky parking area or stilted portion usable as parking space is not `garage' within the meaning ofSection 2(a-1) and, therefore, not sellable independently as a flat or along with a flat. As a matter of fact, insofar as the promoter is concerned, he is not put to any prejudice financially by treating open parking space/stilt parking space as part of `common areas' since he is entitled to charge
price for the common areas and facilities from each flat purchaser in proportion to the carpet area of the flat. MOFA mandates the promoter to describe `common areas and facilities' in the advertisement as well as the `agreement' with the flat purchaser and the promoter is also required to indicate the price of the flat including the proportionate price of the `common areas and facilities'. If a promoter does not fully disclose the common areas and facilities he does so at his own peril. Stilt parking spaces would not cease to be part of common areas and facilities merely because the promoter has not described the same as such in the advertisement and agreement with the flat purchaser. Although there is some merit in the contention of the appellant that High Court erred in placing reliance on the two aspects--namely, that the area of stilt parking space is not included in the FSI and such area is not assessable to the corporation taxes - in reaching the conclusion that stilt parking space is part of `common areas' but in our view even if these two aspects are excluded, in what we have discussed above stilt parking space/open parking space
of a building regulated by MOFA is nothing but a part of `common areas' and, accordingly, we answer question no. (iii) in the affirmative.
Re: question no. (iv) -
what are the rights of a promoter vis-`-vis society in respect of stilt parking
spaces?
39. We have now come to the
last question namely-- what are the rights of a promoter vis-`-vis society (of
flat purchasers) in respect of stilt parking space/s. It was argued that the
right of the promoter to dispose of the stilt parking space is a matter falling
within the domain of the promoter's contractual, legal and fundamental right
and such right is not affected. This argument is founded on the premise,
firstly, that stilt parking space is a `flat' by itself within the meaning ofSection 2(a-1) and in the
alternative that it is not part of `common areas'. But we have already held
that `stilt parking space' is not covered by the term `garage' much less a
`flat' and that it is part of `common areas'. As a necessary corollary to the
answers given by us to question nos. (i) to (iii), it must be held that stilt
parking space/s being part of `common areas' of the building developed by the
promoter, the only right that the
promoter has, is to charge the cost thereof in proportion to the carpet area of the flat from each flat purchaser. Such stilt parking space being neither `flat' under Section 2(a-1) nor `garage' within the meaning of that provision is not sellable at all.
promoter has, is to charge the cost thereof in proportion to the carpet area of the flat from each flat purchaser. Such stilt parking space being neither `flat' under Section 2(a-1) nor `garage' within the meaning of that provision is not sellable at all.
40. MOFA was enacted by the
Maharashtra Legislature as it was found that builders/developers/promoters were
indulging in malpractices in the sale and transfer of flats and the flat
purchasers were being exploited. The effect of MOFA may be summarized as
follows. First, every promoter who constructs or intends to construct block or
building of flats in the area to which MOFA applies has to strictly adhere to
the provisions contained therein, i.e., inter alia, he has to make full and
true disclosure of the nature of his title to the land on which the flats are
constructed and also make disclosure in respect of the extent of the carpet
area of the flat and the nature, extent and description of the common areas and
facilities when the flats are advertised for sale. Secondly, the particulars
which are set out in Section 4(1A) (a)
(i) to (x) have
to be incorporated in the agreement with the flat purchaser. Thirdly, the promoter has to apply to the Registrar for registration of the organization (co-operative society or company or condominium) as soon as minimum number of persons required to form such organization have taken flats. As regards unsold flats, the promoter has to join such organization although his right to dispose of unsold flats remains unaffected. Fourthly, and more importantly, the promoter has to take all necessary steps to complete his title and convey to the organization his right, title and interest in the land and building and execute all relevant documents accordingly. It was argued by Mr. Tanmaya Mehta, learned counsel for the promoter that in view of the provisions of MOFA,Section 6 of T.P. Act and Article 300A of the Constitution, the right of the promoter to transfer parking spaces is not at all restricted. Relying upon the decisions of this Court in ICICI Bank Ltd. v. SIDCO Leathers Ltd. & Ors..4, Karnataka State Financial Corporation v. N. Narasimahaiah & Ors.5 and Bhikhubhai Vithlabhai Patel & Ors., (2006) 10 SCC 452 (2008) 5 SCC 176
v. State of Gujarat & Anr.6, he submitted that the provisions contained in MOFA must be construed strictly and there is no provision either express or by necessary implication in MOFA restricting the sale of stilt or open parking spaces. Mr. Sunil Gupta also argued that promoter continues to have contractual, legal and fundamental right to dispose of the stilt/open parking space in the manner in which he proposes and his consumers accept. We think this argument does not bear detailed examination. Suffice it to say that if the argument of learned senior counsel and counsel for promoter is accepted, the mischief with which MOFA is obviously intended to deal with would remain unabated and flat purchasers would continue to be exploited indirectly by the promoters. In our opinion, MOFA does restrict the rights of the promoter in the block or building constructed for flats or to be constructed for flats to which that Act applies. The promoter has no right to sell any portion of such building which is not `flat' within the meaning of Section 2(a-1) and the entire land and building has to be conveyed to the organisation; the only right remains with the (2008) 4 SCC 144
promoter is to sell unsold flats. It is, thus, clear that the promoter has no right to sell `stilt parking spaces' as these are neither `flat' nor appurtenant or attachment to a `flat'.
to be incorporated in the agreement with the flat purchaser. Thirdly, the promoter has to apply to the Registrar for registration of the organization (co-operative society or company or condominium) as soon as minimum number of persons required to form such organization have taken flats. As regards unsold flats, the promoter has to join such organization although his right to dispose of unsold flats remains unaffected. Fourthly, and more importantly, the promoter has to take all necessary steps to complete his title and convey to the organization his right, title and interest in the land and building and execute all relevant documents accordingly. It was argued by Mr. Tanmaya Mehta, learned counsel for the promoter that in view of the provisions of MOFA,Section 6 of T.P. Act and Article 300A of the Constitution, the right of the promoter to transfer parking spaces is not at all restricted. Relying upon the decisions of this Court in ICICI Bank Ltd. v. SIDCO Leathers Ltd. & Ors..4, Karnataka State Financial Corporation v. N. Narasimahaiah & Ors.5 and Bhikhubhai Vithlabhai Patel & Ors., (2006) 10 SCC 452 (2008) 5 SCC 176
v. State of Gujarat & Anr.6, he submitted that the provisions contained in MOFA must be construed strictly and there is no provision either express or by necessary implication in MOFA restricting the sale of stilt or open parking spaces. Mr. Sunil Gupta also argued that promoter continues to have contractual, legal and fundamental right to dispose of the stilt/open parking space in the manner in which he proposes and his consumers accept. We think this argument does not bear detailed examination. Suffice it to say that if the argument of learned senior counsel and counsel for promoter is accepted, the mischief with which MOFA is obviously intended to deal with would remain unabated and flat purchasers would continue to be exploited indirectly by the promoters. In our opinion, MOFA does restrict the rights of the promoter in the block or building constructed for flats or to be constructed for flats to which that Act applies. The promoter has no right to sell any portion of such building which is not `flat' within the meaning of Section 2(a-1) and the entire land and building has to be conveyed to the organisation; the only right remains with the (2008) 4 SCC 144
promoter is to sell unsold flats. It is, thus, clear that the promoter has no right to sell `stilt parking spaces' as these are neither `flat' nor appurtenant or attachment to a `flat'.
41. In view of the above,
it is not at all necessary to deal with the factual submissions advanced by Mr.
Tanmaya Mehta. Having regard to the answer to question no. (iv), the finding of
the High Court that undertakings are neither binding on the flat purchasers nor
the society also warrants no interference.
42. These appeals,
accordingly, fail and are dismissed with no order as to costs.
..............................J
(R. M. Lodha) .............................J (A. K. Patnaik) New Delhi.
August 31, 2010.
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