Introduction:

The Delhi Apartment Ownership Act was introduced in 1986 and extends to the whole of the Union territory of Delhi. The Act provides that there shall be an Association of Apartment Owners (“AOA”) for the administration of the affairs in relation to apartments and the property appertaining thereto to which the Act is applicable. The AOA shall also be responsible for the management of common areas and facilities. In pursuance of the same, the AOA has also been entrusted with widespread powers to maintain the condominium. The association derives its powers from Section 15 of the Act which lays down the provisions for framing Model Bye-Laws. The administration of the project and management of common areas and facilities by the AOA must be in concurrence with the provisions laid under the Bye-Laws.

Powers of the Association of Apartment Owners (AOA)

As mentioned above the Association of Apartment Owners is vested with vast powers to maintain the affairs in the condominium. The powers given to the Association of Apartment Owners by the Delhi Apartment Ownership Act, 1986, and rules and model bye-laws made thereunder are as follows:

• The association has been given the sole right to maintain the common areas and facilities and, in this regard, it can collect the share of common expenses from the apartment owners.
• The association can advance a short term to any of its members with the consent of other members
• The association can rent out parts of common areas to outsiders for commercial purposes.
• The association can distribute the common profits generated by it among the apartment owners in case any are left after deducting the common expenses.
• The association can also create a reserve fund from the common profits generated by it.

Responsibility to form the Association of Apartment Owners (AOA)

Though the provisions mentioned in the section are unclear whether it be the responsibility of the Promoter to form the AOA, but on the perusal of the definition of the word “Promoter” given under the Act makes it becomes quite clear that a Promoter is a person or co-operative society, as the case may be, who is responsible for the construction of any multi-storey building. Thus it is apparent that nowhere the Promoter is given the right to maintain the condominium on behalf of the apartment owners. Moreover, section (15) of the Act clearly specifies that there shall be an Association for Apartment Owners for the administration of the affairs in relation to the apartments and the property appertaining thereto and for the management of common areas and facilities. This bestows the sole right of maintaining the affairs of the condominium to the AOA.

But in real practice, it has been observed that the Promoter does not comply with the same, and the majority of the group housing projects in NCT of Delhi are still maintained by the Promoters, and that too on arbitrary terms. This is because the Act is silent on when the association can be formed. But, in this case, reference can be taken from Real Estate (Regulation & Development) Act, 2016 (“RERA Act”). Section 11(4)(e) of the RERA act has provided that in absence of any other laws, the association of allottees, by whatever name called, shall be formed within three months of the majority of allottees having booked the flat. Taking into consideration the same it is advisable that AOA may be formed when the majority of apartments are sold in the condominium and their respective deeds of Apartments are registered. Furthermore, it must be the joint responsibility of the Promoter and the apartment owners to form the AOA and the Promoter must peacefully hand over the responsibility of maintenance and also the common areas and facilities to the AOA.

Formation of the Association of Apartment Owners (AOA)

As stated above, in practice the Promoters are most reluctant to form an Association of Apartment Owners as the same will take away their right to manage the common areas and facilities which will ultimately lead to a loss of money collected for the purpose. So in case a majority of apartments i.e. more than 50% of the apartments are sold in the Condominium and even after repeated requests of the apartment owners the Promoter is not forming an Association of Apartment Owners the buyers must serve a notice of 30 days to the Promoter asking him to form the AOA. A copy of the notice must also be served to the Competent Authority as defined in the Act for its perusal. In case, the Promoter after 30 days of the receipt of the notice does not reply, the residents can move further to make AOA by themselves and in this regard can call a General Body Meeting (GBM). The finer nuances of the notice can be discussed with the advocate depending on the circumstances.

The General Body consists of all the apartment owners in the building. This meeting should be notified through wider publicity and all the apartment owners must be aware of the same. The agenda of the meeting should be mentioned clearly i.e. formation of AOA, adoption of Model Bye-Laws, and election of the Board of Management. In the GBM the apartment owners must pass a resolution to form the AOA, adopting the model Bye-laws and must also choose a Board of Management comprising of President, VP, Secretary & Treasurer, and Executive members.

The apartment owners after sending the Legal Notice to the Promoter may also directly approach the competent authority and make a complaint to them about the non-adherence of the law by the Promoter. If in case the Competent Authority is not issuing directions and is delay dallying the process, then the apartment owners can directly approach the Hon’ble High Court and file a writ petition. The Hon’ble High Court will then direct the competent authority to take steps for the formation of the apartment owners association. Once there will be an order from the High Court then the process of registration will be faster and smoother.

O.S. Bajpai vs The Administrator

The Promoters were not abiding by the provisions of the law and were not helping in the formation of the AOA. Instead, the Promoters ensured that such associations do not come up and they keep carrying on the maintenance work and continue minting money from the same. The provisions of the statute were not getting enforced due to the apathy of the government. The Hon’ble Delhi High Court taking cognizance of this issue in O.S. Bajpai Vs. The Administrator (Lt. Governor Of Delhi) & Ors. [WP (C) No. 1959 of 2007] issued some guidelines for the implementation of the act. The Hon’ble Court directed the government of BGT of Delhi to appoint the competent authorities within 30 days of passing of the order. On the issue of the formation of the Apartment Owners’ Association, the Hon’ble Court directed “the competent Authority to send a specific notice to all multi-storeyed apartments informing the owners of apartments that it is their right to form owners’ association in accordance with the bye-laws The officials from the office of the competent authority shall be deputed to visit all these multi-storeyed buildings, who would ensure the formation of owner’s association. They would be authorized to call for the meeting of the owners and supervise the formation of the association, so as to ensure the smooth formation of the association. This exercise in respect of multi-storeyed buildings shall be completed within six months and the existing maintenance companies shall transfer the management of the multi-storeyed buildings to such associations.”

The judgment has made it quite clear that it is the right of the Apartment Owners to make an association and subsequently maintain the affairs of the condominium they are residing it through the association.

Conclusion:

The Association of Apartment Owners has been recognized as the official body for administrating the affairs in a group housing project and for the management of common areas and facilities therein. The Government has officially recognized the right of the apartment owners to maintain their apartments and the common areas and facilities they are using. In pursuance of the same, the AOA has also been entrusted with widespread powers to maintain the condominium. The same has made the process of maintenance more democratic where the apartment owners are responsible for maintaining the condominium by themselves without any external interference.

(This article is for informational purposes only and is not meant to be treated as legal advice. Before forming an Association of Apartment Owners it is necessary to consult your attorney.)