Introduction

The Delhi Apartment Ownership Act, 1986 was enacted by the Indian Parliament keeping in view the fact that the ownership and control of the material resources of the community must be distributed in such a way that it sub-serves a common good. Therefore, the objective of the act was to confer an inheritable and transferable right to the apartment owners in an apartment including a proportionate and undivided share of the land and other common areas. The act also considered the rightful demand of the apartment owners and gave autonomy to the apartment owners to manage the common areas and facilities by themselves instead of relying on the mercy of the Builders.

Relevant Provisions of the Delhi Apartment Ownership Act

Applicability of the Act:

The Act is applicable to every apartment in a multi-storeyed building whether constructed on freehold land or leasehold land if the lease is for a period of more than thirty (30) years. A “multi-storeyed building” means a building constructed on any land which contains four or more apartments. In case there are two or more Buildings in any area designated as a block, pocket or otherwise, each building in that block must contain two or more apartments, with a total of four or more apartments in the whole block.  

Moreover, for any building which contains only two or three apartments, the provisions of the act could also be applicable to it if the owner of such building indicates his intention to make the provisions of this Act applicable to such building. The declaration given by the owner of the building must be duly executed and registered under the provisions of the Registration Act, 1908 and after such a declaration is made by him the owner has to also execute and register a Deed of Apartment.

Transfer of Interest in Common Areas and Facilities:

Every apartment owner who becomes entitled to the exclusive ownership and possession of an apartment shall also be entitled to a percentage of undivided interest in the common areas and facilities. Such interest in the common areas and facilities provided to the apartment owner shall be specified in the Deed of Apartment and the percentage of the undivided interest shall be calculated based on the value of the apartment in relation to the value of the property. Though every apartment owner is entitled to such interest in the common areas and facilities but it is pertinent to remember such an interest is undividable and cannot be separated from the apartment. Moreover, no apartment owner or any other person shall bring any action for partition or division of any part thereof.

Deed of Apartment:

Every Promoter within three months from the date of allotment, sale or other transfer of any apartment shall execute a Deed of Apartment containing the details of the allottee, land, apartment, building and the common areas and facilities. The same has to be filed in the office of the competent authority and deliver a certified copy of the Deed of Apartment as registered under the registration act.

Formation of Association of Apartment Owners:

The Delhi Apartment Ownership Act, mandates that there shall be an Association of Apartment Owners (“AOA’) 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. Moreover, there shall be only a single Association of Apartment Owners in any block or pocket containing more than one multi-storeyed building.

The Act is silent on the aspect of when can such an Association of Apartment Owners be formed. Though as per section 11(4)(e) of the Real Estate (Regulation & Development) Act, 2016 the 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.

The property shall be administered by the Association of Apartment Owners in accordance with the model bye-laws framed by the Administrator. The AOA has to adhere to the bye-laws framed by the Administrator and can not make any departure from the same. Any alteration can only be made to these bye-laws by the AOA after taking approval of the Administrator. Moreover the AOA in the first meeting and make its bye-laws in accordance with the model bye-laws. The model bye-laws contain in them the manner in which AOA is to be formed, the election of the Board of Management of AOA, the powers and duties of the Board, the method of calling meetings of the Association of Apartment Owners, Maintenance, repair and replacement of the common areas and facilities and payment thereof, etc.

Types of Disputes

The most common dispute that is seen is that the builder does not adhere to the provisions of the act. The following issues arise due to the non-compliance from the side of the Builders :

1. The interest in common areas and facilities is not conveyed to the apartment owners, neither fictionally nor practically while executing the Agreement for allotment/sale of the apartment.
2. Builders execute the Sale Deed and register it in accordance with the Registration Act in spite of specific provisions contained in the Delhi Apartment Ownership Act.
3. No associations of apartment owners are formed, and the builders, in fact, ensure that such associations do not come up.

These disputes used to arise as there was no provision in the Act, whereby the competent authority given under the act is authorized to take action against the promoters/builders who have violated the provisions of this Act. Against this, a PIL was filed in the Hon’ble Delhi High Court O.S. Bajpai Vs. The Administrator (Lt. Governor Of Delhi) & Ors. [WP (C) No. 1959 of 2007]. Taking into cognizance the matter the Hon’ble Court stated that “it cannot give positive directions to the respondents to bring out a suitable legislation, influenced by the aforesaid consideration, we can exhort the respondents to proceed further in the direction. But till the time new legislation comes up (if at all it happens), some means are to be found for effective implementation of the present legislation, as far as possible.” Considering all this the Hon’ble court laid some guidelines for the implementation of the act.

Guidelines of Hon’ble Delhi High Court in O.S. Bajpai vs The Administrator

The provisions of the statute were not getting enforced due to the apathy of the government, hence, the Delhi High Court in a Public Interest Litigation issued following guidelines for the proper implementation of the Act in the NCT of Delhi. 

18. Governed by the aforesaid consideration and the role of the Court, which it is supposed to perform in such circumstances, we have considered the matter. The petitioner had also given certain suggestions for proper and effective implementation of the Act in the present form. After due deliberation thereupon, we feel that the following steps can be taken by the respondent seven within the existing law, which may go a long way to curb the menace:

a) Appointment of Competent Authority:

1. That the competent authorities may be appointed/nominated area-wise or building-wise, so that these authorities are able to effectively discharge their functions. This should be done in accordance with the definition of the competent authority as given in section 2(k) of the Act.
2. The competent authority may authorize for this purpose as many officers of the rank of the Deputy Commissioner or Joint Commissioner as may be necessary for the purpose.

The aforesaid action be taken within 30 days of this order.

Registration of Deed of Apartment:

i) The promoter/builder shall in all cases where the transfer has taken place under the sale deed/lease deed/transfer by endorsement, prior to the date of the order, which may be passed by this Court, execute the deed of apartment in the proforma as may be approved and issued by the competent authority keeping in view the provisions of section 13(1) of the Delhi Apartment Ownership Act. This should be done within two months from the date of constituting the competent authorities.

ii) For future, the deed of apartment may be registered within one month of its execution by the owner and the promoter/builder.

iii) That in the case of existing owners, the deed of apartment shall be prepared by the existing owners and the promoters/builders in the proforma as mentioned in para (i) above enclosing their original Title deed (sale deed/lease deed/transfer by endorsement) and the same will be presented before the sub-registrar for registration. It will be the responsibility of the promoter/builder to do so as provided in Section 13(2) of the Act and also to deliver a certified copy of the registered deed to the owner of the apartment after it is registered.

iv) In the case of leaseholder land, the deed of apartment be entered into between three parties, i.e., promoter, apartment owner and Land Development Officer (L & DO) on behalf of the President of India as confirming party.

v) In the case of freehold land; the deed of apartment should be entered into between the promoter/builder and the apartment owner.

vi) The competent authority constituted in the aforesaid manner shall give notice to the promoters/builders of all the multi-storeyed apartments in Delhi directing them to execute sale deed/lease deed/transfer by endorsement in favour of the buyers for which time bound period would be prescribed. The competent authority shall prepare the necessary proforma for this purpose and issue directions to execute the deed of apartments in the said proforma, keeping in view the provisions of Section 13(1) of the Act.

vii) General instructions shall also be issued for future, viz., the deed of apartment would be registered within one month of its execution by the promoters/builders and the owner.

viii)The terms of deed of apartment shall, inter alia, include conveyance of exclusive ownership and possession of (a) apartment owned by the respective owner; (b) title to such percentage of undivided interest in the common areas and facilities including land as may be specified in each deed of apartment computed on the basis of proportionate value of the apartment to the total value thereof. The terms of the deed should also make the right and interest in the property described as clause (v) above inheritable and transferable.

ix) Since it is the obligation of the promoters/builders on the one hand and owner on the other hand to execute and register such a deed of apartment, in the event of failure to execute, this non-action can be treated as evading payment of necessary stamp duty and registration charges, necessary penalty can be imposed by the Registrar under the Indian Stamp Act, the Registration Act and action for recovery of necessary charges can also be initiated.

x) If it is proved that failure and inaction on the part of promoters/builders in executing and registering sale deed of an apartment, the buyer be treated as the owner of the apartment for the purpose of getting benefits under the Act.

b) Apartment Owners Association:

The competent authority shall 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 as per the Explanation B of Chapter 1 of the said bye-laws under Section 15 (2) of the Act. 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.

c) Transfer of Management, Books of Account, etc.

Once the apartment owner’s association is formed, it shall take over the management from the promoter/builder. All the books of account, bank account, and other documents shall be handed over by the promoter/builder to the apartment owners’ association so formed and all functions relating to the management of the building, common area, collection of maintenance charges, expenditure to be incurred on maintenance, employment of manpower, legal compliance, etc. will be performed by the association.

Conclusion:

Though the term competent authority has been defined in Delhi Apartment Ownership Act , but it is silent on the aspect of the powers given to the authority. No provisions have been laid under the act whereby the competent authority has been authorized to take action against the promoters/builders who have violated the provisions given under the Act. As such the competent Authorities are handicapped to act against the violators. Therefore, it is not wrong to call the act toothless. Nevertheless, the problem was recogonised by the Hon’ble High Court of Delhi in O.S. Bajpai Vs. The Administrator where the hon’ble court laid down some guidelines for the effective implementation of the act till some new legislation come into the effect and substitutes the present one and has thus helped to stop the act from becoming redundant.