Frequently Asked Questions by Apartment Owners on U.P. Apartment Act

Question:1- What is the role of the Registrar of Societies (ROS) in the affairs of the Apartment Owners Association (AOA)?

Answer-

From the perusal of the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010,[1] and the decision of the Hon’ble Allahabad High Court in the Designarch Judgment[2] r/w Societies Registration Act, 1860[3] it is evident that ROS is authorized to undertake the registration of Apartment Owners Association as a society. Once an AOA is registered under the Societies Registration Act, 1860 then it is regulated by the ROS in matters which are not specifically mentioned to be dealt by the Competent Authority (CEO, NOIDA Authority) under the 2010 Act and the Model Bye-laws as adopted by the AOA.

Under the Societies Registration Act, 1860 read with rules and other government orders there are Registrars, Assistant Registrars, and Deputy Registrars, who have the same powers and perform the same duties given to the Registrar under the said Act, w.r.t. AOA, which are mentioned as follows amongst other:

1. Power to register, renew and de-register an AOA[4],
2. Maintain the updated/ annual list of the members of an AOA and its Board Members[5],
3. Register the change of name, amended Bye-laws[6]
4. Dissolve an AOA[7]
5. Call for information, audit and carry out investigation into the affairs of the AOA[8],
6. Conduct election where Board fails to conduct election within its term[9],
7. Refer election disputes to the prescribed authority i.e. Sub-Divisional Magistrate[10].

QUSTION:2- What is the role of the Noida Authority in the affairs of AOA?

Answer-

Going by the literal sense of the question, the Noida Authority has no role in the affairs of the AOA.

However, according to Rule 2(c) of the Uttar Pradesh Apartment (Promotion of Construction, ownership and maintenance) Rules, 2011[11] r/w para 65 (10) of the Designarch Judgment, Chief Executive Officer of NOIDA Authority or her duly appointed delegate is the Competent Authority, who, amongst others, has following powers as per the 2010 Act, 2011 Rules and Model Bye-Laws[12]:

1. Accept, reject, or adjudicate on the issue of defects or amendment in the Deed of Declaration (“DOD”) submitted by the Promoter.[13]
2. Permitting amendments in the Model Bye-Laws of the AOA[14],
3. Issue NOC for registration of AOA and provide project-related papers where the promoter is not participating in the formation of the AOA.[15]
4. Direct the promoter to provide all infrastructure services and obtain a completion certificate[16].
5. Provide further time beyond 60 days to AOA for repairing or reconstructing the building or part of the building in case of disposition, destruction, or damage to it.[17] 
6. To initiate recovery proceeding to retrieve common area expenses lying unpaid for more than 12 months as arrears of land revenue[18].
7. Adjudicate appeals filed by an apartment owner against the AOA, where AOA passed a resolution to cut off, withhold, curtail, or reduce essential supply or service enjoyed by the apartment owner.[19]
8. Permit the Board of AOA to prosecute the Promoter u/s 25 of the 2010 Act.
9. Making inspection of all such buildings to which the 2010 Act applies either suo motto or upon receiving an application.[20]
10. Permit amendment in proportionate share and interest of an apartment owner in the common area.[21]
11. Permit the Association to establish a provident fund and gratuity fund, if necessary for the benefit of the employees of the Association[22];
12. Direct the Secretary to call Special Meetings on its subjective satisfaction[23];
13. Receive and maintain records of the notices of meetings of AOA relating to issues dealt by the competent authority under the 2010 Act[24].
14. At the request of AOA take appropriate action for removal of encroachment on common areas in accordance with the provisions of law[25];
15. Grant approval to AOA for raising Funds through loans, if necessary[26];
16. Maintain a Record of the annual audited financial statement of the AOA[27];
17. Decide disputes between the builder and the buyer by mediation and conciliation or reasoned order[28];
18. Decide the grievance of the home-buyers or their associations, positively within 3 months from the date the grievance is brought to their knowledge, by reasoned and speaking order under intimation to the aggrieved persons;[29]
19. The Competent Authority shall ensure that an officer not below the rank of a Gazetted Officer shall periodically visit the apartment/building at least once in 6 months at a prior notice to the registered association which shall be obliged to circulate it amongst its member so as to give them an opportunity to ventilate their grievance, if any. Any reported violation shall be immediately brought to the notice of the Authority concerned which shall immediately take remedial steps[30].

QUESTION:3- Who is the Competent Authority ROS or NOIDA Authority?

Answer-

As per the definition clause in the 2010 Act and 2011 Rules made thereunder, the competent authority will be the CEO of NOIDA Authority for all the issues mentioned in answer to above question no. 2.

However, w.r.t. issues as mentioned in answer to question -1 the authority which is authorised to decide such issues would be the Deputy Registrar of Societies, Meerut.

QUESTION:4- Who is eligible to vote in AOA election?

Answer-

From the perusal of the Bye-Law 5 given under Model Bye-Laws framed under the UP Apartment Act, 2010 it is evident that the owner will be entitled to a percentage of the vote. It is further stated in Bye-Law 13 that in the annual meeting of the Association, the Board of Management shall be elected by the apartment owners. This makes it amply clear that all the owner/apartment owners who are a part of the association can participate in the election process and have a right to vote. Moreover, when it comes to the membership of an Apartment Owners Association  (“AOA”) then as per the Act of 2010, it is also mandatory for the apartment owners of each and every apartment in the group housing to become a member.

As per Section 3(d) of the 2010 Act, the word apartment owner means “the person or persons owning an apartment or the promoter or his nominee in case of unsold apartments and an undivided interest in the common areas and facilities appurtenant to such apartment in the percentage specified in the Deed of Apartment and includes the lessee of the land on which the building containing such apartment has been constructed, where the lease of such land is for a period of thirty years or more”. The word owner or apartment owner is also defined in Bye-law 2(f) as “the person owning an apartment in the condominium”.

However, the issue arises when an apartment is owned in the name of more than one person. Such joint purchases of the apartment are legally termed as co-ownership. The law recognizes all co-owners to have equal rights.

The legal position with respect to co-ownership, as per the Hon’ble Supreme Court, as of today is that all/both the co-owners have equal rights against an apartment.[31] The mere fact of whose name comes first in the conveyance deed may not be a valid document to determine as to who amongst the co-owners has the voting right. Further, the Hon’ble Allahabad High Court in the Designarch Judgement held that the term ‘owner’ shall also include spouse, children, lawful tenants of the allottee/owner, and any person holding a valid power of attorney of the allottee/ owner of the apartment.[32]

Thus, on a combined reading of the above provision of the law and judgments of the Hon’ble High Court and Supreme Court, it is clear that the owner of an apartment includes:

1.  co-owner, the spouse and children of the apartment owner, and;
2.  any person holding a valid power of attorney of the owner of the apartment and;
3.  a lawful tenant of the allottee/ owner and;
4.  an officer or employee of the company/ firm or association, which owns an apartment under a valid  allotment letter and its tenant.

Model Bye-Laws further clear out the remaining confusion on this behalf and state that in case of more than one owner, the right to vote shall accrue in the person whose name stands first on the share certificate[33]. The very requirement of the share certificate is for the purpose of giving rights to the above apartment owners to have a different person than whose name is mentioned as owner/co-owner in the conveyance deed.

Thus, in conclusion, it can be stated that any owner/ co-owners whose name is listed in the first place in the share certificate issued by the AOA shall have the right to vote. But in case the sole owner/ co-owner (in case of co-ownership) mentioned in the first place in the Share Certificate is not able to use his rights due to any reason, can give authorisation by giving a No Objection Certificate to any of the other co-owners as defined in the Designarch judgment and can make an application before Board of Management of AOA and AOA may issue a fresh certificate in that behalf. In case the owner/co-owner is not residing in the apartment and has let any relative to live therein then by a Special Power of Attorney, the right to vote and contest in the election of the Board of AOA can be given by the owner/co-owner to such relative.

It is also pertinent to highlight here that an apartment owner can also be disqualified from participating in the election process in case there are arrears of any sum due from him in respect of his contribution for common expenses for more than 60 days on the last day of the preceding year in which the election to Board would take place. Such dues should only be pending against the association. Any dues pending towards the Promoters will not disentitle an owner from voting or contesting[34].

QUESTION:5- Who is eligible to contest in AOA election?

Answer-

Already answered above in Question 4. All the people who are eligible to vote in the election process are also eligible to contest in the elections.  Furthermore, any board member found guilty of misusing his post in its previous regime shall not be eligible for re-election.[35]  The use of word ‘guilty’ here may be left to be determined by the General Body meeting.  To prove someone guilty of misusing the post during his previous term a report submitted by the investigation committee appointed by the President may be sufficient.

QUESTION:6- In case of Joint-Allottee who is eligible to vote and contest in AOA election?

Answer-

Already discussed and answered in Question 4.

QUESTION:7- How many members of Board of Members must compulsorily retire every year and how: seniority or any basis?

Answer-

The Model Bye-Laws provide for the annual retirement of the board members and it is the responsibility of the board to ensure and make an arrangement that 1/3 of the members of the board retire annually[36]. These retiring board members can contest in ensuing election. There is no such criteria provided as on what basis or under what arrangement the person must retire. But retirement of the board members can be mutually decided, or a retirement policy can framed by the board itself.  It may also be noted that any board member cannot hold the same post continuously for more than 2 years.  The successors of the retiring members of the board shall be elected to fill the vacancy.

The basis of the retirement of the members of the BOM has to be lawful and reasonable ensuring rotation. Reference can be made to Delhi Rules and Tamil Nadu rules on same.

That, according to Bye-Law 27 whenever there is a vacancy due to any reason other than the removal of an office bearer such vacancy will be filled by the vote of the majority of the remaining office bearers.

QUESTION:8- Whether the issuance of Share Certificate is a statutory responsibility of AOA if Yes what is its importance?

Answer-

Yes, it is the responsibility of the AOA to issue a share certificate. The importance of a share certificate is already discussed in the question 4 above.

QUESTION:9- Whether the office bearers of AOA undertake new capital expenditure during the pendency of elections?

Legally there is no provision which bars such expenditure but new expenditure should not be undertaken when election has been declared as an unsaid model code of conduct should be followed as is applicable in general elections and election of municipalities, state legislature etc. Ideally, the BOM should present its budget in the initial one month of it taking the post and then make expenditure as declared therein only.

QUESTION:10- Whether joint-allottees authorize any of their family member residing in their apartment to vote and contest on their behalf and inform board?

Answer-

Yes, the same can be done as already discussed and answered in Question 4 above by issuing a power of attorney held by Hon’ble Allahabad High Court in Designarch case.