Introduction

The Haryana Apartment Ownership Act, 1983 (“the Act”) was enacted with the intent to promote group housing in the state. The Act also sought to regulate the development and administration of group housing colonies in the state. It was enacted in 1983 and was enforced three years later by notification dated 08.09.1986, but it was then realized that the wrong department has issued the notification, and thus the same was rescinded on 24.10.1997 and it was re-notified. Consequently, a fresh notification dated 10.11.1997 was issued by the appropriate department notifying the applicability of the Act in the entire State of Haryana and since then the Act has been applicable in the whole state. One of the objectives of the act was also 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.

Applicability of the Act

The Act applies to all apartments constructed in buildings having five or more apartments. In case there are two or more Buildings in the area, each building in that block must contain two or more apartments, with a total of five or more apartments jointly in all such buildings.  The Act was initially applicable to apartments constructed for residential purposes, flatted factories, Information Technology Industrial Units, Cyber Park, and Cyber City. The Act was later amended in 2022 to bring commercial complexes under its purview. Moreover, as per the Act, the apartment can be used for residence, office, the practice of any profession, or for carrying any occupation, business, trade or manufacturing, other uses relating to Information Technology or for such other type of independent use, as may be prescribed.

Declaration & Deed of Apartment:

As per the Act, in case the licenses of the group housing project are issued under the Haryana Development and Regulation of Urban Areas Act, 1975, the Builder/ Promoter shall execute a Declaration within a period of 90 days from getting a part-completion or completion certificate under rules framed under the Haryana Development and Regulation of Urban Areas Act, 1975, or within 90 days after getting the occupation certificate under rules framed under the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development act, 1963, whichever is earlier. In case the property falls in the area developed by the Haryana Shehri Vikas Pradhikaran (HSVP) [Formerly known as Haryana Urban Development Authority (HUDA)], the owner of such property shall execute a Declaration within a period of 90 days after obtaining the occupation certificate under rules framed under the Haryana Urban Development Authority Act, 1977. In any of the above-mentioned two cases, the property owner viz a viz the Promoter has to execute the Declaration.

The Declaration must contain in it the following things:

1.  description of land on which the building and improvements are to be located and whether the land is freehold or leasehold;
2. description of the building stating the number of storeys and basements, the number of apartments, and the principal materials of which it is or is to be constructed;
3. the apartment number of each apartment and a statement of its location, approximate area, number of rooms and immediate common area to which it has access and any other data necessary for its proper identification;
4. description of the limited common area and facilities;
5. description of the limited common area and facilities, if any, stating to which apartments their use is reserved;
6. value of the property and of each apartment and the percentage of undivided interest in the common areas and facilities appertaining to each apartment and its owner for all purposes, including voting, and a statement that the apartment and such percentage of undivided interest are not encumbered in any manner whatsoever or not on the date of the declaration;
7. statement of the purposes for which the building and each of the apartments are intended and restricted as to use;
8. the name of a person to receive service of process in the cases hereinafter provided, together with the residence or place of business of such persons which shall be within the city, town or village in which the building is located;
9. provisions as to the percentage of votes by the apartment owners which shall be determinative of whether to rebuild, repair, restore or sell the property in the event of damage or destruction of all of part of the property;
10. any other details in connection with the property which the person executing the declaration may deem desirable to set forth consistent with this Act; and
11. the method by which the declaration may be amended consistent with the provisions of this Act.

Furthermore, it is also obligatory for the Promoter to submit the true copy of the Declaration and all amendments to the Declaration to the office of the competent authority. The Act further states that the Declaration and all the amendments thereto shall be registered under the provisions of the Indian Registration Act, 1908.

What constitutes Common Areas and Facilities?

The term common areas and facilities has been defined under the Act. The Act states that the word common areas and facilities unless otherwise provided in the Declaration or lawful amendments thereto, shall mean:

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 the building;
3. the basements, cellars, yards, gardens, parking area and storage spaces;
4. The premises for the lodging of janitors or persons employed for management of the property;
5. installation 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 existing maintenance and safety or normally in common use;

The Act confers the right on all the apartment owners to have an undivided interest in the common areas and facilities in such percentage as mentioned in the Declaration. The percentage of the interest of each apartment owner in the common areas and facilities shall be calculated on the basis of the value of their respective apartment with respect to the value of the whole property (group housing project). Moreover, such an interest has a permanent character and cannot be altered without the consent of all of the apartment owners. Furthermore, in case of alteration of the interest in the common area and facilities it is mandatory to amend the Declaration and register the same. The common areas and facilities will be undivided, and no apartment owner can bring any action for partition or division of the same.

However, the Act states that contribution to common expenses and the rights of the apartment areas in the common areas and facilities will be in the ratio of the respective values of all units, however, in a colony, there could be different values for all the apartments because of differences in the location, size and floor of each apartment. Even the model apartment act circulated by the Ministry of Urban Development, in 1992, specifies only ‘built-up area’ and not ‘value’ as the basis of voting rights, expense contribution and sharing of profits. However, the Act still harps on ‘value’ as the determining factor.

Furthermore, the Act gives a lot of discretion to the promoter to include in the Declaration whatever is to be handed over, and what they wish to retain in their own possession or sell separately as commercial properties. This has led to a lot of disputes among the apartment owners and the promoter over the issue that who will eventually own and run common facilities such as shops, schools, hospitals or clubs etc., constructed as a part of the condominiums. The same was discussed at length before the Hon’ble Supreme Court of India in the case of DLF Limited Vs. Manmohan Lowe And Others which is discussed in length as follows:

Case of DLF Limited Vs. Manmohan Lowe and Others

The appeal was filed by the Promoter against the Order of Hon’ble Punjab and Haryana High Court given in a writ petition filed by the Apartment Owners of Silver Oaks Apartments, DLF Qutub Enclave, Phase-1, Gurgaon. In the writ petition, the Apartment Owners challenged the Declaration filed by the Promoter on the ground that the same is not in conformity with Section 3(f) of the Act and the Promoter failed to include certain areas of the complex as “common areas and facilities” within the declaration, thereby effectively depriving the apartment owners of their rights over the same. The Division Bench of the High Court accepted their contention and held that the apartment owners are entitled to an undivided interest in common areas and common facilities under Section 6 of the Apartment Act and would be vitally affected if those areas are not declared as common areas. The Court also held that the competent authority under is under an obligation to decide the objections of the apartment owners to the declaration filed by the Petitioner.

Deciding over the matter the Hon’ble Supreme Court held that in the particular case the Promoter was obliged by the Haryana Development and Regulation of Urban Areas (Management) Act, 2003, to construct at his own cost schools, hospitals, community centers, and other buildings on the lands set apart for that purpose in the colony. The Apartment Act casts no obligation on the Promoter to provide those facilities which are specifically mentioned under the Development Act. But the Promoter has to mandatorily provide various other facilities like “common areas and facilities”, to the apartment owners, as provided under the Apartment Act. As per the definition of the common areas and facilities as laid in the Apartment Act duty bound to provide all the common areas and facilities as per Section 3(f), except community and commercial facilities referred to in Section 3(f)(7) because the same has a co-relation with the “Community and Commercial facilities” referred in the Development Act.

It is for that reason that Apartment Act gives discretion to the Promoter to either provide the same or not to provide the same in the Declaration. The expression “may” used in the Apartment Act clearly indicates that no duty is cast on the Promoter to give an undivided interest over those community and commercial facilities exclusively to the apartment owners of a particular colony. Apartment owners are entitled to an undivided interest in the common areas and facilities in the percentage expressed in the Declaration, within the meaning of Section 3(f) (1) to (6) and (8) and it is also open to the Promoter to provide, at its own cost, the community and commercial facilities referred to in clause 7 of Section 3(f) by including them in the Declaration.

Apartment owners are, therefore, not entitled to an undivided interest or possession over those community and commercial facilities, schools, hospitals, community centers and other community buildings as mentioned in the Development Act. All the same, the right to enjoy those facilities referred to in Section 3(3)(a)(iv) of the Development Act, whether shown in the declaration or not, under the Apartment Act, cannot be restricted or curtailed and the apartment owners have no other right, except the right of “user”.

The community structures in dispute are two nursery schools, three shops, and one community center, which cannot be treated as “common areas and facilities” within the definition of Section 3(f) of the Apartment Act. As already pointed out above, they are parts of planning for a larger area, which plans were submitted by the Promoter. It is not meant for the exclusive use of the flat owners of Silver Oaks Apartments. The position would have been different had these been integral parts of the facilities, in the sense that these facilities are essential for the enjoyment of the flats. Common passages, staircases, lifts, etc. are examples of such common areas and facilities. Likewise, stilt parking areas may be treated as part of common areas and facilities, in certain circumstances. Here these structures are part of the larger area of about 130 acres in respect of which 7 licenses were obtained for the development of the colony. Silver Oaks Apartments, which comprises 14.75 acres, is only a part thereof. The nursery schools, shops and community center are meant for the development of the entire colony and are not confined only to these apartments, as already noted in detail above.

Takeaway from the Case:

Therefore, it can be inferred that the community and commercial facilities as may be provided for in the declaration can be a part of the common areas and facilities only if the Promoter wishes to provide the same to the Association of Apartment Owners and declares the same in the Declaration. However, the Promoter in no way is obliged to transfer such facilities as such the same are constructed by the Promoter at his own costs under the Development Act for the greater good of the community at large and the apartment owners just have the right to use such facilities.  

But it is also pertinent to highlight that in the judgment given by the hon’ble apex court in the above case, it is also taken into cognizance that the community and commercial facilities were parts of planning for a larger area, which plans were submitted by the Promoter. They were not meant for the exclusive use of the flat owners of Silver Oaks Apartments and the position would have been different had these been integral parts of the facilities.

Therefore, it can be said that in case such community and commercial facilities are not constructed by the Promoter under the development act and are developed inside a particular condominium, meant for the exclusive use of the apartment owners of that condominium then the apartment owners can claim such community and commercial facilities as common area. Provided that such facilities are a part of the total super area of all the apartments in that condominium.

Conclusion:

The law can be called double-faced as the spirit demands that all areas within the complex, other than private residential units, should be common, collective properties of the buyers, however, the provisions laid in it give the Promoters the discretion to include in the Declaration whatever is to be handed over, and what they wish to retain in their own possession. Therefore, it is about time the government must review the Act to make it more user-friendly and eliminate potential areas of conflict between developers, buyers and the government.