Introduction:

The Maharashtra Apartment Ownership Act, 1970 (hereinafter referred to as “Act”) was enacted by the State of Maharashtra with the aim of conferring on the apartment owners an inheritable and transferable right in an apartment along with a proportionate and undivided share of the land and other common areas. The Act came into force in February 1971 and has undergone many amendments since then. The Act inter-alia provides for regulating the following w.r.t. to an apartment and apartment condominium:

1. ownership, heritability and transferability of the apartments in Tamil Nadu.
2. various interests of apartment owners in the common areas and facilities.
3. responsibility and duties of apartment owners towards each other.
4. right to create encumbrances on apartments by its owners.
5. mode and requirement for execution and registration of the conveyance/ deed of apartment.
6. methods of management of common areas and facilities through apartment owners association.
7. regulation of apartment owners association.
8. common profits, common expenses and other related matters.

Applicability of the Act:

The Act applies to all such properties containing a building which have more than four apartments (i.e. 5 or more apartments) or in a case where there are two (2) or more than two buildings in the condominium, each building must contain two or more apartments with a total of five or more apartments in the condominium. The apartment building can be used for residence, office, the practice of any profession, or for carrying any occupation, business or trade or any other type of independent use.

Act is not automatically applicable on apartment buildings

The Act further puts the condition that in order for the Act to be applicable to a particular apartment building, either the sole owner or all the joint owners of the apartment building (whatever the case may be) have to submit the property to the provisions of this Act. The same can be done by executing and registering a Declaration as per the provisions given in the Act.

The term Declaration here means a legal document or instrument by executing which the apartment building can be submitted to the provisions of the Act and shall contain the complete description and other details regarding the p apartment building. Further, the Act has bestowed the duty upon the Manager or the Board of Managers of the Association of Apartment Owners (AOA) to submit before the sub-registrar a certified copy of the Declaration along with the Deed of Apartments made in respect of every apartment in the condominium. However, the Maharashtra Ownership Flats Act which was enacted by the Maharashtra government in 1963 was amended in 1971 to further include that in case the Promoter of the Project submits the Project to the provisions of the Maharashtra Apartment Ownership Act, 1970 by executing and registering Declaration provided under the Apartment Act then the Promoter shall inform the Registrar of Co-operative Societies as defined under the Maharashtra Societies Registration Act, 1960. A conjoint reading of both acts brings us to the conclusion that the Promoter shall submit before the sub-registrar a certified copy of the Declaration along with the Deed of Apartments.

Removal of the Project from Provisions of the Act:

The Act also permits apartment owners to remove a property from the provisions of this Act. If the majority of apartment owners (more than 50% of the apartment owners) want, they can do so by executing a document to this effect. In case there is any charge or encumbrance on any apartment in the project, permission from such holder of charges and encumbrances must be taken to transfer their charge and encumbrance to the percentage of the undivided interest of the apartment owner in the property. Even on the removal of the property from the provisions of this Act, the property shall be deemed to be owned in common by the apartment owners. It is pertinent to highlight here that such removal does not bar the apartment owners to resubmit the property to the provisions of the Act.

Interest of Apartment Owners in the Property

As per the Act, every apartment owner is entitled to exclusive ownership and possession of his/her apartment along with a percentage of undivided interest in the common areas and facilities. Such interest in the common areas and facilities shall be calculated based on the ratio of the value of the apartment in relation to the value of the property. Though every apartment owner is entitled to an interest in the common areas and facilities, it is pertinent to remember such an interest is undividable and cannot be separated from the apartment. This means that the interest in common areas and facilities cannot be sold or transferred separately from the apartment and will be conveyed/transferred along with the apartment even though the same is not mentioned in the conveyance/transfer deed. Moreover, the apartment owners cannot bring any action or suit for the partition of their share in common and areas and facilities until the property is under the provisions of the Act.

Competent Authority under the Act

In case the condominium is developed by the Housing and Area Development Authority or a Housing and Area Development Board established under the Maharashtra Housing and Area Development Act, 1976, or by a Company, then the Deputy Chief Engineer or such other officer of the rank equivalent to that of the Superintending Engineer in the Maharashtra Service of Engineers ( a board established under the Maharashtra Housing and Area Development Act, 1976) shall be the competent authority, and in any other case the Competent Authority shall mean the Registrar of Co-operative Societies as defined under the Maharashtra  Societies Registration Act, 1960 shall be the competent authority.

Formation of Association of Apartment Owners (AOA)

The Act defines the term Association of Apartment Owners (“AOA”) as a group of all the apartment owners together that work in accordance with the Declaration and the bye-laws. The objective of the AOA is to provide for the maintenance, repair and replacement of the common areas and facilities through contributions from the apartment owners.

That the Act is silent on the aspect of the minimum requirement for forming an AOA. However,  Rule-8 of the Maharashtra Ownership Flats Rules, 1964 states that where the apartment takers propose to submit the apartments to the provisions of the Maharashtra Apartment Ownership Act, 1970, by executing Declarations and Deeds of Apartments as required by that Act, the promoter shall inform the Registrar as defined in the Maharashtra Co-operative Societies Act, 1960, as soon as possible after the date on which all the apartment owners (being not less than five) have executed such Declarations and Deeds of Apartment. The above-mentioned rules put a restriction on the Promoter to inform the Registrar when at least five (5) members execute Declarations and Deeds of Apartment. Therefore, it can be construed that a minimum of five (5) apartment owners can form an AOA and get the same registered under Maharashtra Co-operative Societies Act, 1960. The AOA  so formed shall administer the property in accordance with the bye-laws framed by it.

It is pertinent to highlight that the Apartment Act or the rules made therein nowhere mention that the Builder/Promoter shall hand over the Common areas and facilities to the Association and the legislature has directly conferred the right upon the apartment owners to form such an association and thereafter maintain the common areas and facilities.

Members of the Association:

The AOA formed under the Act is formed for the benefit of all the apartment owners and as per the Act of 1970 every person who has purchased apartments in the condominium and executed the deed of Apartment is entitled to become a member automatically and will enjoy all the common facilities in the Project. Upon becoming a member of the society/association so formed under the Act, the apartment owner shall pay the fee as specified.

What constitutes Common Areas and Facilities?

The term common areas and facilities has also been defined by the Act of 1970, which states that unless otherwise provided in the declaration the term common area and facilities 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, stairways, terrace, compound walls, fire escapes, wells, and sumps and entrances and exits of building;

(3) the basements, cellars, yards, gardens, parking areas and storage spaces;

(4) the premises for lodging of caretakers or persons employed for the maintenance 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;

(8) such community and commercial facilities as may be provided in the Declaration; and

(9) all other parts of the property necessary or convenient to its existence, maintenance and safety, or normally in common use;

As already mentioned above, every apartment owner is entitled to a percentage of undivided interest in the common areas and facilities. Such percentage of interest in the common areas and facilities shall be clearly expressed in the Declaration.

Common Expenses

Common expenses are defined in the Act of 1970 as follows:

(1) all sums lawfully assessed against the apartment owners by the Association of Apartment Owners;

(2) expenses of administration, maintenance, repair or replacement of the common areas and facilities;

(3) expenses agreed upon as common expenses by the Association of Apartment Owners;

(4) expenses declared as common expenses by the provisions of this Act, or by the Declaration or the bye-laws;

The definition is very broad and gives vast rights to the Association of Apartment Owners that the AOA can declare any expense as a common expense. The same can be done by passing a resolution in the meeting of the AOA by taking the consent of the apartment owners. The Act further states that all the apartment owners have to make a contribution towards the common expenses and no apartment owner can be exempted from this duty to pay such expenses by merely waiving off his rights to use and enjoy the common areas and facilities. In case there is any apartment owner fails to pay his share of the common expenses shall constitute a charge on such apartment prior to all other charges.

What is the Process of the handover of the maintenance from the Builder to the AOA?

As mentioned earlier the Act of 1970 is silent on the aspect of taking handover from the Promoter/Builder of the project. Therefore, once the apartment owners form a society or AOA and get the same registered with the competent authority, should approach the Promoter to take the handover of the common areas and facilities. However, in case the Promoter is not keen to give the handover of the Project to the AOA, the AOA can deploy its duly appointed agencies to do the maintenance. The AOA shall be within its statutory limit if it appoints new vendors for various services like security, housekeeping, book maintenance, etc. soon after its registration. It can remove the vendors/agencies appointed by the Promoter.

Bye-Laws of the Association

The Act states that the administration of every property shall be governed by the bye-laws. A true copy of the same shall be annexed with the Declaration and must be filed with the competent authority. The administration of the project and management of common areas and facilities by the AOA shall be in accordance with these Bye-Laws. The necessary work of maintenance, repair, and replacement of the common areas and facilities and the making of any additions or improvements thereto shall also be carried out in the manner provided in the bye-laws. Moreover, every apartment owner has to comply strictly with the bye-laws, as may be lawfully amended from time to time. In case any apartment owner fails to comply with the same, the Manager or Board of Managers on behalf of AOA can bring an action against the defaulter apartment owner to recover sums due, for damages or injunctive relief, or both.  

The Maharashtra government has also provided Model-Bye Laws and the AOA formed under the provisions of the Act must adopt the same and have to work in accordance with that. In case the AOA wishes to amend the model bye-laws provided by the state government the same can be amended by taking the assent of at least 75% of the apartment owners in the Project. However, no such modification or amendment of the Model bye-laws shall be valid, unless it is set forth in the Declaration, and the Declaration is further amended to incorporate the same. As per the amendment of 2020 of the Act, the Declaration can be amended by a majority of the apartment owners i.e.  50% of the apartment owners. Such an amendment to the Declaration and the Model Bye-laws must be duly filed with the competent authority.

Redevelopment of the Apartments:

The Act was amended in the year 2018 and a new section was brought to the Act under the title Re-development of Apartments. As per it, any work in relation to the redevelopment of the project can be carried out by taking the consent of the majority of the apartment owners i.e. 50% of the apartment owners. However, the Act also provides a condition that the re-development of only those buildings can be taken place which have completed thirty years from the date of issue of the completion certificate or the occupancy certificate by the Planning authority whichever is earlier. In case the building has not been completed thirty years, but the planning authority has declared the building to be in ruinous condition and is likely to fall or is dangerous to any person occupying it then also the re-development work of the particular building can be taken forward.

Complaints with the Authority:

In case of any dispute between the apartment owners or between the AOA and apartment owners, the aggrieved party can file a complaint before the Registrar of Co-operatives society given under the provisions of the Maharashtra Co-operative Societies Act. Any such complaint before the registrar must be disposed of within a period of thirty days. If in case any party to such a case is aggrieved by the direction or order of the Registrar, it may file an appeal against the same before the Co-operative Court constituted under the Maharashtra Co-operative Societies Act within 60 days of receiving such direction or order passed by the Registrar.

Frequently Asked Questions (FAQs):

1. Can a society be formed under any other act if the Declaration is already registered by the owners of the Property under the Maharashtra Apartment Ownership Act, 1970?

In the case of Shakuntala Bharat Kachare and others Versus Subhash Prataprao Chavan and others, wherein the flat owners tried to register a co-operative society in the fashion and name of Bharat Vihar Co-operative Housing Society by moving an application before the Deputy Registrar Co-operative Societies, which was in turn rejected by him on the ground that the Property has already been subjected to the Act of 1970. Subsequently, a revision application was filed by the flat purchasers before the Joint Registrar, Cooperative Societies (Appeals), Pune Division, Pune, which was allowed under section 154 of the Maharashtra Co-operative Societies Act, 1960. The joint registrar then remanded the matter to Deputy Registrar for a de novo consideration. On such remand, the Deputy Registrar allowed the application filed by the petitioners for registration and registered the Society, and also granted the registration certificate. Deciding over the dispute the Hon’ble Bombay High Court held that “in the context of the aforesaid registration of the society under the Maharashtra Co-operative Societies Act, 1960, the declaration made under the Act of 1970 would not survive as otherwise it would lead to an anomalous situation whereby the property in question is subjected to two local laws. The registration of the society under the Maharashtra Co-operative Societies Act, 1960 would, therefore, have to be given effect as the said registration of the society has been made as per the application filed by the flat purchasers. In fact, by not challenging the said registration, the owners/developers have acquiesced in the registration of the said society. In that view of the matter, the declaration under the Act of 1970 would have to be set aside and is accordingly set aside.”

That the declaration under the Act of 1970 was set aside and the society under the Maharashtra Co-operative Societies Act, 1960 was given effect as the builder/developer did not challenge the registration of the Society and therefore they lost their right to do so.

Therefore, it can be said that only in exceptional circumstances the same can be done.

• Under what circumstance a society can be registered under Maharashtra Ownership Flats Act (“MOFA Act”) and when can the AOA be registered under the Maharashtra Apartment Ownership Act (“MAO Act”)?

As per the acts, three entities can be formed consisting of the purchasers of flats/apartments in a Building i.e.

1. Co-operative Housing Society
2. Company
3. Condominium aka Apartment Owners Association

The legal relationship between the promoter and the apartment/flat owners in the case of a co-operative housing society is governed by the provisions of Sections 10 and 11 of MOFA Act and in case AOA is formed then by provisions given under Section 2 and other Provisions of the MOA Act.

A co-operative housing society can be formed in two contingencies either by the promoter by filing an application before the Registrar when the quorum is fulfilled or by the flat purchasers by approaching the competent authority in case the promoter fails to file an application.

The MOA Act does not contain any provision about the formation of the condominium/AOA. It further provides that the owners of the property can submit the property to the provisions of this Act by executing the Deed of Declaration and registering it. Whereas the MOFA Act, provides that it shall be the duty of only the promoter to submit the property to the provisions of the MAO Act. The MOFA Act earlier provided that the promoter along with the apartment takers has to submit the property to the provisions of MOA Act, however MOFA Act was amended later and subsequently the word apartment takers was deleted and now, only the promoter can submit the property to the provisions of this Act.

The MOFA Act and the MOA Act further provide that in case the promoter is submitting the property to provisions of the MOA Act the same can be done by executing the Deed of Declaration and registering it and further it is also the liability of the Promoter to inform the Registrar about the same. In case the same is already done the competent authority when approached by the apartment takers can decline to register the society. In the case of Cipla Limited v. Competent Authority and the District Dy. Registrar it was held by the Hon’ble Bombay High Court that the intimation given to given to Officer other than Registrar is not proper.

Further, in cases where the promoter has already registered a deed of declaration and submitted the building to the provisions of the MOA Act, and later the apartment takers have approached the Competent Authority as per the MOFA Act for formation of a co-operative housing society, can the competent authority deny the registration of a society. This question was raised before the Hon’ble Bombay high Court in the case of Rusabh Shah Versus Avarsekar & Sons Private Limited and Another. Deciding over the matter the court held that merely registration of the ‘deed of Declaration’ is not sufficient. It is duty of the Competent Authority to verify whether it is as per the provisions of the Maharashtra Apartment Ownership Act. In case the competent authority refuses the proposal for registration of the society merely on producing the ‘deed of Declaration’ and without ascertaining whether it is as per the provisions of the Act or not, in that case it will be abdicating its responsibilities. Further, the Court directed the Competent Authority to issue a certificate of registration to the Petitioner.