Growing Real Estate Business and Rights of Apartment Owner:

 According to a report ‘’Annual Survey of India’s City Systems by Janagraha, a major think tank body  has revealed how more than two third(39%) capital cities in India have no active Master Plans and 26 of the 35 capital cities don’t have sectoral plan, which are key for and planned development of urban areas as reported in Times of India dtd. October 18th 2023. 

SDG 11 recognizes that the need to make cities and human settlements inclusive, safe, resilient and sustainable. Specifically of note is target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums. 

The growing development of metropolitan cities has raised the concern of sustainable and accessible housing for all. People moves towards the cities for their employment and start weaving their dream home which they expected affordable as well as having all the amenities. 

Entries 6 in the concurrent list of the constitution of India includes transfer of property other than agricultural land: registration of deeds and documents. Again entry 7 of the list includes partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land.

Indian real estate falls under the purview of a combination of State-specific and Central laws. The reason behind such an arrangement is the definition of ‘land’ in the Constitution of India. As per Article 246, ‘land’ is the subject matter of List 2 or State List of the Seventh Schedule that covers subjects on which only States can legislate. On the other hand, ‘Transfer of property other than agricultural land, registration of documents and deeds and ‘Contracts other than for agricultural land’ fall under List 3 or Concurrent List of the Seventh Schedule to the Constitution of India, that are subjects on which both the Centre and the State can legislate. As properties are closely related to land-related concerns; hence, real estate in India is associated with speckled laws.

Real estate in India is governed by multiple laws that vary across States. Some vital laws impacting the country’s  landscape of real estate industry  include the Real Estate (Regulation and Development) Act, 2016 (RERA), the Transfer of Property Act, 1882, and the Registration Act, 1908; The Indian Contract Act 1973. 

Besides the laws stated above, the Indian real estate sector is also governed by multiple state or local or municipal laws, customs and policies. These include nuances concerning slum rehabilitation and redevelopment, rent control, urban development, property tax, ownership of property, Special Economic Zones (SEZs), land pooling, land ceiling, land zoning and land use, among others.

Since the commencement of Real Estate Regulation Act in , 21 states have already announced the rules, but West Bengal has made its own rules and regulations. The Seven sister states are still lacking behind. The implementation of the Act has been best in West and North India. Maharashtra, specifically, is leading the way in terms of regulations and litigation, with the state accounting for around 59% of the whole projects registered up to now countrywide.

The real estate sector play a significant role in meeting the country’s housing and infrastructure needs and demands. Though the sector has grown rapidly and significantly in recent years only, with the absence of uniformity and lack of adequate buyer protection, it seems to be not properly regulated.  

Though to address the problems of buyers  the Real Estate Regulation Act  came in the year 2016 which aims to inter alia  protect the rights and interests of consumers by minimising the malpractices done by the developers, the Act couldn’t met with the demand of uniformity  of its provisions and lack of adequate buyer’s protection. And hence Hon’ble Supreme Court has to interfere.

In November 2021, the Hon’ble Supreme Court pronounced a judgement on Newtech Promoters & Developer v. State of UP and Others which has been deemed to be one of the landmark verdicts in the real estate sector.

In August 2021, the Supertech towers were demolished after a Supreme Court order which cited it as an illegal construction. In its verdict the Supreme Court pointed out multiple instances wherein the builders colluded with officials in authority in Noida to build the structure in violation of building codes.

The role of Residents Welfare Association  plays a significant role from the day the project has completed its 2/3 rd of construction. In Supertech Ltd. v. Emerald Court Owner Resident Welfare Association, 2021 SCC OnLine SC 648, decided on 31-8-2021 the Supreme Court observed that

“In any case, rights under the U.P. 1975 Act and U.P. Apartments Act 2010 have been provided to individual flat owners, and not to collective bodies like the RWA. Hence, even the non-constitution of the RWA will not extinguish the rights of individual flat owners. Indeed, however, when such RWAs do exist, developers may use them to seek a common consent from all the flat owners instead of approaching them all individually.”...

Among many things, the tenure of the members of the Apartment Owners Association (AOA) has always been an issue in dispute. This is due to the fact that model bye-laws made by the UP government under the UP Apartment Act, 2010 contain two contrary provisions when it comes to the tenure of the board of management of the Apartment Owners Association. On one side the model byelaws state that the term of office of the Board of Management is one year. This means that elections to all ten posts in the Board of Management shall be held on an annual basis. However, on the other hand, it states that arrangements have to be made by the Board of Management for retiring 1/3rd of its members on an annual basis. Furthermore, there is a provision provided in the model byelaws that restricts the continuance of a person on the same post for more than two years.

These contrary provisions in the law gave some of the apartment owners loopholes to bypass the mandate of the law. It was observed in the state of Uttar Pradesh and especially in Noida, Ghaziabad, and Greater Noida that arrangements were made by the elected Board of Management of the AOA for retiring 1/3rd of its members on an annual basis, however, some members of the Board of Management continued to occupy the offices of President, Secretary and the treasurer in the Board without contesting annual elections for two years and there used to be no certainty when these members would face elections.

The position has now been made clear by the Hon’ble Allahabad High Court in the Writ Petition WRIT – C No. – 12380 of 2023 titled “Windsor Park Residents Welfare Association Vs. State Of U.P. And 4 Others” noted that “The system of elections adopted by the petitioner creates an entitled class which is entrenched in elected office but avoids electoral contest and abjures accountability of elected representatives. The legislature assiduously sought to curb this evil with the promulgation of the Apartment Act, 2010 read with Model Byelaws dated 16th November 2011 notified thereunder.” and further held that “Elections to the 10 posts in the Board of Management shall be held annually in future, and in light of this judgment and in accordance with the Apartment Act, 2010, read with Model Bye-Laws dated 16th November 2011 notified thereunder.”

This made the position law abundantly clear and paved a path for more democratic and transparent functioning of the apartment societies.

Dr Rumi Ahmed