Apartment Complex With Only Residential Flats To Be Registered Under Apartment Ownership Act Not Cooperative Societies Act: Karnataka HC

The Karnataka High Court has held that to manage and maintain an apartment complex consisting of only residential flats, the association of owners has to be registered under the Karnataka Apartment Ownership Act, 1972, and not under the provision of Karnataka Co-operative Societies Act, 1959.

A single judge bench of Justice Anant Ramanath Hegde said “Admittedly, the project referred to above is a residential housing project. There is no commercial unit in the said project. The sale deeds executed in favour of the purchasers of the flats would also indicate that the purchasers have undertaken to subject them to the provisions of the Act of 1972. There is no difficulty in holding that petitioners and members of the proposed respondent No.4 Society are entitled to have registration of an association under the Act of 1972, and there cannot be any association registered under the Act of 1959 to form a society to manage and maintain the Property comprising only residential flats.”

The petitioners Arunkumar R and others were owners of certain flats built in a project DS-Max Star Nest, at Kengeri. They claimed that the proposed Starnest Apartment Owners Cooperative Society Ltd intended to register a Co-operative Society under the provisions of the Act of 1959. Permission was also granted for the same by the Registrar of Cooperative Societies.

The petitioners contended that they had purchased the residential flats per the terms of the sale deed and wanted to form an association under the provisions of the Act of 1972.

The promoters and the persons supporting them cannot form a cooperative society, having an object to maintain and manage the residential apartment under the Act of 1959, it was argued.

The bench noted that sale deeds executed by the builder would indicate that all the common areas are transferred in favor of the purchasers by the builder/owner while transferring flats. It then said, “In case any flats are still retained by the builder/owner, the builder/owner is under obligation to cooperate with the purchasers of the flats to have an association under the Act of 1972.”

Noting that the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale Management and Transfer) Act of 1972 and the rules 1975, are applicable only if the property has commercial and residential units, the court said that since the Property does not include the commercial unit, the said Act has no application.

Considering the submissions, the court observed that members who are willing to be members of the proposed Society are also willing to form an association under the Act of 1972 by joining the petitioners.

Thus the court directed the respondent builder to cooperate with the petitioners in forming the association under the Act of 1972.

“Since the project does not involve commercial units the Registrar of Cooperative Societies could not have granted permission dated 18.10.2023. Accordingly, the same is quashed. Respondent No.2 (Registrar) is prohibited from registering the proposed respondent No.4 Society to manage and maintain the residential apartment complex known as "DS-Max Star Nest,” the Court concluded.

Appearance: Advocate Beena P K for Petitioners

AGA Sidharth Babu Rao for R1 AND R2.

Advocate M S Nagaraj for R4. Citation No: 2024 LiveLaw (Kar) 111

Case Title: Arunkumar R & Others AND State of Karnataka & Others

Case No: Writ Petition No 25528 OF 2023

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