Ensure Strict Compliance With RERA On Transfer Of Apartment Common Areas: Orissa High Court Directs Inspector General Of Registration

"With the RERA Act mandating that the transfer of common areas should only be effected in favour of an Association of Apartment Owners, sale deeds presented for registration which contain clauses contrary thereto cannot be allowed to be registered by the IGR."

Factual Background:

In a letter addressed by the Odisha Real Estate Regulatory Authority (ORERA) to the IGR on 14th May, 2019 attention was drawn to Section 17(1) of the RERA Act, specifically stating that requests for registration of conveyance deeds in respect of real estate projects should be rejected if the ownership of the common areas is not conveyed to the association of allottees as is required under the said provision.

The Court then asked ORERA to make clear its stand on the main prayer in the petition which was for declaring ultra vires the Odisha Apartment Ownership (Amendment) Rules, 2021, which mandates that an association of apartment owners will be formed in an apartment only after the execution of conveyance deeds, on the ground that it is repugnant to Section 11(4)(e), Section 11(4)(f) and Section 17 of the RERA Act.

Pursuant to the order, ORERA had filed an affidavit on 21st April, 2022 claiming that the Odisha Apartment Ownership (Amendment) Rules 2021 binds the promoters as well as allottees and that there is no ambiguity to that extent between the RERA Act and the Odisha Apartment Ownership (Amendment) Rules 2021, since the proviso to Section 11(4)(f) deals with enactment of local laws and that local laws shall prevail.

Further, Mr. B.P. Tripathy, counsel appearing for ORERA drew Court's attention to the format of the agreement for the sale which is part of the Odisha Real Estate (Regulation and Development) Rules, 2017 (ORERA Rules) in which format Clause-G talks of individual apartment owners being conveyed pro rata share in the 'common areas' as defined under Section 2(n) of the RERA Act.

Court's Observations:

The counsel for the State, the counsel for RERA and counsel appearing for the Builders/Builders' Associations referred to the orders passed by the Supreme Court of India in Ashwini Kumar Upadhyay v. Union of India & Others [W.P.(C) No. 1216 of 2020]. After perusing the order, the Court observed that the Supreme Court is seized of one particular issue regarding 'absence of a uniform or model' agreement to sell under the RERA Act. Accordingly, the Court was not inclined to accept the submission that the Court should await the outcome of the said writ petitions before proceeding to hear this petition.

It was clarified by the Court that the issue here is regarding the actual registration of sale deeds in which the share in the common areas is conveyed to individual apartment owners, and not to an association of them, as mandated by Section 17 of the RERA Act and whether such sale deeds can be legally sustained? It noted, the said issue does not appear to have been considered by the Supreme Court in the aforementioned batch of writ petitions.

Further, an affidavit was filed by the IGR stating that there is no provision in the RERA Act or even in the Apartment Ownership Act, 2012 for IGR to issue directions to the registering authorities. The Court pointed out a notification dated 22nd February, 2014, which was issued by the Law Department whereby the amendment to the Registration Act, 1908 by way of the Registration (Odisha Amendment) Act, 2013, which inserted Section 22-A in the Registration Act was notified.

The Court held that as per the mandate of that provision, the Registering Authority is bound to refuse to register an instrument for transfer of immovable property the 'alienation or transfer of which is prohibited at any State and Central Act'. Hence, it should not be difficult for the IGR to issue instructions that Section 22-A of the Registration Act, 1908 shall be strictly complied with by all the registering authorities in Odisha, it observed.

After taking note of certain sample sale deeds, the Court observed,

"While the said sale deeds acknowledge that there is a statutory need for an Association of Apartment Owners to be formed, they proceed to convey the common areas to the individual apartment owners and not to an Association of Apartment Owners, for the obvious reason that such Associations are yet to be formed. It is a matter of concern that such type of sale deeds are getting registered on a daily basis with clauses contrary to the RERA Act and the Rules made thereunder."

The Advocate General, who was present during the hearings made a statement that the State Government and the ORERA will sit together to work out a solution to the problem. He also assured the Court that the proceedings of such deliberations will be placed before the Court with an affidavit before the next date of hearing. Accordingly, the Court ordered,

"The Court is confident that a solution can be found by the Authorities by reconciling the two contrary statutory enactments viz., the Odisha Apartment Ownership (Amendment) Rules 2021 and the RERA Act and the Rules thereunder. The Court directs that, in the meanwhile, the IGR will strictly enforce Section 22-A of the Registration Act, 1908 as inserted by Registration (Odisha Amendment) Act, 2013 and ensure that sale deeds registered hereafter strictly abide by the provisions of the RERA Act and Rules made thereunder."

Case Title: Bimalendu Pradhan v. State of Odisha & Ors.

Case No.: W.P.(C) No. 18799 of 2021

Order Dated: 12 May 2022

Coram: Chief Justice Dr. S. Muralidhar & Justice Radha Krishna Pattanaik

Counsel for the Petitioner: Mr. Mohit Agarwal, Advocate

Counsel for the Respondents: Mr. Ashok Parija, Advocate General for the State; Mr. S.S. Mohanty, Advocate for the Intervener; Dr. N.Swain, Advocate with Mr. A. Mahanta, Advocate for ORERA

Citation: 2022 LiveLaw (Ori) 79

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