Apartment Complexes With Only Residential Flats To Be Registered Under Apartment Ownership Act, Not Co-Operative Societies Act: Karnataka HC

The Karnataka High Court has reiterated that property consisting of only residential flats, is to be registered under the Karnataka Apartment Ownership Act, 1972 and there cannot be any association registered under the Karnataka Co-operative Societies Act, 1959, to form a society to manage and maintain the property.Justice K S Hemalekha held thus while allowing a petition filed by Saraswathi Prakash and others who are apartment owners in an Apartment complex known as “Parkside Retirement Homes Brigade Orchards Apartment Complex. The court said “It can be safely held that the lis stands covered, that the petitioners and the members of the association are entitled to be registered under the KAO Act and that there cannot be any association registered under the Act, 1959, to form a society to manage and maintain the property comprising of only residential flats. It is also relevant to state here that the KOFA Act, 1972 and the Rules 1975, are applicable, if the property has both commercial and residential units.” The petitioners had approached the court after the Registrar of Cooperative Societies issued an order dated 23.02.2023 by which, the Chief promoter of respondent No.3 (proposed Brigade Parkside Retirement Homes Housing Cooperative Society Ltd) was permitted to collect share capital contributions from those residents/owners in the project desirous of being part of such society. The petitioners primarily contended that there already exists an association registered under the KAO Act on the strength of the deed of declaration, and the apartment owners are registered under the KAO Act, therefore, there cannot be a society formed under the Act, 1959. Reliance was placed on coordinate bench judgment in the case of Shantharam Prabhu and others Vs. K. Dayanand Rai and others, CRP No.96/2021 D.D. 08.09.2021, wherein it has held that “once an apartment is subjected to KAO Act, Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 would cease to apply and it is only the KAO Act, by duly executing and registering a declaration, deed of apartment and bylaws which would be applicable.”The respondents opposed the plea submitting that the basic requirement of Section 2 of the KAO Act has not been met. As on the date of deed of declaration, there were 150 units in the project, however, only 90 owners have signed the deed of declaration, so the total number of owners who are signatory to the deed of declaration is woefully lesser.Further it contended that respondent No.3's rights to form a society, which is a fundamental right to form a cooperative society, does not stem from KOFA, but instead stems from the Constitution. FindingsReferring to Section 2 of the KAO Act the court said, “The project referred above is for the residential units. The petitioners are purchasers of the apartments and a deed of declaration is duly executed and registered by the petitioners along with the other apartment owners has undertaken to subject themselves to the provisions of the KAO Act.” It added “Even assuming, as per the contention raised by the respondents, that the deed of declaration is not signed by all the owners and deed of declaration was only executed after various sale deeds conveying the units in favour of the allottees, the deed of declaration is with an intent to form association to be registered under the KAO Act.” Relying on the judgments cited by the petitioners, the court held, “In the instant case, the project does not include any commercial unit and as such, the KOFA has no application and since the KOFA has no application, the registration under the Act, 1959, is not permissible. It is relevant to state that respondent No.4 is the association of the owners of the flats situated in an apartment for which a specific enactment, viz., the KAO Act has been enacted and therefore, the registration of the association has to be made under the KAO Act.” Allowing the petition the court restrained the Registrar from registering the proposed society and declared that “As the project does not involve a commercial unit, the registered association-respondent No.4 registered under the KAO Act would maintain Retirement and manage the 'Parkside Homes Brigade Orchards Apartment Complex' and respondent No.3 is directed to cooperate with the petitioners and the members of the registered association respondent No.4 to manage and maintain the project 'Parkside Retirement Homes Brigade Orchards Apartment Complex".Appearance: Advocate Beena P.K for Petitioners.AGA Yogesh D Naik FOR R-1 & R-2. Advocate Sameer Sharma FOR R-3. Advocate NIMMY K.S, FOR R-4. Advocates P. CHINNAPPA & HARSH GUPTA, FOR R-5. Citation No: 2025 LiveLaw (Kar) 117Case Title: Saraswathi Prakash & Others AND State of Karnataka & Others Case No: WRIT PETITION NO.3779 OF 2023Click Here To Read/Download Order

Apartment Complexes With Only Residential Flats To Be Registered Under Apartment Ownership Act, Not Co-Operative Societies Act: Karnataka HC

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Apartment Complexes With Only Residential Flats To Be Registered Under Apartment Ownership Act, Not Co-Operative Societies Act: Karnataka HC

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