The Kerala High Court come to the rescue of Apartment Owners

 

The Kerala High Court comes to the rescue of Apartment Owners

Introduction

Anyone who seriously studied apartment ownership in Kerala will understand that its protection assumed the last place in priority of the state government.  The making of an Apartment Ownership Law without defining the powers of its competent authoirty is a living example.  Therefore, the law which came into force with the Presidential Assent, 40 years ago, was not implemented until recently, when a few apartment owners associations with the assistance of the Court, attempted to enforce the law.    

The neglect of the state government appears wilful, when is it argued that the state was succumbing to the pressure of the promoters, who were more powerful when compared to the apartment owners, who are largely unorganized.  The unkindest of all the cuts was the position of the state government before the Kerala High Court to repeal the Kerala Apartment Ownership Act 1983 (the Local Law for short), for some illogical reasons. 

Read more about the decision of the state to repeal the local law by clicking this link The State Betrays the Apartment Owners

Some Background

Mr Anandapadmanabhan, a lawyer practicing in the Kerala High Court, preferred a Public Interest Litigation before the Court (ref: WP(C) No. 15166 of 2024) with one of the prayers being to implement the local law, through the mechanism of the Real Estate (Regulation and Development) Act 2016 (the central law for short).

The state refused to file a counter affidavit after being given repeated opportunities.  The Court had to pass peremptory orders and even orders imposing costs for the state to file a response.  The response in fact betrayed the aspiration of the apartment owners to preserve their ownership.  

The Court's interference

A Divison Bench of the Kerala High Court led by the Chief Justice, passed an order on 5th December 2024, directing the state to make their submission as to why  Relief Number 4, of the writ petition, shall not be ordered as an interim measure, on the next date of hearing. 

The order of the High Court concerning Relief Number 4, would make the existing apartment ownership laws functional to the projects of apartment buildings, registered with the Kerala RERA Authority.  

Relief No.4  is extracted for easy reference: 

"Relief No. 4: To issue a Writ of Mandamus or any other appropriate writ order or direction, compelling and commanding the Respondent No.4 to ensure that Clause 20 of Annexure A (standard form Agreement for Sale) under the Kerala Real Estate (Regulation and Development) Rules 2018 is strictly complied by all the Promoters of the Apartment  Buildings, registered under Section 3 of RERA."

The Next date for the hearing is 9.12.2024

Understanding Relief No. 4 in the Writ Petition

The Parliament in its wisdom understood that the regulation and development of the real estate sector in the country may need a robust standard form agreement for sale to be executed and registered by the Promoters and Allottees of the Real Estate Projects. They considered that such a document would be capable of bringing transparency and efficiency in this sector. Hence the central law made provision for prescribing of such a standard form.

The state government brought in RERA Rules 2018, incorporating an Annexure containing the statutory standard form agreement for sale. The Annexure is part of the rules and contains mandatory clauses including Clause No. 20, regarding the application of the local law. Clause No. 20 reads as follows:

"20 Apartment Ownership Act

The Promoter has assured the Allottees that the project in its entirety is in accordance with provisions of the Kerala Apartment Ownership Act 1983 (5 of 1984). (Please insert the name of the State Apartment Ownership Act). The promoter showing compliance with various laws and regulations as applicable in the state.

Who may enforce Relief No. 4?

The central law obligates the promoters to register all the projects with the Regulatory Authoirties constituted under it, in the respective states. The Regulatory Authoirty has a legal obligation to enforce the obligations cast upon the promoters, allottees, and other stakeholders under the law.

Clause No. 20 of Annexure A creates a statutory obligation upon the Promoter to ensure the application of the local law, where apartment ownership is involved. This obligation may be performed by executing and registering a Declaration, as prescribed in the local law, as the sole owner of the property.

It is the statutory function of the RERA Authoirty to ensure compliance of the obligations cast upon the promoters, the allottees, and the real estate agents under this Act and the rules and regulations made thereunder.  Therefore, the Kerala RERA Authority may have to ensure compliance with the statutory obligation of the promoters to apply the local law.

The lack of regulatory provisions in the local law, as discussed earlier, is inherent.  This shortcoming has caused difficulty in its enforcement.  Hence, the state government may exercise its powers to remove difficulties by passing appropriate orders within its powers vested by the local law.

 Conclusion

The future of the apartment ownership law in Kerala is passing through an interesting phase when the state proposes to repeal the law on unreasonable grounds, and the High Court thinking differently.  Let us keep our fingers crossed till the court takes a final decision on the matter.