Delhi High Court
Vijay Building Apartment Owners ... vs Ardee Housing Pvt Ltd & Anr. on 23 July, 2019
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 23rd May, 2019
Date of Decision: 23rd July, 2019
+ CS (OS) 1261/2015
VIJAY BUILDING APARTMENT
OWNERS ASSOCIATION ..... Plaintiff
Through Mr. Sandeep Aggarwal, Sr. Advocate
with Mr. Rama Shankar, Advocates
(M. No.9811214465)
versus
ARDEE HOUSING PVT LTD & ANR. ..... Defendants
Through Mr. T. K. Ganju, Sr. Advocate with
Mr. B. Shekhar, Advocate (M.
No.8010056536)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh, J.
IA Nos. 9496/2015 (Stay) and 1196/2019 (for clarification of order dated 18.12.2018)
1. The present suit is in respect of VIJAYA Building, 17, Barakhamba Road, New Delhi-110001 (hereinafter „building‟). The Plaintiff - VIJAYA Building Apartment Owners‟ Association (hereinafter „Association‟), is an association formed by various apartment/flat owners of the building. The Association was registered on 9th November, 2012. It has filed the present suit against M/s. Ardee Housing Pvt. Ltd. (hereinafter „Ardee‟) and M/s. Gujaral Estates Pvt. Ltd. (hereinafter „Builder‟) seeking declaration, permanent and mandatory injunction.
CS OS 1261/2015 Page 1 of 37Brief Facts
2. The case of the Plaintiff Association is that the Builder had entered into a collaboration agreement dated 6th January, 1978 (hereinafter „Collaboration Agreement‟) with Dr. Ms. Vimla V. Gujral and her daughters (`Owners‟) for raising construction of multi-storied commercial building. The broad terms of the said collaboration agreement are:-
The Builder had to demolish the existing super-structure and after obtaining requisite permissions and approvals construct a multi- storied commercial building by the name VIJAYA Building at its own cost and expenses.
All the charges and expenses for the construction were to be borne by the Builder.
That upon completion of the building, the owners were to retain their share of the building as per the plan annexed to the agreement; That the Builder could transfer the balance space to any third party and the owners were to cooperate;
That for the space falling in the share of the owners, the owners were only to pay conversion charges and maintenance charges to the Builder;
That a society or a company was to be formed with the owners and the Builder as members thereof;
That any person, who purchases or derives any rights from either the owners or from the Builder, would also be bound to become a member of such society/company;
That any assignee of the Builder would also be bound by the terms of CS OS 1261/2015 Page 2 of 37 the collaboration agreement;
That until a society/company was formed, the responsibility of running the common facilities, services and maintenance of the building was to be discharged by the Builder on usual terms and conditions.
3. The building was completed and there were various disputes including as to whether it was constructed as per the sanctioned plans, etc. The authorities had alleged that there were various irregularities and they had taken steps to seal some part of the building, which was challenged by the Plaintiff-Association and the matter is stated to be pending before the MCD Appellate Tribunal.
4. The fact that a society/company was also to be formed, for the welfare of the flat owners, is clear from the flat buyer agreement, which the Builder executed with various flat buyers. The clauses of this flat buyer agreement provide:
That the L&DO charges, house tax and other municipal taxes were to be borne by the flat buyers;
That the flat buyers were to abide by all the rules and regulations, laws and bye-laws of the various governmental authorities; That the flat buyer was to permit access to the Builder/society for the purposes of repairs (clause 22);
That the maintenance charges, as fixed by the Builder/society, would have to be paid regularly;
That the payment of the maintenance charges was to be made to the Builder/society - failure of which would result in the Builder/society CS OS 1261/2015 Page 3 of 37 to taking possession of the flat;
That the flat buyer was also to contribute to the replacements fund, which is meant for replacement for capital/maintenance equipment or for carrying out repairs of a capital nature; That the payment was to be made to the Builder/society; That the Builder/society would have the right to restrict the entry of any undesirable persons into the building; As per Clause 32, the flat buyer had to become a member of the cooperative society or a company or any other appropriate body, which would be formed for safeguarding the interest of the Builder and/or of other flat buyers;
That the expense for formation of the said society/company/entity was to be divided amongst the flat buyers proportionately:
That the voting rights were to be as per Clause 34 of the agreement i.e. one vote for every square meter of space.
5. Thus, the Builder, charged various sums under the flat buyer agreement including for formation of the society, security deposit, maintenance charges, sinking charges, lease money, air conditioning charges, electricity meter, MCB charges, special finishing charges, electric sub-station charges, charges for fire fighting equipment, escalation charges and L&DO charges etc. All the payments were made by the Buyers to the Builder.
6. The Builder, however, did not either form the association/society of flat buyers and continued to charge all the above amounts from the flat owners/occupiers.
CS OS 1261/2015 Page 4 of 377. Several of the flat owners had grievances against the Builder, who had started carrying out the maintenance through Defendant No.1 - Ardee. Both Ardee and the Builder are under a common management.
8. According to the Plaintiff, the Builder had also collected various sums for the purposes of repairs, replacements etc. which run into crores of rupees. The maintenance charges, lift charges etc. were all fixed arbitrarily without consulting the apartment owners. Only a temporary occupation certificate was given by the authorities in 1996 and till date the building does not have a completion certificate.
9. Thus, the case of the Plaintiff-Association is that despite there being an obligation to form a society/company/association, the Builder took no steps to get the same formed. The flat buyers were raising their voice against the Builder and its agency as they were left at the mercy of both these entities. Finally, a large number of flat buyers got together and formed the Plaintiff-Association on 9th November, 2012. The said association was registered with the Registrar of Societies under registration number - S/154/2012. It is the Plaintiff‟s case that more than 80% of the flat buyers are members of the association - which is disputed by the Defendants. The original owners i.e. Mrs. Gujral and her daughters are also the members of the Plaintiff-Association. According to the Plaintiff-Association, the owners‟ share is approximately 60,000 sq. ft., which forms a majority share in the building itself. Since the Builder and its maintenance agency did not cooperate with the Plaintiff-Association despite a majority of the flat buyers being its members, the association addressed notice dated 27 th December, 2012 and called upon the Defendants to hand over the maintenance and all other related services of VIJAYA Building to the Plaintiff-Association.
CS OS 1261/2015 Page 5 of 37Vide the said notice, the association also called upon the Defendants to hand over the entire accounts and other relevant documents relating to the building. Since there was no response, the governing council of the association had a meeting and resolved that with effect from 1 st January, 2013, all the flat buyers would pay the maintenance charges to the Plaintiff- Association. Again, there was no response and a reminder was also issued on 9th June, 2014. On 25th November, 2014, the association called upon Defendant No.1 to cooperate with the Association as, by then, 85% of the flat buyers had become its members. It was also brought to the notice of Defendant No.1 that there were several crisis situations owing to the fact that there was no completion certificate, various portions of the building were sealed by the NDMC and because the Defendants were not giving accounts running into crores of rupees, which had been collected from the flat buyers. Reliance was also placed on the Delhi Apartment Ownership Act, 1986.
10. On 1st December, 2014, the Plaintiff-Association informed Defendant No.1 that it has taken over the administration, management and maintenance of VIJAYA Building with effect from 10th November, 2014. Thus, a tussle had ensued between the parties. By that time, Defendant No.1 is alleged to have not allowed for smooth transition and had also disconnected electricity backup and air conditioning to some of the floors. This also resulted in the association complaining to the police. Further letters were written on 5th February, 2015 and 20th March, 2015 calling upon the Defendants to transfer all the funds, which were collected by them and to also remove all the gensets and other equipment kept by Defendant No.1 and hand over all the records. The total amount demanded by the Association to be transferred to CS OS 1261/2015 Page 6 of 37 it, which was allegedly collected by Defendant No.1 was more than Rs.11 crores.
11. Vide letter dated 27th March, 2015, Defendant No.1 replied to the Plaintiff. In the said letter, Defendant No.1 took the following stand:-
"The companies M/s Ardee Housing Pvt. Ltd. and M/s. Gujral Estates Pvt. Ltd. are the companies incorporated under the Companies Act and are also owners of about 3-1/2 floors in the Vijaya Building and as per the Flat Buyer Agreement and the Maintenance agreement duly signed by all the respective owners, tenants and occupiers, M/s. Gujral Estates Pvt. Ltd. and Ardee Housing Pvt. Ltd. have been providing maintenance, power back up, parking etc. in the building. The company owns generators and other equipment like power back up, lifts etc. and have been successfully providing the maintenance and even today, despite the so called Association having been constituted, are providing all facilities, maintenance etc. to majority of the owners/tenants/occupiers. We may inform you that the company has never stopped you from providing maintenance to any of the occupants/owners/tenants. However, on constitution of the purported Association, you cannot stop the company continuing maintenance in respect of floors owned by us as well as the other owners/occupants. The threat which is being given for removing the generators and or removing out men from the common areas, we would like to clarify that as per agreement, the generator sets are installed by us and are owned by us and we have full right on the common passage and common spaces and open areas, parking etc. In case of any of your executive, agent or employee interferes and or forcibly tries to remove the same from any portion of the building, the same will tantamount to decoity and theft. In such an event will be constrained to initiate criminal proceedings against the executive of CS OS 1261/2015 Page 7 of 37 the association and or others responsible for such criminal acts. Since the company is still providing maintenance as per the agreement with the flat owners, we are not legally obliged and bound to handover any records to you.
We once again wish to inform you that any interference in providing maintenance by us shall not be tolerated and apart from the criminal actions, other actions in accordance with law will be taken by us against all concerned.
We, therefore, once again called upon you not to interfere in the maintenance work being provided by us are stated above and you may also do the same in respect of your own members."
12. Thus, Ardee threatened the Plaintiff with criminal action. As per the above letter, it was claimed that the Defendants are the owners of three and a half floors of VIJAYA Building and that the Association cannot stop the Defendants from continuing the maintenance of the floors, which are owned by it and the other owners/occupants. It claimed that it has agreements with the occupiers and is hence providing maintenance as per the said agreements and that the Association could provide maintenance in respect of its own members.
13. Vide letter dated 1st April, 2015 the Association responded and informed the Defendants that the Defendants owned only 26,500 square feet out of the total super area of 1,88,000 square feet. Thus, the Defendants have no right to challenge the Plaintiff‟s standing. Along with this letter, the complete list of members of the association, running into 102 flat owners including the original owners, was sent to the Defendants.
14. The Defendants, on the other hand, claimed that they are the owners of spaces on the ground, third, eighth, tenth, eleventh, fifteenth floors, CS OS 1261/2015 Page 8 of 37 basement number 2, basement number 3, courtyard and compound. Apart from this, the Defendants state that the Association has no right to take over the maintenance of the multi-storied building. The Defendants claim that the Delhi Apartment Ownership Act, 1986 has not come into effect due to non- constitution of the Authority under the said Act. It is further claimed by the Defendants that since the apartment deed i.e. flat buyer agreement is not registered under the Delhi Apartment Ownership Act, the Association has no right under the said Act. Apart from relying upon the provisions of the Act, it is also claimed that all the contributions made by the apartment owners have been used for maintenance, development, repairs, installation of lift services etc. The case of the Defendants primarily is that since several of the occupiers - i.e., tenants and lessees (`Occupiers‟) etc., have agreements with the Defendants, they are entitled to render services of maintenance and carry on the same without any interruption. The further case of the Defendants is that even as of 11th April, 2015, since the Plaintiff-Association is asking the Defendants to hand over the entire maintenance operations of the building, the case made out in the plaint that the Plaintiffs are maintaining portions of the building, is false.
15. Accordingly, the Plaintiff Association filed the present suit seeking the following reliefs.
"1. That a decree of declaration may kindly be passed in favour of the plaintiff and against the defendants, thereby declaring that the maintenance, common areas and common services, administration, management of Vijaya Building, 17 Barakhamba Road, New Delhi vest in the plaintiff association with effect from November 2014 and the defendants have no right title or interest whatsoever to interfere in day to day affairs of the CS OS 1261/2015 Page 9 of 37 maintenance of the building.
2. That a decree for permanent injunction may kindly be passed in favour of the plaintiff and against the defendants, thereby restraining the defendants, their agents, servants, officers, directors, employees assignees from interfering, disturbing, creating hindrance, nuisance and obstructing the office bearers, servants, employees, agents of the plaintiff association from looking after, taking care of maintenance of building and common area, common services including parking area and also from installing gen- set, power backup or any other equipment, machines, air conditioning units in the building in the common areas for the purpose of smooth maintenance of Vijaya Building, 17, Barakhamba Road, New Delhi in terms of Delhi Apartment Ownership Act 1986.
3. That a decree of mandatory injunction may kindly be passed in favour of the plaintiff and against the defendants, thereby directing them to hand over the records, books of accounts, equipments and machines pertaining to the common maintenance in Vijaya Building, 17, Barakhamba Road, New Delhi.
4. That a decree for a sum of Rs. 4,49,76,200/- may kindly be passed in favour of the plaintiff and against the defendants.
5. That a decree for rendition of account may kindly be passed in favour of the plaintiff and against the defendants thereby directing the defendants, its officers to render the accounts of the building since the year 1989 and rendition of account the decree for the said amount may kindly be passed in favour of the plaintiff."
16. When the suit was initially filed, the matter was partly heard on a few occasions. Even during the said period, the Court was constrained to pass orders that the power backup would be provided to one of the tenants. Vide order dated 25th July, 2016, certain suggestions were considered for a CS OS 1261/2015 Page 10 of 37 working solution. Vide order dated 7th September, 2016, a Local Commissioner was appointed to verify various aspects.
17. The said Local Commissioner submitted his report. Thereafter, on 13th September, 2018, after hearing some arguments, this Court was of the opinion that the wishes of all the flat owners ought to be ascertained. Accordingly, another Local Commissioner was appointed and the following directions were passed:-
"2. The suit has been listed from time to time and various orders have been passed including appointment of a Local Commissioner on an earlier occasion. The submission of the Defendants is that they have arrangements with various occupants currently and they are rendering services under agreements with the said occupants and they cannot be asked to terminate their agreements.
3. The Defendants have placed on record a list of occupants/list of owners of the said building which is at pages 87 to 102. Before proceeding further, to pass any orders in this matter, it is deemed appropriate to ascertain the wishes of all these owners who own various commercial spaces within 17, Barakhamba Road, New Delhi-110001 as to whether they wish to continue the services of Defendant No. 1.
4. Accordingly, Mr. Neeraj Chaudhari, Advocate (M:9811198023), -who is present in Court; is appointed as a Local Commissioner in this matter to visit the premises 17, Barakhamba Road, New Delhi-l 10001 on 6th October, 2018 at 11.30 a.m. at a convenient place-within the building itself.
5. All the owners of the various commercial spaces would assemble in the said building October, 2018 at 11.30 a.m., before the Local Commissioner and express their consent, in writing, for continuation or discontinuation or change of Defendant No.1 as the maintenance agency. The owners, obviously, would be CS OS 1261/2015 Page 11 of 37 at liberty to ascertain the wishes of their tenants. A notice be published by the Local Commissioner, the draft of which may be drawn up by the Local Commissioner, in consultation with both the parties within a week from today. The notice containing the date, time, venue of the meeting be also pasted outside the said building so that all the owners may be informed about the said meeting.
6. The Local Commissioner, may, prepare a standard form consent letter wherein the owners may be given an option to continue or discontinue with Defendant no.1 and submit the same after signing on spot at the meeting. The Local Commissioner may meet with all the owners and after ascertaining their, wishes may submit their report to this Court. If the draft notice and standard form of the consent are not getting finalised between the local commissioner and the parties, the Local Commissioner, is permitted to apply before this Court."
18. This order was challenged in appeal in FAO (OS) 149/2018. The said appeal was dismissed as withdrawn on 3rd October, 2018. The Second Local Commissioner executed the commission and has filed his report. The Defendants have filed objections to the said report. On 18th December, 2018 the following order was passed:-
"Report of the Local Commissioner has been received. Commissioner's report, in paragraph 28, records as under:
"28. That subsequently the consent forms were tallied, a list was compiled and the following was the result:
Consent forms accepted and considered for voting (Envelop-A {Part-1, Part-2 & Part-3}) Options As per Super As per No. of Area sq. ft.) Consent forms Supporting Vijaya 1,21,650 162 CS OS 1261/2015 Page 12 of 37 Building Apartment Owner's Association (Plaintiff) Supporting Ardee 37,787 19 Housing Pvt. Ltd.
(Defendant No. 1) Any other option 0 0 Consent forms not considered for voting (Envelop - B) Options As per Super As per No. of Area sq. ft.) Consent forms Supporting Vijaya 1,168,60 5 Building Apartment Owner's Association (Plaintiff) Supporting Ardee 2,999 5 Housing Pvt. Ltd.
(Defendant No. 1) Any other option 0 0 Mr. T. K. Ganju, learned Senior Counsel for the Defendants has filed objections to this report of the Commissioner. He relies on the documents filed with the Objections to submit that a majority of the flat owners wish to continue the Defendant agency for maintenance. However, the Ld. Sr. Counsel for the Plaintiff refutes this fact.
The Plaintiff shall identify the areas, which constitute 1,21,650 Sq. Feet, forming part of the building, who support the Plaintiff association, by mentioning flat numbers and the specific floors in which these persons own the space. The Defendants are directed to file a chart of the flat numbers and the space, whose owners they claim to be supporting them as the maintenance agency. On the next date, the said two charts shall be considered and appropriate interim directions shall be passed.CS OS 1261/2015 Page 13 of 37
List on 25th January, 2019."
19. Again, an amicable resolution was explored, however, since there was no resolution, arguments were heard in I.A. 9496/2015 for interim injunction and I.A. 1196/2019 for clarification of order dated 18th December, 2018 and judgment was reserved.
20. In I.A. 1196/2019, the Defendants seek clarification to the following extent.
"In view of the above and in the interest of justice, it is therefore, most respectfully prayed that the order dated 18.12.2018 may be clarified to the extent that the majority of Occupiers who are actually using and paying for maintenance services are supporting the Defendants."
Submissions of the Parties
21. Mr. Aggarwal, ld. Sr. counsel appearing for the Plaintiff-Association submits that the Association has been put to enormous harassment and frustration as the flat owners have been left to the mercy of the Builder and its agency. Right from the initial collaboration, it was clear that the society/company/other entity would be formed for taking care of all the aspects of the building. However, the Builder illegally retained the maintenance to itself and continues to hold the flat owners to ransom. It is further submitted that the Defendants have collected huge sums of money running into crores of rupees under the garb of various charges and have not accounted for the same. In fact, some of the fees were for formation of the association, which the Defendants failed to do, even till date. The Builder miserably failed in carrying out its obligations as it has not even obtained the completion certificate thereby prejudicing the interest of the flat owners.
CS OS 1261/2015 Page 14 of 37Since no completion certificate was even obtained, the question of registering the flat buyer agreement under the Act, did not ever arise. All the activities i.e. handing over of the possession, maintenance etc. are being carried out on an ad-hoc basis. Even when portions of the building were sealed, it was the Association, which had to approach the Tribunal for stay. As on date, all the bonafide flat owners are members of the said Plaintiff - Association/society. Despite repeated efforts being made by the Association and despite notices being given, the Defendants have not co-operated. It is further submitted by Mr. Aggarwal that under the Act, the Association has all the powers to carry out the maintenance activities of the building and the entire purpose of the enactment of the Act has been defeated in the present case by the Builder and its agency. He places reliance on the findings of both the Local Commissioners, who were appointed by this Court. He further relies on the following judgments:-
Bangalore Development Authority and Ors. vs. The State of Karnataka and Ors., (2018) 9 SCC 122 Anjali Sawhney vs. Anjali Trust and Ors., 94 (2001) DLT 132 UCO Bank vs. Saumyendra Roy Chaudhary, (2014) 3 CALLT 510 (HC) Hindustan Development Corporation vs. Modiluft Limited and Ors., 2005 (4) CHN 14 Zenit Mataplast P. Ltd. vs. State of Maharashtra and Ors., (2009) 10 SCC 388
22. Ld. counsel for the Plaintiff further submits that non-constitution of the authority under the Act cannot be treated as a free permit for the Builder CS OS 1261/2015 Page 15 of 37 to continue in the building. He relies upon the judgment titled O. S. Bajpai vs. The Administrator (Lt. Governor of Delhi) and Ors., 172 (2010) DLT 442 of a ld. Division Bench of this Court wherein various directions were passed by the Court including in respect of registration of agreements and what should be the procedure to be adopted during the time when the amendments are yet to be effected. The Plaintiff further relies upon an order dated 26th May, 2015 passed in CS (OS) 845/2014 titled Kundan House Flat Owners Welfare Association (Regd.) vs. Gurucharan Singh Bhasin & Anr.
23. On the other hand, Mr. Ganju, ld. Senior Counsel appearing for the Defendants submits that the prayer in the application is for a negative injunction. However, since the Association is not currently maintaining any portion of the property, the nature of the relief is actually a mandatory injunction, which cannot be granted at an interim stage. A mandatory injunction can only be granted at the interim stage to restore status quo ante and not a fresh mandatory injunction. It is also submitted that the Defendants are agreeable for the trial being expedited but at this stage the interim relief cannot be moulded in favour of the Plaintiff-Association. He relies on the following judgments.
Bachhaj Nahar vs. Nilima Mandal and Anr., (2008) 17 SCC 491 Samir Narain Bhojwani vs. M/s. Aurora Properties and Investments and Anr., [Civil Appeal No.7079/2018 decided on 21st August, 2018] Kashi Math Samsthan & Anr. vs. Srimad Sudhindra Thirtha Swamy & Anr. [Civil Appeal Nos.7966-7967/2009 decided on 2nd December, 2009] CS OS 1261/2015 Page 16 of 37 Nandan Pictures Ltd. vs. Art Pictures Ltd. & Ors., AIR 1956 Cal 428
24. On merits, Mr. Ganju submits that the Defendants are looking after the property for the last three decades without any complaint from any quarter. The occupiers are happy with the Defendants. The Second Local Commissioner‟s report does not reflect the majority of the owners, who want maintenance to rest with the Plaintiff-Association. Despite the letter written by Defendant No.1, that the notice which was put up was defective, the Local Commissioner went ahead with the commission. Even the consent form sought by the Commissioner was defective. He relies on the prima facie observations in the order dated 25th July, 2016. He thus submits that the report of the Local commissioner ought not to be accepted and the suit ought to be sent for trial.
Analysis and Findings
25. The present suit filed by the Plaintiff-Association of flat owners of VIJAYA Building shows the apathy which flat owners have to face at the hand of builders. The collaboration agreement in this case dates back to 1978 and even the temporary occupancy certificate was obtained by the Builder only in 1996. Various flat owners have purchased space in the building - literally to their own peril. They are unable to, till date, exercise control over their own building. They/their occupiers/tenants are being forced to pay maintenance charges to the Builder/its agency as they have left no stone unturned in holding on to the building. When the Association wrote notices to the Defendants, it was threatened with criminal action.
26. It was this very malaise that was sought to be cured by the Delhi CS OS 1261/2015 Page 17 of 37 Apartment Ownership Act, 1986. Though the said Act was passed more than 30 years ago, the same has still not been given complete effect to. A Division Bench of this Court made scathing observations against the government in the case of O.S. Bajpai (supra) in the following terms:-
"14. The upshot of the aforesaid discussions leads us to the situation where various infirmities pointed out by the petitioner in the present enactment are acknowledged by the respondents as well. They recognize that there is a complete absence of remedial/penal provisions in the present enactment, which enables the builders of these multi-storeyed buildings to commit breach as minutes has no consequences flow from the said breach. So much so, the respondent also recognize that in order to provide adequate provisions and plug a loophole, it is not even feasible to carry out a large number of amendments and the proper remedy would be to pass new legislation incorporating all such provisions. The Government had itself realized this shortcomings in the existing legislation way back in the year 2001 when Delhi Apartment Bill was introduced in the Parliament. However, with the dissolution of 13th Lok Sabha, said bill lapsed. Thereafter, no exercise is done to either introduce any bill on the same line or in a modified form subsequently. Even in the meeting held between the Ministry of Urban Development and Government of NCT of Delhi as recent as on 01.02.2008, that the need for new legislation is acknowledged. It is also stated that "a Draft Cabinet Note has been prepared and is under-consideration of the Competent Authority for approval", but hand are washed off by further stating in the said meeting that "since enactment of a new legislation rests with the Parliament, it was felt that it may not be possible to indicate any timeframe for enactment of the new Act".
What happened to the Draft Cabinet Note, which was CS OS 1261/2015 Page 18 of 37 under-consideration of the Competent Authority is not brought on record thereafter. It appears that the matter is swept under the carpet and the file is gathering underserved dust. It shows the apathy and non-action on the part of the Government in taking appropriate action by bringing another bill in the Lok Sabha even when need for the same is felt, for the reasons best known to the concerned authorities. No doubt, it is not the province of this Court, even in exercise of its extra- ordinary jurisdiction under Article 226 of the Constitution of India to direct passing of a particular legislation. Again, no doubt, that is the prerogative of the Parliament. However, at the same time, good governance demands that when the Government itself realizes the shortcomings in the present legislation and feels the immediate and emergent necessity to bring out new legislation with all suitable provisions, inaction on the part of the Government by sitting over the matter and not processing the matter further is not an act of good governance. Citizens of this country would have aspirations from the Government of the day to act promptly in this direction by taking suitable measures. When that is not done, expectations of citizens are belied.
15. Though we cannot give positive directions to the respondents to bring out a suitable legislation, influenced by the aforesaid consideration, we can exhort the respondents to proceed further in the direction. They have already moved on their own.
Draft Cabinet Note, which was prepared and submitted to the Competent Authority for approval should be considered by the competent authority without further delay and if found feasible afresh Delhi Apartment Ownership Bill be introduced in the Parliament so that the Parliament in its collective wisdom is above to take a decision on passing suitable legislation on those lines. We hope and are confident that the issue would not remain dormant any longer an the Competent CS OS 1261/2015 Page 19 of 37 Authority spring into action at the earliest.
16. The matter should not be put to rest at that. Till the time new legislation comes up (if at all it happens), some means are to be found for effective implementation of the present legislation, as far as possible. After all, when a particular legislation is passed by the Parliament with benevolent object and contained in its „object and reason‟ as well as preamble and provisions are also made giving certain rights to the apartment owners, if the builders of multi- storeyed apartments do not adhere to these provisions, some mechanism is to be found to ensure that apartment owners are in fact bestowed the rights granted in the aforesaid legislation."
27. The Court accordingly directed that the government should bring out amendments in the legislation owing to various shortcomings, so that the expectations of citizens are not belied. However, till the time the amendments are brought in the said Act, the Court felt that a mechanism ought to be laid down to ensure that apartment/flat owners are able to enjoy the benefits of the said legislation. Accordingly, directions were given as under:
1) The government was directed to appoint a competent authority within 30 days of the order. The said competent authority was to keep the records of the flat buyers‟ agreements.
2) However, if the Builder/promoter failed to provide the transfer deeds, the flat buyer was to be treated as the owner of the apartment for the purposes of availing benefits under the Act.
3) Apartment owners‟ associations were directed to be formed within six months and the existing maintenance companies were to CS OS 1261/2015 Page 20 of 37 transfer the management of the multi-storied buildings to such associations.
4) Thereafter, the transfer of management and all the records were to be handed over by the maintenance agency to the concerned association.
28. Paragraph 18 of the said judgment reads as under:
"18. Governed by the aforesaid consideration and the role of the Court, which it is supposed to perform in such circumstance, we have considered the matter. The petitioner had also given certain suggestions for proper and effective implementation of the Act in the present form. After due deliberation thereupon, we feel that the following steps can be taken by the respondent seven within the existing law, which may go a long way to curb the menace:
a) Appointment of Competent Authority:
i) That the competent authorities may be appointed/nominated area-wise or building wise, so that these authorities are able to effectively discharge their functions. This should be done in accordance with the definition of competent authority as given in Section 2(k) of the Act.
ii) The competent authority may authorize for this purpose as many officers of the rank of the Deputy Commissioner or Joint Commissioner as may be necessary for the purpose.
The aforesaid action be taken within 30 days of this order.
Registration of Deed of Apartment:
i) The promoter/builder shall in all cases where the transfer has taken place under the sale deed/lease CS OS 1261/2015 Page 21 of 37 deed/transfer by endorsement, prior to the date of the order, which may be passed by this Court, execute the deed of apartment in the proformas as may be approved and issued by the competent authority keeping in view the provisions of Section 13(1) of the Act. This should be done within two months from the date of constituting the competent authorities.
ii) For future, the deed of apartment may be registered within one month of its execution by the owner and the promoter/builder.
iii) That in the case of existing owners, the deed of apartment shall be prepared by the existing owners and the promoters/builders in the proformas as mentioned in para (i) above enclosing their original Title deed (sale deed/lease deed/transfer by endorsement) and the same will be presented before the sub-registrar for registration. It will be the responsibility of the promoter/builder to do so as provided in Section 13(2) of the Act and also to deliver a certified copy of the registered deed to the owner of the apartment after it is registered.
iv) In the case of leaseholder land, the deed of apartment be entered into between three parties, i.e., promoter, apartment owner and Land Development Officer (L & DO) on behalf of the President of India as confirming party.
v) In the case of freehold land; the deed of apartment should be entered into between the promoter/builder and the apartment owner.
vi) The competent authority constituted in the aforesaid manner shall give notice to the promoters/builders of all the multi-storeyed apartments in Delhi directing them to execute sale deed/lease deed/transfer by CS OS 1261/2015 Page 22 of 37 endorsement in favour of the buyers for which time bound period would be prescribed. The competent authority shall prepare necessary proformas for this purpose and issue directions to execute the deed of apartments in the said proformas, keeping in view the provisions of Section 13(1) of the Act.
vii) General instructions shall also be issued for future, viz., the deed of apartment would be registered within one month of its execution by the promoters/builders and the owner.
viii) The terms of deed of apartment shall, inter alia, include conveyance of exclusive ownership and possession of (a) apartment owned by the respective owner; (b) title to such percentage of undivided interest in the common areas and facilities including land as may be specified in each deed of apartment computed on the basis of proportionate value of the apartment to the total value thereof. The terms of the deed should also make the right and interest in the property described as clause (v) above inheritable and transferable.
ix) Since it is the obligation of the promoters/builders on the one hand and owner on the other hand to execute and register such a deed of apartment, in the event of failure to execute, this non-action can be treated as evading payment of necessary stamp duty and registration charges, necessary penalty can be imposed by the Registrar under the Indian Stamp Act, the Registration Act and action for recovery of necessary charges can also be initiated.
x) If it is proved that failure and inaction on the part of promoters/builders in executing and registering sale deed of an apartment, the buyer be treated as the owner of the apartment for the purpose of getting CS OS 1261/2015 Page 23 of 37 benefits under the Act.
b) Apartment Owners Association:
The competent authority shall send specific notice to all multi-storeyed apartments informing the owners of apartments that it is their right to form owners- association in accordance with the bye-laws as per the Explanation B of Chapter 1 of the said bye-laws under Section 15 (2) of the Act. The officials from the office of the competent authority shall be deputed to visit all these multi-storeyed buildings, who would ensure formation of owner‟s association. They would be authorized to call for the meeting of the owners and supervise the formation of the association, so as to ensure smooth formation of the association. This exercise in respect of multi-storeyed buildings shall be completed within six months and the existing maintenance companies shall transfer the management of the multi-storeyed buildings to such associations.
c) Transfer of Management, Books of Account, etc. Once the apartment owner‟s association is formed, it shall takeover the management from the promoter/builder. All the books of account, bank account and other documents shall be handed over by the promoter/builder to the apartment owner‟s association so formed and all functions relating to the management of the building, common area, collection of maintenance charges, expenditure to be incurred on maintenance, employment of manpower, legal compliance, etc. will be performed by the association."
29. Thus, the ld. Division Bench had clearly laid down the scheme that was to be followed during the pendency of amendments to the Act.
30. Vide order dated 16th August, 2018, notice was issued to the Standing CS OS 1261/2015 Page 24 of 37 Counsel, GNCTD to inform as to whether the authority under the Real Estate (Regulation and Development) Act, 2016, which was recently enacted in place of the Delhi Apartment Ownership Act, 1986, was constituted or not. However, none has appeared for the GNCTD, Delhi. Neither party has placed before the Court any amendment or statute which has rectified the position that prevailed when O.S. Bajpai (supra) was pronounced. It is unclear if the competent authority has even been established as there are conflicting reports about the same.
31. During the entire period, the Plaintiff-Association continues to be subject to the whims and fancies of the Defendants.
32. There is no manner of doubt that in the 1978 collaboration agreement, the Builder was to continue the maintenance of VIJAYA Building only till the Association was formed. Clauses 20, 21, 22, 23 are relevant and set out herein below:
"20. That the Owner and the Builders agree and undertake to become members of a co-operative Society or the share-holders of a company incorporated under the Companies Act or an association of persons or a firm or any other body which may be formed by any appropriate legislation that may come into force in that behalf and for the purposes of allotment of flats and space as has been agreed to be allotted to the Owners in this agreement. This term will be binding on the purchasers who derive right from the Owner in respects of the flats and space which have to be allotted to the Owner in terms of this agreement. Similarly purchasers from the Builders will also be bound.
21. That the Builders shall have the rights of assigning their rights under this agreement in favour of any person, firm, company or association subject only to CS OS 1261/2015 Page 25 of 37 the limitation that the transferee or assignee shall be bound by all the terms and conditions contained therein.
22. That the Owners shall not revoke or cancel this agreement in any circumstances whatsoever. If by any act or omission on the part of the Owner, the promoters are prevented or obstructed from carrying out the purpose of this agreement or the work of development and construction of the proposed multistoreyed building, then the Owner shall be responsible for indemnifying completely the Builders against all expenses, charges and damages whatsoever. Any act of the government, any local authority or God is however excepted.
23. That till a co operative society, limited company or any other appropriate body is formed in respect of the building and the flat owners, the responsibility for running common facilities and services, maintenance of the building etc. in respect of the entire building shall be discharged by the Builders on the usual terms and charges."
33. Clause 23 categorically provides that `till a cooperative society limited company or the body is formed, the maintenance of the building, shall be discharged by the builders‟. The above clause brooks no ambiguity. The Builder was a party to this agreement and had a bounden obligation to form a society, which it has failed to do for almost four decades. The Builder has used the expression the „builder/society‟ in various clauses. It is, thus, clear, that the Builder was conscious all along of its obligation to form a society and there was no doubt in that regard.
34. The documents placed on record also show that the Builder has been charging various sums under different heads such as:
" Final Bill
1) Name of the space buyer and address:-CS OS 1261/2015 Page 26 of 37
2) .... (5)
6) Escalation charges
7) Total cost of the space including Escalation charges
8) Total L & D.O. Charges
9) Charges towards fire fighting equipment
10) Charges towards electric station
11) Charges towards special finishing
12) Electric Meter and miniature circuit-brakers charges
13) Contribution for formation of Society
14) Security deposit payable to Society
15) ....
16) Sinking charges
17) ....
18) Air-conditioning charges."
35. Thus, over the years the Builder has collected large sums from the owners/occupiers. Amounts collected includes for „formation of a Society‟ which remained in an embryonic state. The Plaintiff-Association has been formed since 2012 and has addressed multiple notices to the Defendants - only to fall on deaf ears.
36. This Court has, from time to time, attempted to resolve the disputes amicably, however, the Defendants have not yielded. The first Local Commissioner, appointed vide order dated 7th September, 2016 which directed the Local Commissioner to report on the following aspects:
"4. It is, however, agreed by both the sides that a Local Commissioner („LC) could be appointed by this Court to verify the following aspects:
(i) Whether each of the grievances listed out at Sl. Nos.
11 to 19, 21 and 22 of the list handed over to the Court by the Plaintiff as noted by the Court in its order dated 9th August 2016 has in fact been addressed by the Defendants as claimed by them in their response submitted today in Court?
CS OS 1261/2015 Page 27 of 37(ii) Whether the maintenance is being additionally provided, as claimed by the Plaintiff, by persons engaged by the Plaintiff as security personnel, sweepers etc.?
(iii) Whether the maintenance services are being provided exclusively by the persons engaged by the Defendants, as claimed by the Defendants?"
37. The Local Commissioner then visited the Building and reported as under:
That the flat owners do not have any access to the terraces, both from the security viewpoint and for the purpose of maintenance; That the boundary wall/steel railing/grills were not of sufficient height and may lead to accidental falls;
That the CCTV coverage is not adequate; That several window panes were found to be broken and required immediate safeguarding with grills and bars; That vacant flats were lying unlocked; That the renovation and repairs were being carried out in some flats without any supervision;
That access to the fire exit was not smooth; That there was no checking of vehicles; That there was inadequate lighting in several areas.
38. The said Local Commissioner had also taken the assistance of the Office of the Chief Fire Officer, Delhi Fire Service to carry out the inspection of the premises, who had given a satisfactory report. The NDMC and electricity inspectors had also given a satisfactory report.
39. The other observations of the Commissioner were that on most of the CS OS 1261/2015 Page 28 of 37 floors, cables and wires were loosely hanging, the fire exit was locked on various floors, there were naked electrical connections, sockets etc., various parts of the property were sealed by NDMC, the middle basement was not being maintained, the third basement had severe water logging, the air conditioning plant was outdated and was in a damaged condition. It is significant to note that the Defendants did not produce any records in respect of the amounts collected by them from the various flat owners. The conclusion of the Local Commissioner was as under:
"No Flat owners are involved in fixing the Maintenance and other charges. The same are being decided by the Defendants unilaterally."
40. The said Local Commissioner has also annexed photographs which showed that several parts of the building were not being adequately maintained and there was huge seepage in the building as also to demonstrate that there were loose hanging wires and cables. The Commissioner also verified records of the Plaintiff to show that between the period from 7th December, 2012 to 6th September, 2016, the Gujral family had paid maintenance and repair charges to the Defendants. The Commissioner also reported that security guards and house keeping workers were deputed by the Plaintiff (13 persons) and electricians, lift operators housekeeping workers and fire and security personal were deputed by the Defendants (30 persons). The extract from the said report in respect of the man power deputed by the parties is set out herein below:
"DETAILS OF MANPOWER DEPLOYED BY THE DEFENDANTS AND PLAINTIFFS:
Defendants : Total number of skilled and un-skilled persons deployed : 30 Nos.CS OS 1261/2015 Page 29 of 37
Consisting of Electricians, Lift Operators, Housekeeping workers, Fire & Security Personnel etc. Plaintiffs : Total number of skilled and un-skilled persons deployed : 13 Nos.Consisting of 12 Nos. of Security Guards and 01
number of Housekeeping worker.
Thus, in response to Para 4 (ii) and (iii) of the order dtd 07.09.2016, it is submitted that maintenance is being additionally provided by the Plaintiff also, by persons engaged by them as security personnel, sweepers etc and the claim made by the Defendants that maintenance services are being provided by them exclusively, is not true."
Thus, the Local Commissioner reported that the Plaintiff was carrying out some part of the maintenance and had also engaged some personnel who were providing services in the Building.
41. The second Local Commissioner - Mr. Neeraj Choudhari, who was appointed to ascertain the wishes of the flat/apartment owners vide order dated 13th September, 2018 also submitted his report dated 24th October, 2018. As per the said report, the Commissioner was to execute the commission on 6th October, 2018. After attempting to contact the counsels for the Defendants, he sent a draft public notice, which he intended to put up at various places in the building. After receiving the inputs of both the sides, the final draft notice was issued by the Commissioner for being published in the newspaper and was also put up in various places in the building itself. The said public notice reads as under:
"It is hereby notified to all concerned/flat/space owners of VIJAYA BUILDING, 17, Barakhamba Road, New Delhi - 110 001, that the Hon'ble High Court of Delhi vide its Order dated 13.09.2018, passed in C.S. CS OS 1261/2015 Page 30 of 37 (O.S.) No.1261/2015, titled "Vijay Building Apartment Owners' Association V/s. Aardee Housing (P) Ltd. & Anr." appointed the undersigned as Local Commissioner to visit the premises Vijaya Building, 17, Barakhamba Road New Delhi - 110 001 on 06.10.2018 at 11.30 A.M. to receive the consent in writing from flat/space owners of the building, whether they want to continue or discontinue or change of Aardee Housing (P) Ltd. (Defendant No.1) as Maintenance Agency or with the plaintiff Association. All the concerned persons shall bring their title documents, containing the measurement, I.D. Proof and letter of consent in writing. The flat/space owners shall assemble at the lobby of the Ground Floor on 06.10.2018 from 11.30 A.M to 02.30 PM. The letters from the flat/space owners shall also be accepted through their Agents with proper authorization alongwith copy of the owners identity proof."
42. The notice was also published in the Hindustan Times dated 4th October, 2018. Photographs of the various places where the notice was affixed in the building, have also been filed by the Local Commissioner. As per the notice, the flat/apartment owners were to assemble on the ground floor of the building on 6th October, 2018. The Defendants raised objections to the consent form, which the Local Commissioner had proposed. The Commissioner has placed on record several photographs, which showed the manner in which the meeting on 6th October, 2018 was carried out. The Commissioner collected a total of 149 consent forms and a list was prepared and was supplied to both the parties. Some suggestions made by the Defendants were also incorporated by the Commissioner. In respect of each of the floors, the Commissioner tabulated the space. Finally, the Commissioner concluded as under:
CS OS 1261/2015 Page 31 of 37Consent forms accepted and considered for voting (Envelop - A {Part-1, Part-2 & Part-3}) Options As per Super Area As per No. of (sq. ft.) consent forms Supporting Vijaya 1,21,650 162 Building Apartment Owners‟ Association (Plaintiff) Supporting Ardee 37,787 19 Housing Pvt. Ltd.
(Defendant No.1)
Any other option 0 0
Consent forms not considered for voting
(Envelop-B)
Options As per Super As per No. of
Area sq. ft.) Consent forms
Supporting Vijaya 1,168,60 5
Building Apartment
Owner's
Association
(Plaintiff)
Supporting Ardee 2,999 5
Housing Pvt. Ltd.
(Defendant No. 1)
Any other option 0 0
43. The Commissioner has attached therewith a complete bundle of consent forms obtained, in four volumes, which is part of the record.
44. Objections were filed by the Defendants to the said report. The broad objections are as under:-
the opinion and the view of the occupiers were not taken; the defaulters and even persons who had not paid maintenance were CS OS 1261/2015 Page 32 of 37 permitted to vote;
the occupiers have agreements with the Defendants; that there were some occupants who were receiving maintenance despite not paying the charges to the Defendants; Various such other objections.
45. Broadly this Court has considered the reports and objections to both the Local Commissioner‟s reports. A perusal of the reports shows prima facie that the Builder has committed several defaults. The Builder had an obligation to form the association/society/company, which it failed to do.
The Court has, at the prima facie stage, ascertained the wishes of the flat owners. The fact that the occupiers may have maintenance agreements with the Defendants, out of compulsion, does not vest any rights with the Defendants, inasmuch as, if the Association starts providing the maintenance, the occupiers who are only either tenants or lessees of the owners, can avail of the same from the Association. As per the second Local Commissioner‟s report, the clear conclusion is that out of the total of approximately 1,59,437 square feet super area, owners of 1,21,650 square feet area have supported the Plaintiff-Association. The Defendants may be owning some parts of the building and would be entitled to become members of the Association and enjoy voting power as contained in the collaboration agreement i.e. one vote for every square meter. The wishes of the majority cannot be ignored by the Court. Further, the intention behind the legislations such as the Delhi Apartment Ownership Act, 1986; Real Estate (Regulation and Development) Act, 2016 and other recent reforms in the real estate sector, cannot be ignored.
46. At the time when the suit was filed and even during the execution of CS OS 1261/2015 Page 33 of 37 the first local commission, the Plaintiff-Association was carrying out some maintenance and other works in the building. The Plaintiff-Association is severely affected as the Defendants are not cooperating with the Plaintiff and are working against the interests of the Plaintiff-Association and its members. Paragraph 21 of the plaint reads as under:
"21. That as the defendants were not responding to the letters and consequent thereof the association on 10.11.2014 had taken over administration, management and maintenance of the building and deputed its employees, security guards and sweepers for the same purpose and the flat owners as well as the other occupants as tenant in the building were duly informed that the possession has been taken over."
47. The submission of the Defendants, that no mandatory injunction can be granted and only status quo ante can be restored, is an observation made by the Supreme Court in different fact situations. The present case does not result in passing of a mandatory injunction but in actually ensuring that the Defendants abide by their obligations under the collaboration agreement and the flat buyer agreements. The Defendants have no rights to be challenging the binding obligations in agreements executed by them and claim a right to continue to violate the same with impunity. None of the judgments cited by the Defendants are applicable in the present factual matrix. However, this Court is persuaded to follow the judgment of a ld. Single Judge in Kundan Housing (supra) where, after referring to the Ld. Division Bench‟s judgement in O. S. Bajpai, the Court passed the following directions.
"10. Keeping in view the legal position as stated above by the Division Bench of this court and the conditions of the common areas as elaborated by the Local Commissioner, in my opinion, it is appropriate that the CS OS 1261/2015 Page 34 of 37 essential services in the building in the common areas like electricity, water, cleanliness and lifts are taken over and handled by the plaintiff association forthwith. This would be in accordance with the judgment of the Division Bench of this High Court. It would also break the impasse which is there whereby defendant No.1 is unable to take steps for maintenance of the common areas. I direct accordingly and permit the plaintiff to take over the above noted services without hindrance by the defendant.
11. The plaintiff shall abide by the terms and conditions as stipulated by the Division Bench in the case of O.S.Bajpai vs. The Administrator (Lt. Governor of Delhi) & Ors. (supra) and statutory provisions while carrying out maintenance of the common areas."
48. On a broad conspectus of the facts narrated above it is clear that the Builder had a binding obligation to form a society to represent the interests of the flat buyers. This obligation was contained in the initial collaboration agreement as also in each of the flat buyers agreements. This obligation was clearly violated by the Builder. To make things worse, the Builder created a maintenance agency, under the same management for giving maintenance and collected huge sums of moneys both from the flat owners and the occupiers - without accounting for the same. The Plaintiff association came to be formed after many years and despite repeated notices, the Builder did not cooperate. The maintenance agency Ardee has no right at all whatsoever as it is just an agent of the Builder. Some of the occupiers may have been forced to agree for maintenance being provided by the Builder and its maintenance agency. However, this does not constitute a legal right to claim that the defendants can continue to provide maintenance against the wishes CS OS 1261/2015 Page 35 of 37 of the Plaintiff which represents the majority of the flat owners. Whenever the Association or the owners have taken any drastic steps, they have faced harassment in enjoying the basic facilities such as electricity back up and air conditioning - in a building located in the centre of the capital city. This has led to police interventions and orders by the Court. The court cannot ignore these happenings.
49. The Local Commissioners have both reported the situation of the building on ground and the arbitrariness with which the Builder is unilaterally collecting the fees/monies under various heads from the residents/owners and or occupiers. The wishes of the flat owners have been totally ignored. Repeated notices by the Plaintiff association have elicited no reasonable reply by the Builder. The Association has a right to prevent the Builder and its maintenance agency from continuing to interfere in providing maintenance and other services to the building.
50. Under these circumstances, the Defendants are restrained from preventing the Plaintiff-Association from carrying out the maintenance of Vijaya Building, 17, Barakhamba Road, New Delhi-110001 and are further restrained from interfering, disturbing or obstructing the Plaintiff- Association and/or its employees/their agents from looking after, taking care of the maintenance of the building, common areas, common services, parking areas including the genset, power backup, fire services, etc. The Defendants are further restrained from causing any harassment to the flat owners/occupiers for a period of 30 days by disconnecting any of the maintenance services including electricity, water, gensets, power backup, lift services, air conditioning etc., During the said period, the Plaintiff can make whatever arrangements it needs to make for ensuring that all the services are CS OS 1261/2015 Page 36 of 37 duly provided by it to the flat owners and the occupiers of the building. I.A. 9496/2015 is disposed of accordingly.
51. Insofar as I.A. 1196/2019 is concerned, the question raised is that many of the occupiers are supporting the Defendants and hence the order dated 18th December 2018 deserves to be clarified. The Defendants have tried to produce some satisfactory maintenance letters from different occupiers along with their written submissions after the judgment was reserved on 23rd May, 2019. The same cannot be gone into at this stage. The Defendants can prove the same in accordance with law. No clarification of the order dated 18th December, 2018 is called for as the occupiers who are not owners cannot have any independent right to opt for a maintenance agency when a majority of the owners are members of the Plaintiff association.
52. I.A. 1196/2019 is accordingly dismissed.
PRATHIBA M. SINGH JUDGE JULY 23, 2019/dk/Agastya CS OS 1261/2015 Page 37 of 37