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A.P. Apartments (Promotion of Construction and Ownership) Act, 1987

25. As seen from the statement of objects and reasons of the Apartments Act, the State of Andhra Pradesh undertook legislation in order to meet increasing pressure in urban land resources due to rapid urbanization and to secure effective mortgageable title to individual buyers of flats. It also deals with rights and liabilities of the builders of apartments and owners of flats. Section 3(d) defines common areas and facilities as under:

26. Section 31 of the Apartments Act makes it clear that all owners, tenants, employees or any other person who may use the property or any part thereof are bound by the provisions of Chapter III of the enactment. Section 24 which appears in Chapter III prohibits the promoters or owners of the apartment from selling or leasing out or misusing any common areas and facilities. Be it also noted that under Section 9, all the owners in apartments, flats shall be entitled to percentage of undivided interest in the common areas and such undivided common interest shall not be altered without the consent of the apartment owner. It is interesting that Section 9(2) provides that the percentage of undivided interest in the common areas and facilities shall not be separated from the apartment and shall be deemed to be conveyed or encumbered with the apartment even though such interest is not expressly mentioned in the deed of conveyance. As per Section 9(3), each apartment owner has a right to use the common areas and facilities for the purpose for which they are intended without hindering or encroaching upon the lawful rights of the other apartment owners.

30. The upshot of the above discussion may be summarised thus:

1. In the case of a multi-storeyed building complex or group housing scheme where the original owner of the land/ builder parts with title and possession for a valuable consideration and executes sale deeds or other transfer deeds, cannot claim right over the appurtenant land meant for common facilities like staircase, verandahs and electrically operated lifts;
2. Subject to any agreement, the original owner can sell or retain control over common facilities, terrace and appurtenant land for the purpose of maintenance, but the owner cannot charge any amount for providing security to the property of the visitors who go to a public place like commercial complex;

31. The above principles would show that if the plot area earmarked for parking places or other common facilities is allowed to be put to commercial use by the owner or group of owners of multi-storeyed complexes, the same would amount to fraud on statute. In K.R. Shenoy v. Udipi Municipality, , the municipality granted permission for construction of Kalyana Mandapam-cum-lecture hall imposing conditions that the building constructed must be used only for Kalyana Mandapam subject to the provisions of Madras Public Health Act, 1930 and the scheme framed under Madras Town Planning Act, 1920. Later, an application was made under the Madras Places of Public Resorts Act, 1888 for using the building as a public resort. The applicant also made a representation to the Udipi Municipal Council for licence to use the building for exhibition of cinematographic films. The application was initially rejected by the Chief Officer of the Municipality on the ground that Kalyana Mandampam cannot be converted into cinema theatre. The applicant's appeal was allowed by the Municipal Council which was challenged before the Mysore High Court inter alia on the ground that the Municipality has exceeded its power and if the Kalyana Mandapam is allowed to be converted into cinema theatre it amounts to fraud on statute. The Supreme Court accepted the same and set aside the permission granted to the applicant to convert the Kalyana Mandapam into cinema theatre. In that connection, it was observed: