Builder Can’t sell common areas of group housing society: Bombay HC

In yet another case, the judiciary have come to the rescue of homebuyers. The Bombay high court in an interim order has restrained a city builder from selling the common areas of a newly constructed high rise building.

Case Brief

This is the case of Anand Villa, on Linking Road, Santacruz, Mumbai. Interestingly this building is known for housing Salman Khan’s Being Human store. The developer after selling the apartments and commercial areas to buyers, modified the layout plans and converted common areas into shops etc. Builder also didn’t install service lifts and didn’t pay the dues to Municipal Authorities. Aggrieved by such illegal practices, the homebuyers moved to Bombay High Court and sought relief. High Court than passed an interim order and restrained builder from selling the common areas and creating any third party interest.

Resident’s Grievances

  • Residents claims that the developer surreptitiously put a design for extra mezzanine floor and altered the plan without the approval of the residents.
  • Developer increased the height of the commercial area of the building by approximately 19 ft. thereby creating extra service floor and mezzanine floor.
  • After taking the possession the residents noticed various breaches of the development agreement and various deficiencies in the amenities and facilities.
  • The developer has added three shops on the ground floor in the redeveloped building thereby offering three shops i.e. extra area at the costs of the residents.
  • Developer did not install two car lifts to provide an access to the parking at the podium level.
  • Developer have done away with the demarcation wall and amalgamated the car parking area into office area.
  • Developer has done various alterations while carrying out construction of the building which is not shown in the approved plan. They submits that even service floor constructed by the developer is without FSI and is part of the common amenities. He submits that for basement area also which is for parking, no FSI is consumed by the developer and thus part of the common amenities developer has taken benefit of free FSI area. He submits that even on podium level, there is a parking space.
  • Developer did not pay municipal taxes and also did not contribute towards the maintenance charges for the various apartments held by him.

Developer’s Submission 

  • Even if FSI is not consumed in respect of any of the portion of the said building, that would not automatically become the property of the resident’s society.
  • Arrears of payment of property taxes and maintenance charges are  payable by the developer in respect of the property owned by them.

Court’s Observations

  • The development agreement prima facie indicates that all common areas including service floor area belongs to the resident’s society and for benefit of the members of the society.
  • Any structure for which there was no consumption of any FSI and was not alloted to the developer but continued to be remained the property of the residents.
  • Developer cannot be allowed to create any third party rights in respect of the service floor and all other common amenities in the building which belong to the society and is for the benefit of its members.
  • Developer has created mortgage in respect of some part of the common amenities illegally.
  • Developer has not paid the Municipal Corporation taxes and substantial amount of outgoing in respect of the tenements occupied by the developer and/or allowed to be sold under the said development agreement. There was huge arrears of municipal taxes in respect of the construction carried out and for the period prior to the developer handing over such redeveloped portion to the society.

Since the resident’s society have good chances in succeeding arbitral proceedings, it would be appropriate if the developer is restrained from creating any third party rights in respect of the first floor premises, service floor and the basement, till the disposal of the arbitral proceedings filed by the residents.

The Order

The developer, their servants, agents and/or representatives and/or any other claiming by, from, through or under them are restrained by an order of injunction of this court from in any manner transferring, encumbering, alienating, or creating any third party right, title and interest in respect of the first floor and service floor of Anand Villa situated at Linking Road, Santacruz (West), Mumbai 400 054 and also the basement area which is alleged to have been transferred in favour of the respondent no.8 along with three shops bearing nos. 1, 2 and 3 on the ground floors of Anand Villa.

Copy of order can be downloaded from here: Anand Villa Society – Bombay HC order (source: indiankanoon.org)

Related cases : SC confirms “No Layout – Floor plan changes without consent” and Is your dream home part of an illegal layout plan change?

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