There are ambiguities surrounding the formation of apartment owners’ associations or RWA's in Karnataka. The major ambiguity is wrt under which statutes it can be registered/formed and if it is mandatory to register apartment owners association. Can it be formed as a welfare society under the Societies Registration Act, 1960 or as a Cooperative Society under the Cooperative Societies Act, 1959 or as an Apartment Owners’ association under the Karnataka Apartment Ownership Act, 1972?
The answer is an Apartment Owners’ Association under the Karnataka Apartment Ownership Act, 1972 (KAOA,1972). The Honorable high Court of Karnataka has upheld in plethora of decisions that in a residential apartment an association under the Karnataka Apartment Ownership Act, 1972 has to be formed.
THE KARNATAKA APARTMENT OWNERSHIP ACT, 1972 (KAOA,1972)
(1) The Karnataka Apartment Ownership Act, 1972(KAOA,1972) is a Specific statute enacted for the matters connected with the apartments unlike the Cooperative Societies Act or Societies Act.
(2) KAOA,1972 has clear provisions for forming an association for the management and administration of the property (Section 16)
(3) Under section 2 of the KAOA 1972, which deals with the applicability of the Act, states that the Act applies to property, where the sole owner or all of the owners register under the Act. Infact a collective Declaration (in Form A) as well as an individual declaration (in Form B) is prescribed by the Act. The Deed of Declaration along with the byelaw has to be registered, an essential part of the apartment owners association rules and regulations, before the Jurisdictional Sub Registrar/ District Registrar as prescribed under section 13 of the Act, under the provisions of the Registration Act, 1908. Further the registered Declaration along with the Byelaw has to be submitted before the Competent Authority under Section 11(2).
(4) Therefore, after sale of the apartment units, no builder or the developer can form an association without the consent of the purchasers which is the greatest advantage of the Karnataka Apartment Owners Association Act of 1972, compared to all the other statutes containing provisions for forming a society, like the Societies Act 1960(KSRA 1960) or the Co-operative Societies Act,1959(KCSA,1959) as falsely suggested by the advisors of cooperative society.
(5) KAOA, 1972 Vs KCSA, 1959 (Cooperative Societies Act,1959)
(a) Cooperative Societies Act,1959 is basically aimed at promotion of cooperative movement. Unlike KAOA, membership rights are upheld rather than the property rights. There are many provisions in the Act ensuring the government control over the cooperative societies as the main objective is to promote the public participation to strengthen the cooperative movement than enforcing the private rights over the property as prescribed under the KAOA, 1972.There are government restrictions in constituting the board where reservations are made for scheduled castes and scheduled tribes and two seats are reserved for women. There are restrictions in Membership based on the territorial basis too. For eg: If you own residential units in Property A and B, you can opt membership either in Association A or Association B.
(b) Apart from that, a Cooperative Society can be formed in any apartment project with 20 members by submitting a Memorandum and the Byelaw of the Society before the Cooperative Societies Registrar. It doesn’t require the consent of all the apartment owners. This being the case, there can be a number of societies in the same complex, which can ultimately lead to multiple disputes with the societies in the same apartment complex.
(c) The apartment complexes are developed with an agreed arranged system of development based on certain private agreements/ documents (your sale agreement, Construction agreement and sale Deed) which governs the terms and conditions of the development. Imposing a cooperative society (that too after or during its development) will be contradictory to the terms and conditions entered with the purchasers, who invest their hard-earned money after paying the necessary taxes to the government. In other words, the objective of this Act is not in line with the apartment development scheme followed in Karnataka and is not specifically enacted for apartment complexes like the Karnataka Apartment Ownership Act,1972. Most dangerously this societies are formed with an objective of getting the land conveyed in their name, which amounts to land grabbing.
(6) KAOA,1972 Vs KSRA, 1959(Karnataka Societies Registration Act, 1960)
(a) Societies Act is suitable for NGOs, but not suitable for an Apartment owner’s association, where the property rights of the apartment unit owners have to be upheld than their religious, scientific and social welfare. The bylaws of apartment owners association Karnataka Societies Registration Act is intended for charitable, scientific, literary and religious purposes but the objective under the Karnataka Apartment Ownership Act is to maintain the property as well as the property interest of the apartment owners. Property management and governance is expressly excluded from the objective clause of the Karnataka Societies Registration Act in section 3 of the Act. The whole objective of Karnataka Societies Registration Act is different and not at all related to the management of an apartment complex.
(b) In fact, the Honourable High Court of Karnataka has given a direction to the Registrar of Societies not to register the Societies in apartment complexes for its maintenance and management. The government also has issued a notification stating that no Welfare Societies for management and maintenance can be formed in apartments under KSRA,1960
CONCLUSION:
In a residential apartment an association under the Karnataka Apartment Ownership Act has to be formed, not under the Cooperative Societies Act.
April 24, 2025
Leave a Comment