BENGALURU: A recent high court ruling could reshape the establishment of apartment associations under Rera regulations. The court affirmed the legitimacy of the Commune 1 Apartment Co-operative Society.
The ruling dismissed two writ petitions brought forth by a faction of flat owners and their registered welfare association. It concluded that the cooperative, formed under the Real Estate (Regulation and Development) Act (Rera), has the rightful authority to represent the allottees and oversee the project’s shared areas.
The case arose from the Commune 1 Apartment Project, where the Commune 1 Residents Welfare Association contested the establishment of the co-operative society created on August 11, 2023. The association claimed that the society was improperly formed by agreement holders from Towers A and E, which were still under construction. They argued these individuals lacked ownership or possession and, therefore, had no legal basis to manage the project’s maintenance.
Conversely, residents from Towers B, C, and D, who had already occupied their flats, asserted that only an association formed under the Karnataka Apartment Ownership Act (KAOA), 1972, could legally manage the property. Tensions heightened when Rera permitted the co-op society to assume control in May 2024, followed by a directive from a district registrar barring the welfare association from collecting maintenance fees.
The petitioners aimed to annul the co-op society’s registration and restore their association’s authority.
However, the government backed the co-op society’s registration, citing Rera’s Section 8 as justification for its validity and necessity. The state argued that, according to the Karnataka State Co-operative Societies Act, 1959, such societies could be formed prior to project completion to safeguard buyers’ interests.
The high court noted that while the KAOA governs post-ownership transfer, Rera is pertinent during the pre-ownership stage. It clarified that cooperative societies are ineligible for registration under KOFA, 1972, unless a commercial unit exists, and societies formed under the Karnataka Societies Registration Act (KSRA), 1960, are not authorized to manage apartment maintenance.
The court referenced preceding cases—such as Shantaram Prabhu, VDB Caledon, and DS Max—to reinforce its decision, indicating that these cases pertained to pre-Rera situations. It stated that the Starnest ruling, which limited society registration under KOFA to mixed-use projects, is no longer applicable since Rera’s implementation.
The court upheld the legal status of the Commune 1 Co-operative Society and mandated the builder to execute conveyance deeds for common areas within 120 days. It also called on the Union and State Law Commissions to clarify conflicting provisions across Rera, KAOA, KOFA, and KSRA, labeling the current legal environment a “Catch-22” for apartment buyers.
