Nahalchand Laloochand
P.Ltd. Vs. Panchali Co-Op.Hng.Sty.Ltd. [2010] INSC 696 (31 August 2010)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2544 OF 2010 Nahalchand
Laloochand Pvt. Ltd. ...Appellant Versus Panchali Co-operative Housing Society
Ltd. ...Respondent WITH CIVIL APPEAL NO. 2545 OF 2010 CIVIL APPEAL NO. 2546 OF
2010 CIVIL APPEAL NO. 2547 OF 2010 CIVIL APPEAL NO. 2548 OF 2010 CIVIL APPEAL
NO. 2449 OF 2010 CIVIL APPEAL NO. 2456 OF 2010 JUDGEMENT R.M. Lodha, J.
Of these seven
appeals which arise from the judgment dated April 25, 2008 passed by the High
Court of Judicature at Bombay (Appellate Jurisdiction), five are at the
instance of the original plaintiff and the other two are by the parties, who
were not parties to the proceedings before the High Court or the trial court
but they are aggrieved by the findings recorded by the High Court as they claim
that these findings are affecting their rights.
The facts:
2. Few important
questions of law arise in this group of appeals. It will be convenient to
formulate the questions after we set out the material facts and the contentions
of the parties.
The narration of
brief facts from S.C. Suit No. 1767 of 2004 will suffice for consideration of
these appeals. Nahalchand Laloochand Private Limited is a Private Limited
Company. As a promoter, it developd few properties in Anand Nagar, Dahisar
(East), Mumbai and entered into agreements for sale of flats with flat
purchasers. The flat purchasers are members of Panchali Co-operative Housing
Society Ltd. (for short, `the Society'). The promoter filed a suit before the
Bombay City Civil Court, Bombay for permanent injunction restraining the
Society 2 (defendant) from encroaching upon, trespassing and/or in any manner
disturbing, obstructing, interfering with its possession in respect of 25
parking spaces in the stilt portion of the building.
The promoter set up
the case in the plaint that under the agreements for sale it has sold flats in
its building and each flat purchaser has right in respect of the flat sold to
him and to no other portion. It was averred in the plaint that each flat
purchaser has executed a declaration/undertaking in its favour to the effect
that stilt parking spaces/open parking spaces shown in the plan exclusively
belong to the promoter and that the declarant has no objection to the sale of
such spaces by it.
The defendant
(Society) traversed the claim and set up the plea that the promoter has no
right to sell or dispose of spaces in the stilt portion and that the
undertakings given by the flat purchasers are not binding being contrary to law
and based on such undertakings, the promoter has not acquired any right to sell
stilt parking spaces.
3. The parties let in
evidence (oral as well as documentary) in support of their respective case.
4. On April 4, 2007,
the Presiding Judge, City Civil Court, Greater Bombay dismissed the suit with
costs.
5. The promoter
preferred first appeal before the High Court which was dismissed on April 25,
2008.
6. For brevity, we
shall describe Maharashtra Ownership Flats (Regulation of the Promotion of
Construction, Sale, Management and Transfer) Act, 1963 as `MOFA', Maharashtra
Ownership Flats (Regulations of the Promotion of Construction, Etc.) Rules,
1964 as `1964 Rules', Development Control Regulations for Greater Bombay, 1991
as `DCR', Maharashtra Apartment Ownership Act, 1970 as `MAOA', The Maharashtra
Regional and Town Planning Act, 1966 as `MRTP Act' and Transfer of Property Act
as `T.P. Act'.
The summary of
findings recording by the High Court:
7. While dismissing
the appeal, the High Court recorded the following findings :
7 The carpet area of
any of the 56 flats/tenements in Panchali building is not less than 35 sq.
mtrs. 7 The parking space either enclosed or unenclosed, covered or open cannot
be a `building'.
7 It is compulsory
requirement to provide for parking spaces under DCR.
7 It is obligatory on
the part of the promoter to follow the DCR. The agreement signed under MOFA
between the developer and the flat purchaser must be in conformity with the
model form of agreement (Form V) prescribed by the State Government.
7 The model agreement
does not contemplate the flat purchasers to separately purchase the stilt
parking spaces.
7 The rights arising
from the agreement signed under the MOFA between the promoter and the flat
purchasers cannot be diluted by any contract or an undertaking to the contrary.
The undertakings contrary to DCR will not be binding either on the flat
purchasers or the Society.
7 The stilt parking
space is a common parking area available and the developer is obliged to
provide the same under the DCR when the carpet area of the flat is 350 sq.
meters It is not an additional premises/area that he is authorized to sell
either to flat purchaser or any outsider. It is part and parcel of the Society
building and it cannot be a separate premises available for sale. As soon as
the Corporation issues the occupation certificate and the Society is
registered, the building as well as the stilt parking spaces, open spaces and
all common amenities become the property of the Society.
7 The stilt parking
spaces cannot be put on sale by the developer as he ceases to have any title on
5 the same as soon as the occupation certificate is issued by the Corporation
and it becomes the property of the society on its registration.
7 The stilt parking
spaces cannot be termed as `open/covered garages' and Clause 2 of the Model
Agreement--Form V provides for sale of covered/open garage in addition to the
flat/shop.
7 It is immaterial if
the purchase agreement does not include stilt car parking spaces in the common
area of amenities. The stilt car parking spaces is part of the common amenities
and it cannot be treated to be a separate premises/garage which could be sold
by the developer to any of the members of the society or an outsider.
7 Under MOFA, the
developer's right is restricted to the extent of disposal of flats, shops
and/or garages, which means that any premises which is included in the Flat
Space Index (FSI) can be sold by the developer/promoter. The stilt parking
space is not included in the FSI nor it is assessable for the Corporation
taxes.
The submissions:
8. Mr. Tanmaya Mehta,
learned counsel appearing for the promoter--Nahalchand Laloochand Private
Limited (appellant) contended that: the stilt parking space being `garage', as
an independent unit is covered by the definition of `flat' in Section 2(a-1) of
MOFA; Section 2(a-1) creates an artificial definition of `flat' and since in
common parlance a 6 garage would not be considered as a flat, the legislature
clarified and explained that the term `flat' means...... and `includes a
garage'; as long as premises are covered from the roof or which have a covered
roof and used for the parking of vehicles, that would qualify as `garage' and
since stilt parking spaces are covered parking spaces and form part of the
building, they fall within the definition of a `garage'; even if stilt parking
spaces do not fall within the definition of `flat', they are nevertheless
sellable as independent units since right to sell such spaces flows from the
bundle of rights associated with ownership of the property and Sections 10 and
11 of MOFA read with Rule 9 of 1964 Rules are not exhaustive of the rights
retained by the promoter upon execution of conveyance.
Moreover, if stilt
parking spaces are treated as `common areas' then the proportionate price for
the same would have to be paid by each flat purchaser, irrespective of whether
he requires the parking space or not and there may be situations where the
number of parking spaces will not be equal to the number of flats and, thus, a
person who has paid proportionate price for 7 the common parking space may find
himself without parking space, even though he has paid for the same. Lastly,
the learned counsel submitted that in any event the promoter undertakes that
the parking spaces shall be sold only to persons purchasing flats within the
subject layout, i.e. the purchasers of flats in the seven buildings which form
part of the layout and exist in close proximity.
9. Mr. Pravin K.
Samdani, learned senior counsel for one of the appellants viz., Maharashtra
Chamber of Housing Industry adopted a little different line of argument. He
contended that the provisions of MOFA permit a promoter to sell
garage/open/covered car parking space along with the flat.
His submission is
that MOFA does not define the word `garage' and that word has to be understood
and interpreted in accordance with the plain grammatical meaning and not with
reference to DCR which have been framed under MRTP Act having different
legislative object. As to whether the stilt parking spaces are `common areas',
Mr. Pravin K. Samdani would submit that MOFA does not list out the `common
areas' and 8 `limited common areas' while MAOA does define these terms and
parking spaces there under are `common areas and facilities' unless otherwise
provided in the declaration by the owner of the property. Under MOFA, it is for
the promoter and under MAOA, the declarant has to prescribe at the outset the
`common areas' and `limited common areas'. He referred to Sections 3(2)(h),
4(1)(a)(v), 10 and 11 of the MOFA and submitted that the promoter must at the
outset indicate the nature of organization (condominium or society or company) that
would be formed at the time of sale of flats and on formation of such
organization, the promoter joins such organization with a right and power to
dispose of remaining flats that would include the remaining unsold open/covered
parking space/garage and the organization is transferred unsold open/covered
parking spaces only if all the flats have been sold by the promoter. Learned
senior counsel would submit that it is wholly irrelevant whether
stilt/podium/basement/covered car park attracts FSI or not but the only
relevant criterion is whether the promoter has listed it as a part of common
area or 9 not and if he has not done so then it is sellable. If he has listed
it, then every flat purchaser is proportionately required to contribute for the
same.
10. In the appeal
filed by one Chirag M. Vora, Mr. Sunil Gupta, learned senior counsel appeared.
He argued that MOFA was enacted and enforced in the year 1963 as a regulatory
piece of legislation and barring the few aspects in respect of which MOFA makes
specific inroads into the rights of the promoter in the matter of construction,
sale, management and transfer of flats, all other aspects of the right of the
promoter who enters into contract with the flat purchaser remain unaffected and
undisturbed. His submission is that MOFA gives a wide meaning to the word
`flat' so that buildings of all permutations and combinations may be covered
within the scope of that Act and keeping in mind both the plain language of
Section 2(a-1) as well as the object of that Act, widest meaning to the word
`flat' deserves to be given so that the plain language is satisfied and also
the object of the Act is better subserved. He adopted the line of
interpretation put forth by Mr. Tanmaya Mehta that `garage' includes covered
parking spaces and even open parking spaces and is a `flat' in itself under
Section 2(a-1). Relying upon Barnett & Block v. National Parcels Insurance
Company Ltd.1, learned senior counsel submitted that the minimum requirement of
garage is that there should be roof (even if there are no walls) and for the
purpose of MOFA, not only a covered parking space like a stilt parking space
but also an open parking space is tantamount to `garage'. According to learned
senior counsel the word `garage' is not to be read simply as another kind of
user as contrasted with residence, office, showroom or shop or godown or
industry or business rather it has to be read in contrast and juxtaposed
against the expression `set of premises'; it is the alternative to the `set of
premises' and not merely to the different users of the set of premises
mentioned in Section 2 (a-1). Mr. Sunil Gupta, learned senior counsel would
submit that each stilt parking space as well as each open parking space is a
`flat' in itself de hors the other accommodations amounting to `flat' under
Section 2(a-1) of MOFA. In support of his argument, he relied 1 [1942] 1 All
E.R. 221 1 upon a decision of this Court in the case of Municipal Corporation
of Greater Bombay & Ors. v. Indian Oil Corporation Ltd.2. In the alternative,
he submitted that if the stilt parking space or open parking space is not held
to be a `flat' under Section 2 (a-1), still that space/area cannot be treated
as part of `common areas and facilities'. Firstly, he submitted that common
areas and facilities do not include garage/parking spaces and such parking
spaces remain ungoverned by MOFA. Sections 3 and 4 of MOFA concern with matters
pertaining to `common areas and facilities' but MOFA does not define the
meaning of `common areas and facilities'. Section 3(2)(m)(iii) leaves it to the
promoter to disclose to his flat purchaser the nature, extent and description
of the common areas and facilities. Section 4, by mentioning a prescribed form
of agreement, rather opened the possibilities for the promoter to continue to
exercise his traditional and pre-Act right to dispose of such parking spaces
according to his choice. The stilt/covered/open parking spaces do not figure as
part of the common areas and facilities in any project and remain within 2 1991
Suppl. (2) SCC 18 1 the contractual, legal and fundamental rights of the
promoter to dispose of the same in the manner in which he proposes and his
customers accept. Section 16 of MOFA does not override this right of a
promoter. Secondly, learned senior counsel would submit that the provisions of
MOFA must not be made to depend on the provisions of some other enactment just
because the subject matter of the two legislations appears to be the same. In
this regard, he referred to Maxwell Interpretation of Statutes, 12th Edition,
pages 69 to 70 and G.P. Singh on Principles of Statutory Interpretations, 8th
edition, pages 150 to 160. He, thus, submitted that for the purposes of
understanding the meaning of `flat' under Section 2(a-1) of MOFA, the provisions
of MAOA may be looked at but there would be no justification in understanding
the expression, `flat' defined in MOFA with reference to MRTP Act, DCR, rules
related to FSI and the provisions concerning property tax in the Bombay
Municipal Corporation Act.
11. On the other
hand, Mr. Neeraj Kumar Jain, learned senior counsel and Mr. Umesh Shetty,
learned counsel for the Societies stoutly supported the view of the High Court.
The issues:
12. In view of the
contentions outlined above, the questions that arise for consideration are :
(i) whether stand alone `garage' or in other words `garage' as an independent
unit by itself is a `flat' within the meaning of Section 2(a-1) of MOFA; (ii)
whether stilt parking space/open parking space of a building regulated by MOFA
is a `garage'; (iii) If the answer to aforesaid questions is in the negative,
whether stilt parking space/open parking space in such building is part of
`common areas and facilities' and (iv) what are the rights of the promoter
vis-`-vis society (of flat purchasers) in respect of open parking space/s /
stilt parking space/s.
13. All these
questions have to be considered in the light of statutory provisions. At this
stage we notice some of the provisions of MOFA. As regards other statutory
provisions, we shall refer to them wherever necessary.
Relevant provisions
of MOFA:
14. The definition of
`flat' in Section 2(a-1) is most vital and during course of arguments it has
been rightly said that meaning of the word `flat' is the actual fulcrum of MOFA.
Section 2(a-1) reads
thus:
"S.2(a-1).-
"Flat" means a separate and self-contained set of premises used or
intended to be used for residence, or office, show-room or shop or godown or
for carrying on any industry or business (and includes a garage), the premises
forming part of a building and includes an apartment.
Explanation.--Notwithstanding
that provision is made for sanitary, washing, bathing or other conveniences as
common to two or more sets of premises, the premises shall be deemed to be
separate and self-contained."
15. `Promoter' is
defined in Section 2(c) as under :
"S.2(c).-
`Promoter' means a person and includes a partnership firm or a body or
association of persons, whether registered or not who constructs or causes to
be constructed a block or building of flats, or apartments for the purpose of
selling some or all of them to other persons, or to a company, co-operative
society or other association of persons, and includes his assignees; and where
the person who builds and the person who sells are different persons, the term
includes both;"
16. The general
liabilities of the promoter are set out in Section 3. To the extent it is
relevant to the present case it reads thus :
"S.3.- (1)
Notwithstanding anything in any other law, a promoter who intends to construct
or constructs a block or building of flats, all or some of which are to be
taken or are taken on ownership basis, shall in all transactions with persons
intending to take or taking one or more of such flats, be liable to give or
produce, or cause to be given or produced, the information and the documents
hereinafter in this section mentioned.
(2) A promoter, who
constructs or intends to construct such block or building of flats, shall-- (a)
make full and true disclosure of the nature of his title to the land on which
the flats are constructed, or are to be constructed; such title to the land as
aforesaid having been duly certified by an Attorney-at- law, or by an Advocate
of not less than three years standing, and having been duly entered in the
Property card or extract of Village Forms VI or VII and XII or any other
relevant revenue record;
(b) make full and
true disclosure of all encumbrances on such land, including any right, title,
interest or claim of any party in or over such land;
(c) to (h) .....
(i) not allow persons
to enter into possession until a completion certificate where such certificate
is required to be given under any law, is duly given by the local authority
(and no person shall take possession of a flat until such completion certificate
has been duly given by the local authority);
1 (j) to (l) .....
(m) when the flats
are advertised for sale, disclose inter alia in the advertisement the following
particulars, namely :- (i) the extent of the carpet area of the flat including
the area of the balconies which should be shown separately;
(ii) the price of the
flat including the proportionate price of the common areas and facilities which
should be shown separately, to be paid by the purchaser of flat; and the
intervals at which the instalments thereof may be paid;
(iii) the nature,
extent and description of the common areas and facilities;
(iv) the nature,
extent and description of limited common areas and facilities, if any.
(n) sell flat on the
basis of the carpet area only:
Provided that, the
promoter may separately charge for the common areas and facilities in
proportion `to the carpet area of the flat'.
Explanation.--For the
purposes of this clause, the carpet area of the flat shall include the area of
the balcony of such flat."
17. Section 4 of MOFA
mandates that promoter before accepting advance payment or deposit shall enter
into an agreement with the prospective flat purchaser and such agreement shall
be registered. It provides as follows:
"S.4.- (1)
Notwithstanding anything contained in any other law, a promoter who intends to
construct or constructs a block or building of flats all or some of which are
to be taken or are taken on ownership basis, shall, before, he accepts any sum
of money as advance payment or deposit, which shall not be more than 20 per
cent of the sale price enter into a written agreement for sale with each of
such persons who are to take or have taken such flats, and the agreement shall
be registered under the Registration Act, 1908" and such agreement shall
be in the prescribed form.
(1A) The agreement to
be prescribed under sub- section (1) shall contain inter alia the particulars
as specified in clause (a); and to such agreement there shall be attached the
copies of the documents specified in clause (b)-- (a) particulars-- (i) if the
building is to be constructed, the liability of the promoter to construct it
according to the plans and specifications approved by the local authority where
such approval is required under any law for the time being in force;
(ii) to (v) .....
(vi) the nature,
extent and description of limited common areas and facilities;
(vii) the nature,
extent and description of limited common areas and facilities, if any;
(viii) percentage of
undivided interest in the common areas and facilities appertaining to the flat
agreed to be sold;
1 (ix) statement of
the use for which the flat is intended and restriction on its use, if any;
(x) percentage of
undivided interests in the limited common areas and facilities, if any,
appertaining to the flat agreed to be sold;
(b) ..... "
18. Section 10 casts
duty upon the promoter to take steps for formation of co-operative society or
company, as the case may be. The said provision reads as follows :
"S.10.- (1) As
soon as a minimum number of persons required to form a Co-operative society or
a company have taken flats, the promoter shall within the prescribed period
submit an application to the Registrar for registration of the organization of
persons who take the flats as a co-operative society or, as the case may be, as
a company; and the promoter shall join, in respect of the flats which have not
been taken, in such application for membership of a co-operative society or as
the case may be, of a company. Nothing in this section shall affect the right
of the promoter to dispose of the remaining flats in accordance with the
provisions of this Act.
Provided that, if the
promoter fails within the prescribed period to submit an application to the
Registrar for registration of society in the manner provided in the Maharashtra
Co-operative Societies Act, 1960, the Competent Authority may, upon receiving
an application from the persons who have taken flats from the said promoter, direct
the District Deputy Registrar, Deputy Registrar or, as the case may be,
Assistant Registrar concerned, to register the society :
1 Provided further
that, no such direction to register any society under the preceding proviso
shall be given to the District Deputy Registrar, Deputy Registrar or, as the
case may be, Assistant Registrar, by the Competent Authority without first
verifying authenticity of the applicants' request and giving the concerned
promoter a reasonable opportunity of being heard."
19. There is also
obligation cast upon promoter to execute the documents of title and convey to
the co-operative society or the company or an association of flat
purchasers/apartment owners, right, title and interest in the land and building
by virtue of Section 11 which reads thus:
"S.11.- (1) A
promoter shall take all necessary steps to complete his title and convey to the
organization of persons, who take flats, which is registered either as a
co-operative society or as a company as aforesaid, or to an association of flat
takers or apartment owners his right, title and interest in the land and
building, and execute all relevant documents therefore in accordance with the
agreement executed under section 4 and if no period for the execution of the
conveyance is agreed upon, he shall execute the conveyance within the
prescribed period and also deliver all documents of title relating to the
property which may be in his possession or power.
2. It shall be the
duty of the promoter to file with the Competent Authority, within the
prescribed period, a copy of the conveyance executed by him under sub- section
(1).
3. If the promoter
fails to execute the conveyance in favour of the co-operative society formed
under Section 10 or, as the case may be, the company or the association of
apartment owners, as provided by sub- section (1), within the prescribed
period, the members of such co-operative society or, as the case may be, the
company or the association of apartment owners may, make an application, in
writing, to the concerned Competent Authority accompanied by the true copies of
the registered agreements for sale, executed with the promoter by each
individual member of the society or the company or the association, who have
purchased the flats and all other relevant documents (including the occupation
certificate, if any), for issuing a certificate that such society, or as the
case may be, company or association, is entitled to have an unilateral deemed
conveyance, executed in their favour and to have it registered.
(4) .....
(5) ....."
20. Section 16 of
MOFA provides that the provisions contained therein are in addition to the
provisions of the T. P.
Act and shall take
effect notwithstanding anything to the contrary contained in the contract.
Re: question nos. (i)
and (ii):
(A) What is `flat'?
21. For proper
consideration of questions (i) and (ii) as afore-referred, it is of
considerable importance to ascertain the import and meaning of the term `flat'
defined in Section 2(a-1) of 2 MOFA. Rather the answer to the questions
presented for consideration must squarely or substantially depend on what is a
`flat'. Justice G.P. Singh in the `Principles of Statutory Interpretation'
(12th edition, 2010) says that the object of a definition of a term is to avoid
the necessity of frequent repetitions in describing all the subject matter to
which that word or expression so defined is intended to apply. In other words,
the definition clause is inserted for the purpose of defining particular
subject-matter dealt with and it helps in revealing the legislative meaning.
However, the definitive clause may itself require interpretation because of
ambiguity or lack of clarity in its language. In the `Construction of Statutes'
by Earl T. Crawford (1989 reprint) at page 362, the following statement is
made: ".......the interpretation clause will control in the absence of
anything else in the act opposing the interpretation fixed by the clause. Nor
should the interpretation clause be given any wider meaning than is absolutely
necessary. In other words, it should be subjected to a strict
construction."
22. The definition of
term `flat' in MOFA at the time of its enactment was this: `flat' means a
separate and self- contained set of premises used or intended to be used for
residence, or office, showroom or shop or godown (and includes a garage), the
premises forming part of a building. By Maharashtra Act No. 15 of 1971, the
definition of `flat' got amended and the words `and includes an apartment' were
inserted after the word `building'. Thereafter by Maharashtra Act 36 of 1986,
the words `or for carrying on any industry or business' were inserted after the
word `godown' and before the bracketed portion `(and includes a garage)'.
23. Before we analyze
Section 2(a-1), if we ask what the term `flat' means, apart from the statutory
definition, the reply must be that though it has no uniform meaning but in its
natural and ordinary meaning, `flat' is a self contained set of premises
structurally divided and separately owned for dwelling.
Concise Oxford
English Dictionary (10th edition, revised) explains `flat' --a set of rooms
comprising an individual place of residence within a larger building.
24. Webster
Comprehensive Dictionary; International edition (Vol. 1) explains `flat'-- 1. a
set of rooms on one floor, for the occupancy of a family; apartment. 2. A house
containing such flats.
25. In Stroud's
Judicial Dictionary (5th edition, Vol. 2), a reference has been made to the
observations of Somervell L.J, in Murgatroyd v. Tresarden, 63 T.L.R. 62 and it
is stated; the natural meaning of the word `flat' is a separate self-contained
dwelling.
26. In Words and
Phrases, Permanent Edition, (West Publishing Company), Vol. 17, while dealing
with the term `flat' generally, it is stated :
"The word `flat'
has no technical, legal meaning, so that a court can pronounce absolutely one
way or the other.
A building is a
`flat' or not, and, where the testimony is conflicting, the question is one of
fact".
27. Advanced Law
Lexicon by P. Ramanatha Aiyar (3rd edition, 2005) explains the term `flat', in
the following way - `in the ordinary use of the term a flat is a self-contained
set of rooms, structurally divided and separately owned or let from 2 the rest
of a building, which for the most part consists of other flats separated in
like manner'.
28. Reverting back to
the definition of the term `flat' under Section 2(a-1), for a `flat' within the
meaning of this definition clause, the set of premises has to be a separate and
self-contained that forms part of the building which is used or intended to be
used for residence or office, showroom or shop or godown or for carrying on
industry or business.
Separateness of one
premises from another premises physically and also in use or intended use for
one of the uses specified in the definition clause containing the necessary
facilities for self-contained accommodation is sine qua non for a unit being
covered by the definition of `flat' occurring in Section 2(a-1) which includes
an `apartment'. In other words, it must be a separate unit conforming to the
description capable of being used for one of these purposes--namely, residence,
office, showroom, shop, godown or for industrial or business purposes.
Alternative uses in Section 2(a-1) do expand the ordinary meaning of the term
`flat' but nevertheless such 2 premises that form part of building must be
separate and self- contained. A set of premises is called self-contained if it
has the following basic amenities available: (a) sanitary;
(b) washing, bathing
and (c) other conveniences (cooking etc.) for the use of its occupant/s
although as provided in the explanation appended to Section 2(a-1) such
provision may be common to two or more sets of premises. The nature of
construction and user are important features of this definition clause. A unit
or accommodation to fit in the definition of `flat' must meet twin-test namely:
(i) self contained test and (ii) user test. The other predominant
characteristic is that it must form part of a building. Crucially, for the
relevant premises to be `flat':
7 It must be a
separate and self contained premises;
7 It must form part
of building;
7 It must be used or
intended to be used for any of the uses namely--residence, office, showroom,
shop, godown or for carrying on any industry or business.
29. In the discussion
made above, we have not referred to the bracketed portion namely - `(and
includes a garage)' so far. What is the meaning and significance of this
bracketed portion? On technical linguistic basis, the bracketed phrase can only
attach to the word preceding it. That may not be happy construction nor such
construction by reading bracketed portion `(and includes a garage)' with the
preceding word `business' appropriately reflects the meaning of the phrase. The
scope of the bracketed phrase has to be seen in the context of the definition
given to the word `flat' which is true indication of intent of the legislature.
It was suggested by learned senior counsel and counsel for the promoters that the
phrase `and includes a garage' must be read with the `set of premises' and not
with the user. This does not appear to be a correct reading of the expression.
We are not persuaded to accept such construction.
We think that
statutory definition of `flat' must be construed keeping in view the intent of
the legislature and the context of the statute and, seen thus, the phrase, `and
includes a garage' in the bracket does not bring in `garage' by itself within
the meaning of word `flat'. If stand alone `garage' (or a garage by itself)
were intended by the legislature to be a `flat' within the meaning of Section
2(a-1), that could have been conveniently conveyed by use of the expression `or
garage' after the word `business' in the same breath as preceding uses. The
bracketed phrase is rather indicative of the legislative intention to include a
`garage' as appurtenant or attachment to a flat which satisfies the ingredients
of Section 2(a-1). To this extent Mr. Pravin K. Samdani is right in his
submission. It is clear to us that stand alone `garage' or in other words
`garage' as an independent unit by itself is not a `flat' within the meaning of
Section 2(a-1) and we answer question (i) in the negative. The Balkrishna3 to
the extent the expression `or garage' has been read after the word `godown' in
para 5 (clause 2) of the report does not state the correct legal position in
what we have already said above.
(B) Whether stilt
parking space is a garage? 3 AIR 1972 Bombay 343 2 30. The next question is,
whether stilt parking space in a building regulated by MOFA is a `garage'. The
term `garage' has not been defined in MOFA and, therefore, we need to first
find out what is the extent and scope of that term in Section 2(a-1). The general
term `garage' is appropriated in English from the French language and means
`keeping under cover' or `a place for keeping' of wagons as well as
automobiles.
Concise Oxford
English Dictionary (10th edition, revised) explains `garage'-- 1 a building for
housing a motor vehicle or vehicles. 2 an establishment which sells fuel or
which repairs and sells motor vehicles.
31. Webster
Comprehensive Dictionary, International edition (Vol. 1) explains the word
`garage'--a building in which motor vehicles are stored and cared for.
32. Words and
Phrases, Permanent Edition, (West Publishing Company), Vol. 17, states that
`garage' generally is a station in which motorcars can be sheltered, stored,
repaired, cleaned, and made ready for use; it is also place for private storage
for motorcars; stable for motor cars.
33. The DCR define
two expressions `garage-private' and `garage-public' in Regulations 2(47) and
2(48) respectively. According to these Regulations, `garage-private' means a
building or a portion thereof designed and used for the parking of vehicles and
`garage-public' means a building or portion thereof designed other than as a
private garage, operated for gain, designed and/or used for repairing, serving,
hiring, selling or storing or parking motor-driven or other vehicles. In our
view, we must give to the word `garage' occurring in Section 2(a-1) a meaning
that general public or for that matter a flat purchaser of ordinary prudence
would give to that word or understand by that word. Learned senior counsel Mr.
Sunil Gupta referred to Barnett and Block1 wherein Atkinson, J. stated as
follows:
"Now what is a
garage? No evidence was given to suggest or prove that the word
"garage" in the trade had got any special meaning, and it was agreed
to take four dictionary definitions set out in the agreed statement of facts.
The four definitions were these. From the SHORTER OXFORD DICTIONARY: "A
building for the storage or refitting of motor vehicles." From the NEW
CENTURY DICTIONARY : "A building for sheltering, cleaning or repairing
motor vehicles. To put or keep in a garage." From the NEW STANDARD
DICTIONARY:
"A building for
stabling or storing of motor vehicles of all 3 kinds." From NUTTAL'S
STANDARD DICTIONARY :
"A storehouse
for motor vehicles." Those are four definitions from leading dictionaries
all containing at any rate one word in common, and that is
"building." As there is no evidence as to how the general public
understand the word "garage," I suppose one is entitled to use one's
own knowledge. I am inclined to think that ordinary man in the street does
regard a garage as connoting some sort of a building; how far he would go I do
not know. I do not know whether he would think that there should be a wall all
round it, or whether it would be sufficient if there were three sides walled in
and a roof. I have one in mind where there is a row of sheds without any
protection in front, which are commonly spoken of as "garages," but I
am going to apply here the test suggested by counsel for the insured. He said
"A garage is a place where one can get reasonable protection and shelter
for a car." Can I say that you are getting reasonable protection and
shelter for a car, if there is nothing to protect the car from above - if there
is no roof of any sort? I think the ordinary man, as counsel for the insurers
suggested, who took a house with a garage, if he came and found merely an open
shed without any roof, would think he had been swindled, however high the walls
might be. I cannot think that one is entitled to say that it is adequate or
reasonable protection or shelter if there is no roof; but this is worse than
that, though I agree that the walls are very good here. Wherever you put a car
in this yard, in addition to there being no shelter from above, there will be
no shelter on two sides. That seems to me to be really conclusive."
He, thus, submitted
that even a place with merely a roof may well be a `garage'. By placing
reliance on condition No. 2 in Form V of 1964 Rules, learned senior counsel
submitted that 3 for the purposes of MOFA, even an open parking space is
tantamount to a `garage'.
34. The relevant
portion of condition No. 2, Form V appended to 1964 Rules reads as under:
"2. The Flat
Purchaser hereby agrees to purchase from the Promoter and the Promoter hereby
agrees to sell to the Flat Purchaser one flat No. .......... of the Type
.......... of carpet area admeasuring .......... sq.
meters (which is
inclusive of the area of balconies) on .......... floor as shown in the Floor
plan thereof hereto annexed and marked Annexures D/Shop No. ........../covered/open
Garage No. .......... in the ..........
Building (hereinafter
referred to as "the Flat") for the price of Rs. .......... including
Rs. .......... being the proportionate price of the common areas and facilities
appurtenant to the premises, the nature extent and description of the
common/limited common areas and facilities/limited common areas and facilities
which are more particularly described in the Second Schedule hereunder written.
The Flat Purchasers hereby agrees to pay to that Promoter balance amount of
purchase price of Rs. .......... (Rupees .......... ...............) having
been paid to the Promoter on or before the execution of his agreement in the
following manner."
35. We do not
perceive any force in the argument that open parking space tantamounts to a
`garage' within the meaning of Section 2(a-1) read with condition No. 2 Form V
of 1964 Rules. Can a person buying a flat for residence or one of the uses
mentioned in Section 2(a-1) really think that open to 3 the sky or open space
for parking motor vehicles is a garage? We do not think so. The word `garage'
may not have uniform connotation but definitely every space for parking motor
vehicles is not a garage. A roofless erection could not be described a garage.
What is contemplated by a `garage' in Section 2(a-1) is a place having a roof
and walls on three sides.
It does not include
an unenclosed or uncovered parking space.
It is true that in
condition No. 2, Form V the words `covered/open garage' have been used but, in
our view, the word `open' used in the Model Form V cannot override the true
meaning of term `garage' in Section 2(a-1). As a matter of fact, none of the
provisions of MOFA regards `open garage' connoting `flat' or an
appurtenant/attachment to a flat. We do not think undue importance should be
given to word `open' which has loosely been used in condition No. 2, Form V.
The true meaning of the term `garage' in Section 2(a-1), we think, is not
affected by a Model Form V appended to the 1964 Rules.
36. The question then
is as to whether the stilted portion or stilt area of a building is a garage
under MOFA. A 3 stilt area is a space above the ground and below the first
floor having columns that support the first floor and the building. It may be
usable as a parking space but we do not think that for the purposes of MOFA,
such portion could be treated as garage. It was argued that the test accepted
by Atkinson, J. in Barnett & Block1-that a garage is a place where one can
get reasonable protection and shelter for a car--is satisfied by stilt car
parking space and such space is a garage. We are unable to agree. The test
accepted by Atkinson, J. in Barnett and Block1 also does not support this
argument. Even as per that test a place having roof but offering no shelter or
protection on two sides cannot be a garage. It is worth repeating what
Atkinson,J. said, `....I am inclined to think that the ordinary man in the
street does regard a garage as connoting some sort of building; how far he
would go I do not know. I do not know whether he would think that there should
be a wall all round it, or whether it would be sufficient if there were three
sides walled in and a roof. I have one in mind where there is row of sheds
without any protection in front, which are commonly spoken of 3 as
"garages".' Atkinson,J. applied the test of `reasonable protection
and shelter for car' as was suggested by the counsel for the insurer while
construing the term `garage' in a policy of insurance. For the purposes of
MOFA, and particularly Section 2(a-1), the term `garage' must be considered as
would be understood by a flat purchaser and such person would contemplate
garage which has a roof and wall on three sides.
Our answer to
question No. (ii) is, therefore, no. Re: question no. (iii) - Whether stilt
parking spaces are part of `common areas and facilities'?
37. The High Court
has held that the stilt car parking spaces are part of the common amenities. Is
the High Court right in its view? MOFA does not define nor it explains `common
areas and facilities' though the said phrase is used at various places in that
Act. Mr. Pravin K. Samdani, learned senior counsel for Maharashtra Chamber of
Housing Industry submitted that following could be termed as part of the
`common areas':
7 15% Recreation
Ground (RG) Area;
3 7 Recreational
facilities and/or club house on above RG Areas;
7 Society Office;
7 Security guards
cabin;
7 Common
passage/lobbies;
7 Stair case;
7 Lift;
7 Terraces over the
roof of the building;
7 Landings on each
floor;
7 Columns and beams
of the building 7 Playgrounds, if any.
According to him, the
following could be part of `Limited Common Areas':
7 Separate lift
attached to a particular flat and/or certain number of flats;
7 Terrace attached to
a flat;
7 Servants toilet on
each floor, meant for the user of the flats on that particular floor;
The aforesaid list as
suggested by the learned senior counsel, in our opinion, is not exhaustive. It
may not be out of place to refer to Section 3(f) of MAOA which defines `common
areas and facilities' as follows:
"3(f)
"common areas and facilities", unless otherwise provided in the
Declaration or lawful amendments, thereto means-- (1) the land on which the building
is located;
3 (2) the
foundations, columns, girders, beams, supports, main walls, roofs, halls,
corridors, lobbies, stairs, stair-ways, fire-escapes and entrances and exits of
t he buildings;
(3) the basements,
cellars, yards, gardens, parking areas and storage spaces;
(4) the premises for
the lodging of janitors or persons employed for the management of the property;
(5) installations of
central services, such as power, light, gas, hot and cold water, heating,
refrigeration, air conditioning and incinerating;
(6) the elevators,
tanks, pumps, motors, fans, compressors, ducts and in general all apparatus and
installations existing for common use;
(7) such community
and commercial facilities as may be provided for in the Declaration; and (8)
all other parts of the property necessary or convenient to its existence,
maintenance and safety, or normally in common use;"
It is true that
interpretation clause or legislative definition in a particular statute is
meant for the purposes of that statute only and such legislative definition
should not control other statutes but the parts of the property stated in
clauses (2), (3) and (6) of Section 3(f) as part of `common areas and
facilities' for the purposes of MAOA are what is generally understood by the expression
`common areas and facilities'. This is fortified by the 3
fact that the areas
which according to the learned senior counsel could be termed as `common areas'
in a building regulated by MOFA are substantially included in a fore noticed
clauses of Section 3(f) of MAOA. Looking to the scheme and object of MOFA, and
there being no indication to the contrary, we find no justifiable reason to
exclude parking areas (open to the sky or stilted portion) from the purview of
`common areas and facilities' under MOFA.
38. It was argued
that under MOFA it is for the promoter to prescribe and define at the outset
the `common areas' and unless it is so done by the promoter, the parking area
cannot be termed as part of `common areas'. We are quite unable to accept this
submission. Can a promoter take common passage/lobbies or say stair case or RG
area out of purview of `common areas and facilities' by not prescribing or
defining the same in the `common areas'? If the answer to this question is in
negative, which it has to be, this argument must fail. It was also submitted
that by treating open/stilt parking space as part of `common areas', every flat
purchaser will have to bear 3 proportionate cost for the same although he may
not be interested in such parking space at all. We do not think such
consideration is relevant for the consideration of term `common areas and
facilities' in MOFA. It is not necessary that all flat purchasers must actually
use `common areas and facilities' in its entirety. The relevant test is whether
such part of the building is normally in common use. Then it was submitted that
if a parking space is sold to a flat purchaser, it is to the exclusion of other
flat purchasers and, therefore, logically also it cannot be part of `common
areas'. This submission is founded on assumption that parking space
(open/covered) is a `garage' and sellable along with the flat. We have,
however, held in our discussion above that open to the sky parking area or
stilted portion usable as parking space is not `garage' within the meaning of
Section 2(a-1) and, therefore, not sellable independently as a flat or along
with a flat. As a matter of fact, insofar as the promoter is concerned, he is
not put to any prejudice financially by treating open parking space/stilt parking
space as part of `common areas' since he is entitled to charge 3 price for the
common areas and facilities from each flat purchaser in proportion to the
carpet area of the flat. MOFA mandates the promoter to describe `common areas
and facilities' in the advertisement as well as the `agreement' with the flat
purchaser and the promoter is also required to indicate the price of the flat
including the proportionate price of the `common areas and facilities'. If a
promoter does not fully disclose the common areas and facilities he does so at
his own peril. Stilt parking spaces would not cease to be part of common areas
and facilities merely because the promoter has not described the same as such
in the advertisement and agreement with the flat purchaser. Although there is
some merit in the contention of the appellant that High Court erred in placing
reliance on the two aspects--namely, that the area of stilt parking space is
not included in the FSI and such area is not assessable to the corporation
taxes - in reaching the conclusion that stilt parking space is part of `common
areas' but in our view even if these two aspects are excluded, in what we have
discussed above stilt parking space/open parking space 4 of a building
regulated by MOFA is nothing but a part of `common areas' and, accordingly, we
answer question no. (iii) in the affirmative.
Re: question no. (iv)
- what are the rights of a promoter vis-`-vis society in respect of stilt
parking spaces?
39. We have now come
to the last question namely-- what are the rights of a promoter vis-`-vis
society (of flat purchasers) in respect of stilt parking space/s. It was argued
that the right of the promoter to dispose of the stilt parking space is a
matter falling within the domain of the promoter's contractual, legal and
fundamental right and such right is not affected. This argument is founded on
the premise, firstly, that stilt parking space is a `flat' by itself within the
meaning of Section 2(a-1) and in the alternative that it is not part of `common
areas'. But we have already held that `stilt parking space' is not covered by
the term `garage' much less a `flat' and that it is part of `common areas'. As
a necessary corollary to the answers given by us to question nos. (i) to (iii),
it must be held that stilt parking space/s being part of `common areas' of the
building developed by the promoter, the only right that the 4 promoter has, is
to charge the cost thereof in proportion to the carpet area of the flat from
each flat purchaser. Such stilt parking space being neither `flat' under
Section 2(a-1) nor `garage' within the meaning of that provision is not
sellable at all.
40. MOFA was enacted
by the Maharashtra Legislature as it was found that uilders/developers/promoters
were indulging in malpractices in the sale and transfer of flats and the flat
purchasers were being exploited. The effect of MOFA may be summarized as
follows. First, every promoter who constructs or intends to construct block or
building of flats in the area to which MOFA applies has to strictly adhere to
the provisions contained therein, i.e., inter alia, he has to make full and
true disclosure of the nature of his title to the land on which the flats are
constructed and also make disclosure in respect of the extent of the carpet area
of the flat and the nature, extent and description of the common areas and
facilities when the flats are advertised for sale. Secondly, the particulars
which are set out in Section 4(1A) (a) (i) to (x) have 4 to be incorporated in
the agreement with the flat purchaser.
Thirdly, the promoter
has to apply to the Registrar for registration of the organization
(co-operative society or company or condominium) as soon as minimum number of
persons required to form such organization have taken flats. As regards unsold
flats, the promoter has to join such organization although his right to dispose
of unsold flats remains unaffected.
Fourthly, and more
importantly, the promoter has to take all necessary steps to complete his title
and convey to the organization his right, title and interest in the land and
building and execute all relevant documents accordingly. It was argued by Mr.
Tanmaya Mehta, learned counsel for the promoter that in view of the provisions
of MOFA, Section 6 of T.P. Act and Article 300A of the Constitution, the right
of the promoter to transfer parking spaces is not at all restricted. Relying
upon the decisions of this Court in ICICI Bank Ltd. v. SIDCO Leathers Ltd.
& Ors..4, Karnataka State Financial Corporation v. N. Narasimahaiah &
Ors.5 and Bhikhubhai Vithlabhai Patel & Ors., 4 (2006) 10 SCC 452 5 (2008)
5 SCC 176 4 v. State of Gujarat & Anr.6, he submitted that the provisions
contained in MOFA must be construed strictly and there is no provision either
express or by necessary implication in MOFA restricting the sale of stilt or
open parking spaces. Mr. Sunil Gupta also argued that promoter continues to
have contractual, legal and fundamental right to dispose of the stilt/open
parking space in the manner in which he proposes and his consumers accept. We
think this argument does not bear detailed examination. Suffice it to say that
if the argument of learned senior counsel and counsel for promoter is accepted,
the mischief with which MOFA is obviously intended to deal with would remain
unabated and flat purchasers would continue to be exploited indirectly by the
promoters. In our opinion, MOFA does restrict the rights of the promoter in the
block or building constructed for flats or to be constructed for flats to which
that Act applies. The promoter has no right to sell any portion of such
building which is not `flat' within the meaning of Section 2(a-1) and the
entire land and building has to be conveyed to the organisation; the only right
remains with the 6 (2008) 4 SCC 144 4 promoter is to sell unsold flats. It is,
thus, clear that the promoter has no right to sell `stilt parking spaces' as
these are neither `flat' nor appurtenant or attachment to a `flat'.
41. In view of the
above, it is not at all necessary to deal with the factual submissions advanced
by Mr. Tanmaya Mehta.
Having regard to the
answer to question no. (iv), the finding of the High Court that undertakings
are neither binding on the flat purchasers nor the society also warrants no
interference.
42. These appeals,
accordingly, fail and are dismissed with no order as to costs.
..............................J
(R. M. Lodha)
.............................J
(A. K. Patnaik)
New
Delhi.
August
31, 2010.
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