Case: Nahalchand Laloochand P.Ltd Vs. Panchali Co-Op.Hng.Sty.Ltd

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 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-à-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-à-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 promoters 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 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 builders/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 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.. ((2006) 10 SCC 452 ), Karnataka State Financial Corporation v. N. Narasimahaiah & Ors. ((2008) 5 SCC 176 ) and Bhikhubhai Vithlabhai Patel & Ors., v. State of Gujarat & Anr. ((2008) 4 SCC 144 ), 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 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Re: question nos. (i) and (ii):(A) What isReverting 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 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.What is the meaning and significance of this bracketedtechnical 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 judgment of Bombay High Court in Dr. K.R. Agarwal Vs. Balkrishna (AIR 1972 Bombay 343) 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 parkingspace is aWe 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 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 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 suchspace is agarage. 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 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 parkingspaces are part of `common areas andaforesaid list as suggested by the learned senior counsel, in our opinion, is notis 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 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 aforenoticed 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 underare 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 mustdo 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 commonsubmission 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 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 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-à-vis society in respect of stilt parkingargument is founded on the premise, firstly, that stilt parkingspace 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 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 atour 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 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.