SOME RELIEF
VIVEK SADHALE and VIKAS AGARWAL analyse a recent judgment on parking spaces
Can builders sell parking in open spaces / stilt parking spaces? Here comes much awaited relief in the form of the recent judgment given by the Honorable Supreme Court in Nahalchand Laloochand Pvt. Ltd. (“Promoter”) vs. Panchali Co-operative Housing Society Ltd. (“Society”) which could set as a precedence to stop builders from selling parking spaces. The Court ruled that developers cannot sell open spaces and stilt areas in their buildings as these are meant for common use and form part of the flats.
BRIEF FACTS OF THE CASE
The Promoter developed few properties in Dahisar (East), Mumbai and entered into agreements for sale of flats with the members of the Society. The Promoter filed a suit before the Bombay City Civil Court, for permanent injunction restraining the Society from interfering with its possession of parking spaces in the stilt portion of the building. The Promoter stated that under the agreements for sale, each flat purchaser has right in respect of the flat sold to him and to no other portion and that each flat purchaser has executed a declaration that stilt /open parking spaces belong to the Promoter and that the declarant has no objection to the sale of such spaces. The Society negated the Promoter’s claim and stated that the Promoter has no right to sell parking in stilt portion and that the declaration given by flat purchasers are not binding being contrary to law.
On dismissal of suit by City Civil Court, the Promoter preferred first appeal before the High Court which was also dismissed. The Developer then filed an appeal with the Supreme Court. The gist of the judgment of Honorable Supreme Court on the following issues is as under:
WHAT IS A FLAT?
The Court stated that the meaning of term `flat’ should be analysed from its ordinary meaning apart from the statutory meaning and referred Oxford English Dictionary, Webster Comprehensive Dictionary and Advanced Law Lexicon by P. Ramanatha Aiyar.
The Court considered various provisions and placed considerable importance to Section 2(a-1) of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (“MOFA”) wherein “Flat” is defined to mean 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.
The Court held the following:
a. For a `flat’ to be within the meaning of this definition, it must be a separate unit conforming to the description capable of being used for one of the purposes given in the definition.
b. The meaning and significance of the bracketed portion “(and includes a garage)” should be seen in the context given to the word `flat’ which is true indication of intent of the legislature.
c. 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’ was intended by the legislature to be a `flat’ within the meaning of Section 2(a-1), that could have been conveyed by use of the expression `or garage’ after the word `business’ in the same breath as preceding uses. The bracketed phrase is 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).
IS STILT PARKING SPACE A GARAGE?
The Court analysed the definition of ‘garage’ in the general parlance to find out the extent and scope of this term in Section 2(a-1). The Court analysed the general definitions of ‘garage’ given in Concise Oxford English Dictionary, Webster Comprehensive Dictionary, Words and Phrases (West Publishing Company).
The Court also discussed the provisions of Development Control Regulations for Greater Bombay, 1991 (“DCR”), where in Regulation 2(47) define `garage-private’ as a building or a portion thereof designed and used for the parking of vehicles and Regulation 2(48) defines `garage-public’ as 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.
Analysing the general definitions of the term ‘garage’ and DCR, the Court held:
a. Word `garage’ occurring in Section 2(a-1) be given 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.
b. The word `garage’ may not have uniform connotation but definitely every space for parking motor vehicles is not a garage. A garage’ in Section 2(a-1) contemplates a place having a roof and walls on three sides. It does not include an unenclosed or uncovered parking space.
c. Word `open’ used in the Model Form V cannot override the true meaning of term garage’ in Section 2(a-1).
WHETHER THE STILTED PORTION OR STILT AREA OF A BUILDING IS A GARAGE UNDER MOFA?
Deciding on this issue, the Court stated that while stilt area may be usable as a parking space but for the purposes of MOFA, such portion could not be treated as garage. For the purposes of MOFA, 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.
ARE STILT PARKING SPACES PART OF COMMON AREAS AND FACILITIES’?
The Supreme Court referred to the decision of High Court that the stilt parking spaces are part of the common amenities. The Court also referred to Section 3(f) of Maharashtra Apartment Ownership Act, 1970 which defines `common areas and facilities’. Looking to the scheme and object of MOFA, the Court held the following:
a. There is no justifiable reason to exclude parking areas from the purview of common areas and facilities’ under MOFA.
b. A promoter cannot take common passage/lobbies or staircase out of purview of common areas and facilities’ by not prescribing the same in the `common areas’.
c. 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.
d. MOFA mandates the promoter to describe common areas and facilities’ in the advertisement as well as the `agreement’ with the flat purchaser. 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.
WHAT ARE THE RIGHTS OF A PROMOTER VIS-A-VIS SOCIETY IN RESPECT OF STILT PARKING SPACES?
The Court stated that it is has 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 its decision, the Court held that stilt parking space/s being part of common areas’, 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 cannot be sold at all.
CONCLUSION
The ruling could bring relief to lakhs of flat-owners across India engaged in a tug of war with the builders over the sale of stilt space as parking lots. We need to see how it goes further in terms of actual corrective action at the builder’s end. It also needs to be seen how this judgment will impact parking which are already sold and allotted. The judgment is silent on this aspect.
Vivek Sadhale is Company Secretary & Head – Legal, Persistent Systems Ltd., Pune, and Vikas Agarwal is Manager – Corporate Secretarial, Persistent Systems Ltd., Pune (The views expressed in this article are strictly the personal views of the authors)