IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF NOVEMBER, 2019 PRESENT THE HON’BLE MR. ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE PRADEEP SINGH YERUR WRIT PETITION NO. 50617/2019 (GM-RES-PIL) BETWEEN BANGALORE CITY FLAT OWNERS WELFARE ASSOCIATION OFF AT NO.K-641, SENA VIHAR KAMMANAHALLI MAIN ROAD KALYAN NAGAR, BANGALORE ZONE 2 SARVAGNANAGAR, KAMMANAHALLI BENGALURU-560 043 REPRESENTED BY ITS PRESIDENT SRI ANIL KALGI S/O VASUDEV AGED ABOUT 55 YEARS …PETITIONER (BY SRI KIRAN C V, ADVOCATE FOR SRI DESHRAJ, ADVOCATE) AND 1. STATE GOVERNMENT OF KARNATAKA REPRESENTED BY ITS CHIEF SECRETARY VIDHANA SOUDHA, BENGALURU-560 001 2. PRINCIPAL SECRETARY URBAN DEVELOPMENT DEPARTMENT GOVERNMENT OF KARNATAKA VIDHANA SOUDHA BENGALURU-560 001 3. PRINCIPAL SECRETARY DEPARTMENT OF CO-OPERATION GOVERNMENT OF KARNATAKA M S BUILDINGS BENGALURU-560 001 4. THE REGISTRAR DEPARTMENT OF CO-OPERATIVE SOCIETIES, ALI ASKER ROAD BENGALURU-560 001 …RESPONDENTS (BY SRI B V KRISHNA, AGA FOR R-1 TO R-4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENTS TO IMPLEMENT SECTIONS 4, 5, 7, 10 AND 11 OF THE KARNATAKA OWNERSHIP FLATS (REGULATION OF THE PROMOTION OF CONSTRUCTION, SALE, MANAGEMENT AND TRANSFER) ACT, 1972 IN ITS LETTER AND SPIRIT AND ETC.
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, CHIEF JUSTICE MADE THE FOLLOWING:
ORDER Heard the learned counsel appearing for the petitioner and the learned Additional Government Advocate appearing for the respondents.
2. There are two prayers made in this petition in the nature of a public interest litigation, which read thus:
“a) Issue a writ of Mandamus or any other Writ directing the Respondents to Implement the Sections -4, 5, 7, 10 and 11 of the Karnataka Ownership Flats (Regulation of the promotion of Construction, Sale, Management and Transfer) Act, 1972 in its letter and Spirit; and b) Issue a writ of Mandamus or any other Writ directing the Respondent No.1 to assign/delegate the entire Karnataka Ownership Flats (Regulation of the promotion of Construction, Sale, Management and Transfer) Act, 1972 to Respondent No.4 for implementation and execution.”
3. The Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 (for short ‘the said Act’) has been enacted with the object of declaring that flats or apartments in multistoried building may, for all purposes, be heritable and transferable immovable property. Another object of the said Act is stated to be that the owners of such flats or apartments should enjoy exclusive ownership of their flats or apartments while retaining an undivided interest in the common areas and facilities which are to be used and owned by all such owners jointly. Clause (c) of Section 2 of the said Act defines ‘promoter’ to mean a person 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, a co-operative society or other association of persons. Section 3 deals with the general liabilities of the promoter. Section 4 and Section 5 incorporate the obligations of the promoter. As far as Section 7 is concerned, it again contains an obligation of the promoter. Sections 10 and 11 also lay down the obligations of the promoter. Except for Section 5 and sub-section (4) of Section 7, we fail to understand how the State Government comes into picture for enforcing the provisions of the said Act. Section 5 reads thus:
“5. Promoter to maintain separate account of sums taken as advance or deposit and to be trustee therefor and disburse them for purposes for which given.- The promoter shall maintain a separate account in any bank of sums taken by him, from persons intending to take or who have taken flats, as advance or deposit, including any sums so taken towards the share capital for the formation of a co- operative society or a company, or towards the outgoings (including ground rent, if any, municipal or other local taxes, taxes on income, water charges, electricity charges, revenue assessment, interest on any mortgage or other encumbrances, if any); and he shall hold the said moneys for the purposes
for which they were given and shall disburse the moneys for those purposes, and shall on demand in writing by an officer appointed by a general or special order by the State Government for the purpose, make full and true disclosure of all transactions in respect of that account.”
4. In a case where the purchaser of a flat makes a grievance about the failure of the promoter to maintain separate account of the sums taken as advance or deposit, the Officers appointed under Section 5 are bound to look into the complaint and if a case is made out, are bound to demand in writing calling upon the promoter to make full and true disclosure of all the transactions in respect of that account. Section 14 provides for the offences by the promoter which lays down that any promoter who, without reasonable excuse, fails to comply with or contravenes any provisions of the said Act or of any rule made thereunder can be convicted by imposing the punishment as provided in the Section.
5. The learned counsel appearing for the petitioner invited our attention to the order made by the State Government on 14th March 2012 appointing the Officers to exercise powers under Section 5 of the said Act. The said Officers will have to comply with the direction as stated in the earlier paragraph. Apart from Section 5, there is one more Section under which the State Government has some role to play is sub-section (4) of Section 7, which reads thus:
“(4) Where there is a dispute as regards any defect in the building or material used, or any unauthorised change in the construction or as to whether it is reasonably possible for the promoter to rectify any such defect or change or as regards the amount of reasonable compensation payable in respect of any such defect or change which cannot be, or is not, rectified by the promoter the matter shall, on payment of such fee as may be prescribed, be referred for decision to such officer not lower in rank than a Superintending Engineer as the State Government may by general or special order specify in this behalf, within a period of two years from the date of handing over possession. Such officer shall after such enquiry as he deems necessary, record his decision, which shall be final.”
6. The learned counsel appearing for the petitioner has invited the attention of the Court to the order of the Government dated 8th March 2012 under which the Officers have been appointed to exercise powers under sub-section (4) of Section 7 of the said Act. Thus, where a dispute is raised by a flat purchaser under sub-section (4) of Section 7, within the period specified in sub-section (4) of Section 7, the Officer appointed by the State Government is bound to hold an enquiry and record his decision.
7. The learned counsel appearing for the petitioner submitted that the members of the petitioner have already made grievances about the failure of certain promoters to maintain the accounts.
8. Wherever powers have been conferred on the Officers of the State to take action, the Officers must take action in accordance with law. However, if there is a violation on the part of the promoter to perform his obligations under the said Act, a remedy will have to be adopted by the aggrieved flat purchaser or purchasers by approaching the Competent Court. They can always set the criminal law in motion wherever offences punishable under Sections 14 and 15 have been committed. Prayer (b) is completely misconceived as such a wide direction to delegate cannot be issued against the State Government. The said Act does not provide for exercise of such a blanket power.
9. We must note here that while we are dealing with this matter, we have not gone into the question of the effect of the provisions of the Real Estate (Regulation and Development) Act, 2016 on the applicability of the provisions of the said Act.
10. Accordingly, we pass the following order:
(i) If any complaint is made by any flat purchaser about the failure of the promoter to abide by his obligation under Section 5 of the said Act, the Officer appointed by the State Government under the provisions of Section 5 shall immediately look into the complaint and if a case is made out, shall call upon in writing the concerned promoter to make full and true disclosure of all the transactions in respect of the concerned account;
(ii) If a purchaser of a flat makes a grievance to which sub- section (4) of Section 7 of the said Act is applicable, the Officers appointed by the State Government to exercise powers under sub-section (4) of Section 7 shall hold an enquiry and record a decision;
(iii) Except the above directions, no other relief can be granted in this petition;
(iv) With the above directions, the petition is disposed of.
Sd/- CHIEF JUSTICE Sd/- JUDGE bkv