The Karnataka High Court (Bengaluru Bench) has clarified that for a purely residential apartment project in Karnataka, the Karnataka Apartment Ownership Act, 1972 (KAOA) is the specific and applicable local law governing the post-ownership management, maintenance, and administration of the project and its common areas. Accordingly, the Karnataka Co-operative Societies Act, 1959 (KCS Act) is not the appropriate statute for forming a body to manage a residential apartment complex, as its objectives are primarily economic and its governing principles are inconsistent with the nature of apartment ownership.
The High Court asserted that there is no repugnancy between the Real Estate (Regulation and Development) Act, 2016 (RERA) and the KAOA, as they operate in distinct spheres, i.e., RERA for the pre-ownership stage and KAOA for the post-ownership stage. Thus, the Court ruled that the existence of two parallel bodies (an association under KAOA and a society under KCS Act) with the same objective of managing a single residential project is impermissible, as it would lead to chaos. The body formed first in accordance with the applicable special law (KAOA) and contractual obligations will prevail, and consequently, the registration of the Co-operative Society (Respondent No. 3) deserves to be cancelled.
As regards interplay and repugnancy between RERA, KAOA, and KOFA, a Single Judge Bench of Justice M G Uma observed that KOFA applies to both residential and commercial premises and primarily regulates the pre-ownership stage, imposing liabilities on the promoter, including the formation of a co-operative society or a company. The Bench affirmed that where there is a conflict between KOFA and RERA, the provisions of RERA, being a later Central enactment, will prevail over the State enactment, KOFA.
The Bench noted that KAOA is a special enactment that applies exclusively to residential apartments and governs the post-ownership phase. It provides a framework for individual ownership of apartments as heritable and transferable property and for the administration of common areas through an ‘Association of Apartment Owners’ formed via a registered Deed of Declaration. On the other hand, the Bench identified RERA as a Central legislation with the primary objective of regulating the real estate sector, protecting consumer interests, and ensuring transparency during the development and sale process, i.e., the pre-ownership stage.
The Bench observed that that forming a co-operative society under the KCS Act is not the appropriate mechanism for managing a purely residential apartment complex, since the primary object of the KCS Act is the promotion of the economic interests of its members in accordance with co-operative principles.
The Bench firmly held that two parallel bodies, an association under KAOA and a co-operative society under the KCS Act, cannot coexist to manage and administer the same residential project. It observed that such a situation would inevitably lead to chaos and frustrate the owners’ objective of peaceful living. Since the Owners’ Association (Respondent No. 5) was formed first on 12.06.2023 in compliance with both contractual obligations (in the sale agreements) and statutory provisions under KAOA, its legal standing for managing the project was upheld over the subsequently formed Co-operative Society (Respondent No. 3).
As far as grievance redressal for allottees and owners are concerned, the Bench explained that an aggrieved person can file a complaint with the RERA authority under Section 31 of RERA. The aggrieved consumers can also approach the Consumer Forums under the Consumer Protection Act, 2019, as Section 35(1)(c) of the Act allows one or more consumers to file a complaint on behalf of numerous consumers with the same interest (a class action), thereby providing a mechanism for collective grievance redressal.
Briefly, the petitioner is a real estate developer who developed a purely residential housing project named ‘Sobha HRC Pristine’, consisting of 395 units (381 apartments and 14 row houses), and the project was registered under the Real Estate (Regulation and Development) Act, 2016 (RERA). After completing construction and obtaining the Occupancy Certificate in 2023, the petitioner began executing sale deeds for the units. Thereafter, the petitioner submitted a Deed of Declaration and bye-laws under the Karnataka Apartment Ownership Act, 1972 (KAOA) and the Karnataka Apartment Ownership Rules, 1974 (KAOR), thereby forming the ‘Sobha HRC Pristine Owners Association’ (Respondent No. 5) for the management and maintenance of the project’s common areas.
Subsequently, a group of allottees and owners, led by T K Parasuraman, registered the ‘Sobha HRC Pristine Apartment Owners Co-operative Society Ltd’ (Respondent No. 3) under the Karnataka Co-operative Societies Act, 1959 (KCS Act). The petitioner challenged this registration of Respondent No. 3 society before the Deputy Registrar of Co-operative Societies (Respondent No. 1), who dismissed the appeal. Hence, the petitioner had sought quashing of the appellate order and the registration certificate of the society, arguing that two parallel bodies cannot exist to manage the same residential project and that KAOA is the appropriate governing law.
Appearances:
Advocate Madhukar M Deshpande, for the Petitioner
Advocates Yogesh D. Naik, Pradeep Kumar P.K., and Sneha Nagraj along with Amicus Curiae G. Sridhar, for the Respondent
