Shareholders in Chandigarh houses can be outside family: High court

Possession of a specific portion of a house by a co-owner in Chandigarh does not amount to ‘apartmentalisation’, says high court; in case of a dispute, the only remedy would be to auction the property and the sale proceeds be distributed among shareholders

The Punjab and Haryana high court has ruled that residential plots in Chandigarh can have multiple shareholders, even outside the family.

The purchaser only becomes a co-owner/co-sharer in the entire site/building which remains in joint ownership, the hogh court bench of justices Tejinder Singh Dhindsa and Vivek Puri said.

The high court bench of justices Tejinder Singh Dhindsa and Vivek Puri dismissed a clutch of petitions, the earliest one filed in 2016 by a Residents Welfare Association, seeking a restrain order that Chandigarh administration should not permit residential plots to be constructed or utilised as apartments.

The court said, occupation/possession of a specific portion be it a floor of a joint property by a co-owner does not amount to ‘apartmentalisation’. Under the Chandigarh Master Plan (CMP-2031), which carries statutory force, three floors can be built on all private plots with each floor having potential of having an independent unit, the bench said.

Reacting to the development, senior advocate ML Sarin of Sarin Memorial Legal Aid Foundation said that in the interest of the city “we may go in appeal”. While another lawyer, Salil Dev Singh Bali said judgment gives the opportunity for people to have economical house in otherwise expensive city.

The court said the fragmentation of a site/building, which is barred by law, has to entail an element of permanent severance. “Mere construction of three floors on a private plot and utilisation of the same as independent units would not amount to fragmentation, which will take place only if there is a division of the site or division of the building with an element of exclusive ownership i.e. partition by metes and bounds,” the bench said. As of the argument that properties are being sold as apartments, the court said there has to be a sub division of a building duly recognised by the estate officer along with proportionate share in common areas and common facilities in the case of apartments. “However, in the case in hand, all of these pre-requisites are missing. By virtue of sale of share(s) by a co-owner and thereafter the purchaser/vendee occupying a specific portion of the building on the basis of an internal arrangement/understanding, sub division of building does not take place,” the court said, adding that a specific portion under the occupation of a co-owner is not accorded any recognition by the estate officer.

The court observed that the residential building constructed on a residential plot in Chandigarh cannot be confined for single family use as projected by petitioners. Such a proposition being canvassed would be alien to the provisions of the rules for CMP-2031.

Pulls up UT administration

The court said that Chandigarh administration has taken a stand that floor-wise sale of a building is not permitted. But it found numerous advertisements in newspapers indicating that such a sale is happening. “The administration chooses to stay smug, taking a stand on paper that floorwise sale of residential building is not permissible while residential floors are being advertised for sale right under its nose…Chandigarh administration is deliberately choosing to look the other way and thereby failing to discharge the onus of being the guardian of the interests of the residents of the city,” the bench said listing out measures so that property agents are not able to fleece gullible buyers.

Directions from the high court

A public notice be carried at periodic intervals in newspapers, educating homebuyers that fragmentation of site/building is prohibited.

Chandigarh administration does not recognise ownership rights over any floor/part of any site/building by virtue of purchase of a share on the basis of MoU between parties. The purchaser only becomes a co-owner/co-sharer in the entire site/building which remains in joint ownership

In case a dispute, the only remedy would be to auction the property and the sale proceeds thereafter to be distributed among co-sharers. These conditions be included in the affidavit to be filed at the time of execution and registration/ transfer of shares etc.

Steps be taken to criminally prosecute persons who are misrepresenting rules in the advertisements to allure prospective buyers.

Key observations

The purchaser only becomes a co-owner/co-sharer in the entire site/building which remains in joint ownership

In case of a dispute, the only remedy would be to auction the property and the sale proceeds be distributed among shareholders

Quote

In the case of an apartment, the brunt of any coercive/penal steps on account of violation of a building bylaw would have to be borne by the owner of the apartment. In the case of a joint property, in case violation takes place, the coercive/penal consequences, including resumption, would be on the entire building.

High court