Allowed

Columbia Pacific Communities Private Limited v. Serene Urbana Apartment Owners Welfare Association (Regd)

Karnataka HC21 Oct 2024WP/5789/2024

Case brief

AI extract

What is this about?

A senior-care services provider challenged RERA's order holding an apartment owners' association's complaint against it maintainable. The High Court held the petitioner, being merely a service provider with no obligations toward development of the project, could not be hauled into RERA proceedings for the developer's liabilities and quashed the order.

What did the court decide?

Impugned RERA order dated 11-01-2024 quashed; declared that the complaint filed by respondent No.1 against the petitioner is not maintainable before RERA.

Columbia Pacific Communities Private Limited Vs… — Writ and Judicial Review | Karnataka HC (2024)

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Reserved on : 10.09.2024 Pronounced on : 21.10.2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 21^ST DAY OF OCTOBER, 2024

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BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

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WRIT PETITION No.5789 OF 2024 (GM – RES)

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BETWEEN:

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COLUMBIA PACIFIC COMMUNITIES PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS CORPORATE OFFICE AT: 2999, 12^TH A MAIN ROAD HAL 2^ND STAGE, INDIRANAGAR BENGAURU – 560 008 REPRESENTED BY ITS AUTHORISED SIGNATORY MR.V.SIVA KUMAR.

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... PETITIONER

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(BY SRI MURALIDHARA C., ADVOCATE)

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AND:

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1 . SERENE URBANA APARTMENT OWNERS WELFARE ASSOCIATION (REGD.) COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING OFFICE AT: (OZONE URBANA CAMPUS)

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KANNAMANGALA VILLAGE KASABA HOBLI, DEVANAHALLI TALUK BENGALURU – 562 110.

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2 . M/S OZONE URBANA INFRA DEVELOPERS PVT. LTD., COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING OFFICE AT: 38, ULSOOR ROAD YELLAPPA GARDEN YELLAPPA CHETTY LAYOUT, SIVANCHETTI GARDENS, BENGALURU – 560 042.

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3 . M/S. COVAI PROPERTY CENRE (INDIA) PVT. LTD., COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING OFFICE AT: COVAI CARE TOWER 3^RD FLOOR, GEM NIRMAALAYAM V.G.RAO NAGAR, GANAPATHY, COIMBATORE – 64100.

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4 . M/S. COVAI SENIOR CARE CONSTRUCTIONS PVT. LTD., COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING OFFICE AT: COVAI CARE TOWER 3^RD FLOOR, GEM NIRMAALAYAM V.G.RAO NAGAR, GANAPATHY, COIMBATORE – 64100.

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5 . M/S. SERENE SENIOR LIVING PRIVATE LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING OFFICE AT: 485, PANTHEON ROAD PANTHEON PLAZA, EGMORE CHENNAI – 600008.

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6 . KARNATAKA REAL ESTATE REGULATORY AUTHORITY HAVING OFFICE AT: SILVER JUBILEE BLOCK, 3^RD CROSS RD, CSI COMPOUND, MISSION ROAD, SAMPANGI RAMA NAGARA BENGALURU, KARNATAKA – 560 002.

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... RESPONDENTS

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(BY SRI G.SURIYA NARAYANAN, ADVOCATE FOR C/R-1)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO a) QUASH THE IMPUGNED ORDER DATED 11/01/2024 (ANNEXURE-A) PASSED BY THE R6 AUTHORITY HOLDING THAT COMPLAINT NO. CMP/UR/211027/0008475 FILED BY R1 IS MAINTAINABLE AS AGAINST THE PETITIONER; b) QUASH THE MEMORANDUM OF COMPLAINT (ANNEXURE-B) UNDER SECTION 31 OF THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 READ WITH SECTION 29 OF THE KARNATAKA REAL ESTATE (REGULATION AND DEVELOPMENT) RULES, 2017 FILED BY R1 AGAINST THE PETITIONER PENDING BEFORE THE R6 AUTHORITY.

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 10.09.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA

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CAV ORDER

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The petitioner/Columbia Pacific Communities Private Limited, a company incorporated under the provisions of the Companies Act, 1956 is knocking at the doors of this Court calling in question an interim order dated 11-01-2024 passed by the Karnataka Real Estate Regulatory Authority (‘RERA’ for short) in No.CMP/UR/211027/0008475 and seeking a declaration that the petition filed by the 1^st respondent before the RERA is not maintainable qua the petitioner / 5^th respondent.

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Heard Sri C. Muralidhara, learned counsel appearing for the petitioner and Sri G. Suriya Narayanan, learned counsel appearing for respondent No.1.

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Facts, in brief, germane are as follows:-

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The petitioner is said to be a company engaged in the business of providing specialized senior care services and is said to be well known for development and maintenance of retirement communities across the country. The petitioner / company was

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incorporated in the year 2009 and is said to be experienced senior living community services provider. Serene Urbana (hereinafter referred to as ‘the Community’ for convenience) is a part of Ozone Urbana developed by the 2^nd respondent as an integrated township, which developed the subject property with a view to offer senior citizens tranquillity and serenity in the City. The 1^st respondent, a Society registered under the Karnataka Societies Registration Act, 1960, registers a complaint before the 6^th respondent/RERA. In the said complaint there were several respondents. The 5^th respondent is the present petitioner. On registration of the complaint, the petitioner had knocked at the doors of this Court in Writ Petition No.8368 of 2022 contending that the petitioner has nothing to do with the dispute between the complainant and the developer or any other entity. The petitioner was only a service provider. Therefore, the complaint against the petitioner was not maintainable. This Court on the preliminary objection raised by the petitioner regarding maintainability directed it to be decided at the threshold and remitted the matter to the hands of the RERA. The RERA by the impugned order holds that the complaint against the petitioner

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as well, is maintainable among others. The petitioner is back to the doors of this Court in the subject petition.

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The learned counsel for the petitioner would contend that the dispute is between the developer - Ozone Urbana Infra Developers Private Limited or any other entity with the complainant before the RERA. The complainant before RERA is the Serene Urbana Apartment Owners Welfare Association. They have a working dispute with regard to several development issues. There is no contract between the complainant before the RERA and the petitioner. The petitioner has a contract with Ozone Urbana for providing services. Therefore, it should not be brought within the ambit of the RERA to contend that they are liable for implementation of orders that are passed by the RERA.

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Per contra, the learned counsel appearing for the complainant/1^st respondent or even the 4^th respondent – M/s Covai Senior Care Constructions Private Limited would vehemently refute the submissions to contend that the 1^st respondent has admitted in the written submission that the confirming party, the 4^th respondent therein was the initial service provider who has transferred the

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entire corpus to the 5^th respondent instead of it being transferred to the Association of Allottees and the petitioner is collecting charges like common area maintenance charges, month on month from the apartment owners and the 5^th respondent is said to be under personalized services to individual apartment owners, pursuant to service agreement entered into with individual apartment owners. Therefore, he would contend that the dispute cannot be decided without the petitioner/5^th respondent to be a party to those proceedings. He would seek dismissal of the petition as all the grounds urged in the present petition can as well be urged before the RERA and the RERA is yet to pass any final order in the matter.

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I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

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What drove the complainant to the RERA is necessary to be noticed. The complaint is by Serene Urbana Apartment Owners Welfare Association/1^st respondent. The prayer in the complaint are as follows:

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“WHEREFORE, the Complainants humbly pray that this Hon’ble Authority be pleased to pass the following orders in the interest of equity and justice to the ageing Senior Citizens Community.

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(a) Declare the Serene Urbana Project as an “On-going project” and initiate penalty proceedings as stipulated under Section 59(1) & 62 of RERA Act, 2016 respectively.

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(b) Direct the Respondent No.1 and Respondent No.3, 4, & 5 to immediately register under the provisions of RERA Act, 2016 as an on-going Project.

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(d) Declare the Rectification Deed dated 08-02-2018 registered by Respondent No.1 as null and void.

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(e) Declare the 2 Sale Deeds executed and registered by Respondent No.1 in favour of M/s. Serene Senior Care Private Limited (now M/s. CPC the respondent No.5) as null and void.

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(f) Direct the Respondent No.1 to complete all the incomplete works on priority as listed in Annexure-H.

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(g) Direct the Respondent No.1 to reimburse the amount of expenditure of nearly Rs.23/- lakhs incurred by the Owners out of the Corpus Fund from 2018 to 2021 towards completion/rectification of improperly completed safety related works prematurely taken over by respondent No.5.

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(h) Direct the respondent No.1 to obtain the legally valid Completion Certificate/OC & ‘A’ Khata from Competent Local Authority after completion of all the presently incomplete works.

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(i) Direct the Respondent No.1 to Form an Association of Homebuyers and get it registered under the provisions of the relevant Act.

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(j) Direct the Respondent No.1 to transfer the control of the management and maintenance of the “Serene Urbana Project” as stipulated under Clause No.35 of the Registered Bye-laws of the Serene Urbana Homebuyers Association to the legally formed Association before the CAM charges are collected from the owners.

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(k) Direct the Respondent No.1 to transfer the title of the Property along with all infrastructures and assets in favour of the legally formed Association as required under Section 17 of the Act.

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(l) Direct the Respondent No.1 to transfer the Corpus Fund of Rs.3.69 crores along with the due accrued interest to the legally formed Association.

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(m) Direct the Respondent No.1 to make the committed Delivery Delay Compensation (DDC) payment along with due accrued interest to all the partially-paid and unpaid owners.

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(n) Direct the Respondent No.4 and 5 to refund the Interest Free Returnable Deposit amount collected during end-2014 to early 2015 from the individual Apart Owners by M/s. SSCPL presently M/s. CPC the respondent No.5 along with due accrued interest.

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(o) Direct the Respondent Nos. 1, 4 and 5 to immediately refund the CAM charges already collected till date to all Apartment Owners with eligible interest.

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(p) Direct Respondent No.1 to carry out proper demarcation of Serene Urbana Land area of 4 acres and 20 guntas and provide a Physical Security fencing on the ‘southside of Serene Urbana’ between the two projects Serene Urbana and IRENE, opening of the Entry/Exist Road from the 40 M Road of Ozona Campus, belonging to Serene Urbana at South East

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side (near STP) for the exclusive use of the Serene Urbana Apartment Owners as per the approved layout.

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(q) Direct the Respondent No.1 to compensate the capital cost to the Serene Urbana Apartment Owners for the illegal sharing of the infrastructure like WTP and STP situated in the land area of Serene Urbana, for the use of IRENE Project Blocks – A, B & C.

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(r) Direct the Respondent No.5 to compensate/share the O & M and repair costs of WTP &STP incurred towards servicing the requirements of the IRENE Project Blocks – A, B & C with the Serene Urbana Apartment Owners.

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(s) Restrain M/s. Columbia Pacific Communities Private Limited, the Respondent No.5 from mortgaging the land, infrastructure and assets illegally bought over in terms of the sale Deeds dated 09-02-2018 and also restrain the Respondent from selling the assets as above to any third party, till disposal of this complaint.

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(t) In view of the items (e) and (s) above, direct M/s. Columbia Pacific Communities Private Limited the Respondent No.5 from showing the ‘depreciation of the above assets’ in their Balance Sheet with immediate effect and also rectify the earlier Balance Sheets since 09-022018.

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(u) Direct M/s. Columbia Pacific Communities Private Limited, the Respondent No.5. from increasing the current CAM and other Service charges till all the issues concerning them with respect to “Serene Urbana project” are sorted out.

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(v) Direct the Respondent to reimburse the cost of litigation and

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(w) Pass any other orders and/or directions as deemed fit by this Hon’ble Authority in the facts and

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circumstances of the case in the interest of equity and justice to elderly senior citizens.”

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(Emphasis added)

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Insofar as the petitioner is concerned, three prayers that are sought are at Sl.Nos.(s), (t) and (u) supra . The prayers are to restrain the petitioner from mortgaging the land, infrastructure and assets; show their balance sheet and restrain the petitioner from increasing the current common area maintenance charges till the issue concerning them with regard to Serene Urbana Project is sorted out.

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The pleadings and the prayer would clearly indicate that the dispute is between Ozone Urbana Infra Developers Private Limited - project developer and the Apartment Owners Welfare Association as prayers (a) to (r) all point against other respondents. The ancillary prayers that are sought in the case at hand are against the petitioner. Therefore, it was a dispute purely between the Apartment Owners Welfare Association, the Developer and the other respondents. The petitioner approached this Court for them being made a party to the proceedings, in Writ Petition No.8368 of

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2022. This Court disposed of the petition on 11-09-2023 by the following order:

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“Learned counsel for the petitioner submits that the petitioner is a service provider and therefore the petitioner could not have been impleaded as a respondent in a proceedings under the provisions of the Real Estate (Regulation and Development) Act, 2016 (for short ‘the RERA Act’).

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However, learned counsel for the respondents submits that it is not the case of the respondents that the petitioner is a service provider, sufficient grounds are made out to proceed against the petitioner.

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In the considered opinion of this Court, the authority is required to consider the objections of the petitioner as preliminary objection regarding maintainability of the proceedings insofar as the petitioner herein is concerned and sufficient opportunity should be available to all the parties concerned to have their say in the matter.

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4. In that view of the matter, the writ petition stands disposed of requesting the regulatory authority to consider the preliminary objection raised by the petitioner regarding maintainability of the petition against the petitioner under the provisions of the Act, 2016 and thereafter pass orders on the said issue. A issue is also sought to be raised at the hand of the petitioner that the authority has no power to cancel the sale deed or to declare that the sale deed is null and void. All contentions are kept open. The petitioner should be permitted to raise all contentions and the question of maintainability of the proceedings should be taken up as a preliminary issue.

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Ordered accordingly.”

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(Emphasis supplied)

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The petitioner sought a direction to the RERA to decide the issue of maintainability of the complaint against it, the 5^th respondent before the RERA. This Court disposed of the petition with a direction to decide the said issue at the threshold. The RERA after the matter was remitted back to its hands, passes the following order on 11^th January, 2024:

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“ FINDINGS

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From the materials available on record it is apparent that the agreement of sale, construction agreement, service agreement and the sale deeds that the confirming party in all the 4 documents M/s Sarene Senior Living Private Limited, the respondent No.4 is the service provider.

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24. Our findings on Point No.1: From the materials available on record, it is apparent that the Agreement for Sale, Construction Agreement, Service Agreement and the Registered Sale Deed makes it amply clear that the confirming party in all the 4 documents, M/s.Serene Senior Living Private Limited, the respondent No.4 is the service provider authorized to do the maintenance of the Serene Urbana complex and collect the CAM charges from the residents and not the respondent No.5, M/s.Columbia Pacific Communities Private Limited who has been doing so from April 2017 even before the issue of the Occupancy Certificate is against the law. Further, it is established from the 2 Sale Deeds both dated 09.02.2018 that the Common Area amenities and infrastructures in the “Serene Urbana Project” has been sold to Respondent No.5 for a valid consideration.

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However, the 2 sale deeds dated 09-02-2018 does not indicate any financial transaction details for having paid the consideration to respondent No.1. Further, the Service

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Agreement and Sale Deed clauses raises an inexplicable conflict between the respondent No.1, 3 & 4 and 5. Moreover, the Respondent No.1 has clearly admitted in the written submission that the confirming party, respondent No.4 only is the Service Provider but transferred the corpus fund to respondent No.5 instead of the Association of allottees. The documents filed by the Complainant Association clearly supports the claim of the Respondent No.5 collecting the Common Area Maintenance charges (CAM) month after month from the Apartment Owners whereas the respondent No.5 claims that only personalized services are provided to the individual apartment owners pursuant to the Service Agreement entered with the individual apartment owners.

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26. It is pertinent to note that whether the Respondent No.5 is a service provider or not, a number of controversies and contractual disputes exist between the allottees who are members in the complainant association and all the Respondents including Respondent No.5, hence the Respondent No.5 is not only a necessary party but also a proper party for the proper adjudication of the present complaint as the Respondent No.5 is also an allottee and the owner of the Common Area amenities and infrastructure by virtue of the 2 sale deeds dated 09.02.2018 executed between the Respondent No.1 and Respondent No.5 which come under the definition of ‘Common Area’ as defined in Section 2(n) of Act, 2016. The allottees who are members in the complainant association claim that they have paid the cost of these Common Area amenities and infrastructure as per the Marketing Brochures/communication, as such Common Area amenities and infrastructure are required for a Retirement home conceptualized and designed with some speciality infrastructure, amenities and facilities to cater to the life style of a particular category of elderly owners/residents which needs to be decided on the merits of the case. Accordingly, the point raised above is answered in the affirmative.

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Our findings on Point No.2 : In view of the above discussion, we proceed to pass the following:

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ORDER

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This complaint No. CMP/UR/211027/0008475 against the respondent No.5 is maintainable.”

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(Emphasis added)

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The RERA holds that the complaint against the petitioner is maintainable on the ground that notwithstanding the fact that the 4^th respondent therein, the authorized service provider to maintain Serene Urbana Complex and collect CAM charges from the residents and not the petitioner, but the petitioner was the one who is doing it from April, 2017 even before issuance of occupancy certificate and has collected common area maintenance charges for providing common area amenities. This is pursuant to an agreement entered into between the parties / respondents. The agreement so entered into by the petitioner with individual flat owners becomes necessary

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to be noticed. It is termed as ‘Services Agreement’. Except providing services, there is no other obligation on the part of the petitioner with regard to development or other activities of the apartment complex, if the amenities are not provided or the apartment complex is not complete or it was still an on-going project. In the considered view of this Court, the petitioner cannot

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be hauled up for the liabilities of the owner. As an illustration, a deed of sale with an individual apartment owner is also appended to the petition. Even the said sale deed does not provide any obligation on the part of the petitioner. The sale deed is with Ozone Urbana Infra Developers Private Limited and M/s.Serene Senior Care Private Limited, the 4^th respondent. The petitioner is nowhere in the picture. Now for the folly of others, the petitioner is sought to be dragged into these proceedings. In the considered view of the Court, the complaint qua the petitioner who is only a service provider is not maintainable.

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The 1^st respondent / complainant, the Owners Welfare Association has filed its detailed statement of objections. Even the objections nowhere make it obligatory on the part of the petitioner of any wrong doings or misgivings of the developer. The only condition in the sale deeds that are executed is with regard to common area maintenance and the said clause reads as follows:

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“ COMMON MAINTENANCE

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As this project “Serene Urbana” is being developed as Retirement Community for Senior/Aged citizens by the Developer and agreed to be maintained by the Confirming Party or its Nominee, the Common Area Maintenance shall be managed by the Confirming Party and the Allottee(s) agrees to

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pay the pro-rata chares for Common Area Maintenance. All expenses incurred in providing common services shall be taken into account for arriving at common area maintenance expenses to be shared by all the owners/ occupants of the Residential Units in the Project and the frequency of payment of Maintenance charges shall be determined by the Confirming Party/its Nominee Company.”

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Except the service provider being a confirming party to the sale deed, it is not bound by any other obligation as the obligations are clearly enumerated in the construction agreement itself. The obligations of the confirming party are as follows:

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“ OBLIGATIONS OF THE CONFIRMING PARTY :

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(a) Shall ensure maintenance of the entire project “Serene Urbana” post handover by the Developer as per the terms contained in the Services Agreement.

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(b) Shall ensure all the requisite services are provided to the Occupants/Owners of Serene Urbana as per the mutually agreed terms and conditions indicated in the Services Agreement entered between the Allottee(s) and the Confirming Party, provided the Allottee(s) have made the payments as per the Services Agreement.

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(c) Shall maintain proper accounts with respect to “Corpus Fund” and other expenses incurred towards Common Area Maintenance”.

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It restricts to maintain proper accounts with regard to corpus fund incurred towards common area maintenance. Therefore, the

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dispute is between the respondents and others. The petitioner cannot be made to suffer as being the service provider.

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For the aforesaid reasons, the following:

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O R D E R

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(i) Writ Petition is allowed.

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(ii) The order dated 11^th January, 2024 passed by the 6^th respondent/ Karnataka Real Estate Regulatory Authority in No.CMP/UR/211027/0008475 stands quashed.

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(iii) It is declared that the complaint filed by the 1^st respondent against the petitioner is not maintainable before the RERA.

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Sd/(M. NAGAPRASANNA) JUDGE

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nvj CT:MJ

Columbia Pacific Communities Private Limited v. Serene Urbana Apartment Owners Welfare Association (Regd)

Case brief

What is this about?

What did the court decide?

Columbia Pacific Communities Private Limited v. Serene Urbana Apartment Owners Welfare Association (Regd)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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