Can a builder sell stilt or open parking? Supreme Court in Nahalchand v. Panchali CHS, decoded

The builder has kept the stilt parking for himself, sold a few of the spaces by letter to selected members, and now tells the society it has no say over them. A member waves the undertaking every purchaser signed at booking, which says the stilt spaces belong to the promoter. The committee is unsure whether it may act. For a building regulated by MOFA, the Supreme Court answered this question in 2010, and the answer favours the society.

The case in brief

Nahalchand Laloochand Pvt. Ltd. developed properties at Anand Nagar, Dahisar (East), Mumbai, and sold flats. The purchasers formed Panchali Co-operative Housing Society Ltd., a building of 56 flats. The promoter sued in the Bombay City Civil Court for a permanent injunction to stop the Society from interfering with its possession of 25 parking spaces in the stilt portion. Each purchaser had signed a declaration that the stilt or open parking spaces shown in the plan belonged exclusively to the promoter.

The City Civil Court, Greater Bombay dismissed the suit on 4 April 2007, and the Bombay High Court dismissed the first appeal on 25 April 2008. Seven appeals reached the Supreme Court, where R.M. Lodha J. and A.K. Patnaik J. decided them together on 31 August 2010 (Civil Appeal No. 2544 of 2010, (2010) 9 SCC 536).

The Court framed four questions (para 12): whether a stand-alone garage is a flat under section 2(a-1) of the Maharashtra Ownership Flats Act, 1963 (MOFA); whether stilt or open parking in a MOFA building is a garage; if not, whether it is part of the common areas and facilities; and what rights the promoter has against the society over such parking.

What the court decided

• •A stand-alone garage, an independent unit by itself, is not a flat under section 2(a-1). The words and includes a garage only make a garage appurtenant to a flat (para 29).
• •A garage in that section means a place with a roof and walls on three sides. It does not include an unenclosed or uncovered parking space (para 35). A stilt area, though usable for parking, is not a garage for the purposes of MOFA (para 36).
• •Stilt and open parking are therefore part of the common areas and facilities. The test is whether the part of the building is normally in common use, not whether every purchaser actually uses it (paras 37-38). The promoter cannot escape this merely by not describing the space as common in the advertisement or the agreement (para 38).
• •What remains with the promoter is only the right to charge the cost of the stilt parking in proportion to the carpet area of each flat. The Court said that such space is not sellable at all (para 39).
• •The undertakings signed by purchasers were held to bind neither the flat purchasers nor the Society (para 41). The appeals were dismissed (para 42).

> “The promoter has no right to sell any portion of such building which is not ‘flat’ within the meaning of Section 2(a-1) and the entire land and building has to be conveyed to the organisation; the only right remains with the promoter is to sell unsold flats.” (para 40)

Why it matters for your society

In a MOFA building, a sale letter for a stilt space, or a signed undertaking that the space belongs to the builder, does not by itself make the space the builder's property.

What your committee should do

1. 1Confirm first that your building was developed and sold under MOFA. This ruling applies only to such buildings.
2. 2Collect the sanctioned plan, agreements, undertakings and every letter by which the builder has allotted or sold a parking space, and take legal advice before replying.
3. 3Do not accept a signed undertaking or sale letter as final. Record in writing that the society regards the stilt and open parking as common area, and ask the promoter to convey the entire land and building to the society under section 11.
4. 4Bring parking under the society's own rules. Bye-law 78 requires the General Body to frame and adopt Parking Rules, with allotment by the Committee on first come first served for available slots. Under bye-law 79 the Society should number and demarcate the stilts and open space. Bye-law 3(x) itself treats a stilt as Parking Space, and bye-law 68(a)(xxiii) lists Common Parking Space among items the Society maintains.
5. 5Allot fairly. Under bye-law 80 a Member with a vehicle is eligible for a slot, normally not more than one. Where eligible Members exceed the slots, bye-law 81 requires an annual allotment by a fair and transparent process.
6. 6Charge parking at the rate decided by the General Body (bye-laws 83 and 65(viii)), and require prior permission and charges for two-wheelers and autorickshaws (bye-law 84). Remember that under bye-law 78 a Member has no right to sell or transfer an allotted slot.

Limits of this ruling

• •It is limited to buildings regulated by MOFA. It says nothing about buildings outside MOFA.
• •The operative sentences in paras 39 and 40 are worded for stilt parking spaces, although question (iv) was framed for both. For open parking, the propositions rest on paras 35, 37 and 38.
• •The Court did not decide the FSI or property-tax questions. It only said the High Court should not have relied on them.
• •It did not address how a society allots parking among members, how many spaces there must be, charges or maintenance. Those are governed by the society's own bye-laws.
• •It did not rule on a promoter's undertaking to sell parking only to purchasers in the same layout.
• •The case was decided in 2010 under MOFA, before RERA. If your project is registered under a later law, check the current position with your advocate before relying on this ruling.