Chandigarh floors verdict : Explained
In the Resident welfare association and others versus Union territory of Chandigarh and others , The Honourable Punjab and Haryana High Court has upheld the status quo regarding the status of the sale of shares in a property. However, It has at the same time provided much needed clarity to the buyers and sellers.
What practice has been going on ?
Since the repeal of the apartment act on 1 st October 2007 , a new practice emerged where the real estate agents/ builders were selling properties by dividing it into 3 shares of 50%, 30% and 20 % . The 50 % shareholder was given on the possession of the ground floor. The 30 % shareholder was given on the possession of the second floor and the 20 % shareholder was given the possession of the second floor. This arrangement was mutually agreed between the co - owners on the basis of an internal memorandum of understanding (MOU). This MOU has no legal sanctity and was reiterated by the Honourable Court.
What is Fragmentation ?
Rule 16 of the estate rules prohibits fragmentation of site / building . The Punjab and Haryana High Court has stated that fragmentation in this case means division by metes and bounds that is exclusive ownership . The current practice does not amount to fragmentation which is not allowed under the law.
What the Court has clarified ?
The court has said that a shareholder is a co - owner which has the right to each and every parcel of the land. So , In case of a dispute between the co - owners the property will be auctioned off and the sale proceeds thereafter to be distributed. According to the Punjab and Haryana High court " Where a co - owner is in possession of separate parcels under an arrangement consented by the other co -owners, it is not open to anybody to disturb the arrangement without the consent of others except by filing a suit for partition "
What is the final verdict ?
In essence, The sale of shares in a property cannot be stopped in consonance with the law. The Honourable Court have thus dismissed the writ petition.
However , certain indicative steps have been suggested which include the chandigarh adminstration taking pro active measures to curb the information asymmetry prevailing regarding the sale of floors. Moreover , the court has suggested changes in the transfer letter and the affidavit. In addition to this , they have recommended criminal prosecution for any person who misrepresents the sale of floors/ building.
KARAN KAPOOR
BUFFERSANDCATALYST@GMAIL.COM
