Karnataka has clarified in a letter to the Registrar of Cooperative Societies (RCS) that resident welfare associations (RWAs) cannot be registered under the Karnataka Societies Registration Act (KSRA), 1960, a document accessed by Moneycontrol shows.
However, it said RWAs can be registered under the Karnataka Co-Operative Societies Act (KCSA), 1959, for the maintenance of common areas, after considering previous orders from the Karnataka High Court.
However, the state government left a grey area in the case of the Karnataka Apartment Ownership Act (KAOA), 1972, as writ petition 511 of 2021 is still sub-judice in the high court.
This comes after the legal department at the RCS had sought clarification from the state legal department, as reported by Moneycontrol.
In an objection filed by the state government in writ petition 511, the government mentioned that an association cannot be formed by registering a deed of declaration. Additionally, the government also noted that, under the RERA Act, the associations have to be registered under KCSA. The rest of the matter is sub-judice.
Dhananjaya Padmanabhachar, co-founder and principal secretary of Mantri Serenity Home Buyers Forum, said: "The Karnataka state government has not given a proper direction to homebuyers to protect the interest on the land title and effective functioning of the association.”
The Karnataka Ownership Flats Act (KOFA) and RERA Act must be implemented to ensure that an association of allottees is formed under the Karnataka Co-Operative Societies Act or Company Act, which becomes a body corporate to hold the title of the project land and get legal status to sign the contracts with service providers, he added.
Though KAOA, 1972, mentions the RCS in Karnataka as the competent authority, however, the state government has not notified the rules for them.
Experts argue that, in the current situation, KAOA does not have the power to register the associations as cooperative societies.
Karnataka HC quashes more cases
Last month, the Karnataka High Court disposed of two cases by quashing associations registered under KSRA 1960. A copy of the order is awaited.
Advocate Abhilash Naik added, "Right now, courts have already clarified that associations cannot be registered under KSRA. And given the unclear interpretation of KAOA, 1972, the associations in the state have only one way to be registered -- under KCSA 1959."
Homebuyers want more clarity, deemed conveyance
On December 26, homebuyers in the state submitted a memorandum to Chief Minister Basavaraj Bommai, asking the sub-registrar's office to issue orders or circulars and publicise the process of registering conveyance deed of project land from the promoter to the association of allottees (as required by Section 17 of RERA Act and Section 11 of KOFA).
The homebuyers have also asked the chief minister's office (CMO) to issue orders to all sub-registrar's offices to stop affixing the seal and signature on the bye-laws and/or memorandum of association that promoters insert at the end of the Deed of Declaration (DoD) for associations under KAOA 1972.
Additionally, homebuyers have asked the department to allow deemed conveyance, if the promoter fails to register RWAs as per Section 17 of the RERA Act, 2016, which is currently being followed in Maharashtra.
Deemed Conveyance occurs when the builder/land owner or the legal heir refuses to hand over the titles and rights to the cooperative societies. In such cases, the housing society has to appear before the District Deputy Registrar.
Apartment owners pay stamp duty while registering their individual sale deeds, comprising the apartment and an undivided interest in the project land.
"Since the title transfer to the owners association does not involve any financial transaction and the stamp duty has been recovered as mentioned earlier, the conveyance should be exempted from any further levy of stamp duty. Where cases of stamp duty evasion through non-registration of such immovable units are identified, the stamp duty could be levied. This practice is followed in the state of Maharashtra," the memorandum added.
Homebuyers claim the guidelines from the sub-registrar's office or the Karnataka Department of Stamps and Registrations on this matter are unclear.
A list of questions has been sent to the RCS and the Karnataka Department of Stamps and Registrations. Moneycontrol will update the copy when the department replies.
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