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Promoter has No Right to Sell Garages/Stilt Parking Areas

By: Meenakshi Iyer

In a significant ruling delivered on August 31, 2010, the Supreme Court has held that builders are not entitled to sell garages/stilt parking areas as separate flats to owners who intend to use it as parking facilities. A Division Bench of the Apex Court (Justice R. M. Lodha and Justice A. K. Patnaik) dismissed the appeal of the promoter, Nahalchand Laloochand Pvt. Ltd., which challenged the Bombay High Court’s ruling that a builder cannot sell parking slots in the stilt area as independent flats or garages, under the Maharashtra Ownership Flats Act (MOFA).

The Apex Court reiterated that promoters had no right to sell open to sky parking areas or stilted portion usable as parking space as these are not “flat” within the meaning of Section 2(a-1) of MOFA and, therefore, not sellable independently as a flat or along with a flat.

The Court did not find any justifiable reason to exclude parking spaces (open to sky or stilted portion) from the purview of “common areas and facilities” under MOFA.

“If a promoter does not fully disclose the common areas and facilities, he does so at his own peril. Stilt parking spaces would not cease to be part of common areas and facilities merely because the promoter has not described the same in the advertisement and agreement with the flat purchaser. Stilt parking space/s being part of ‘common areas’ of the building developed by the promoter, the only right that the promoter has is to charge the cost thereof in proportion to the carpet area of the flat from each flat purchaser. Such stilt parking space, being neither ‘flat’ under Section 2(a-1) nor ‘garage’ within the meaning of that provision, is not sellable at all.”

“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 organization, the only right that remains with the promoter is to sell unsold flats.

The Court accepted the argument of the Panchali Co-operative Society and flat owners of the Society that the undertakings executed by them at the time of executing the Agreements for sale were contrary to provisions of MOFA and not binding on the flat purchasers and the Society.

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