Sharing Common Amenities Between Adjacent Projects is Valid if Consented to in Registered Sale Deeds

In brief

The question

1. Whether the restrictions in the Sale Deed regarding the shared use of common amenities are void under Section 11 of the Transfer of Property Act, 1882.

The court held

The restriction was not void under Section 11 of the TPA as no absolute interest in common areas was created, and the contract was not void under Section 29 of the Contract Act as the terms were certain and acted upon.

It also directed

The High Court dismissed the appeal, holding that there was no merit in the challenge as the Allottees were bound by the contractual terms of their registered Sale Deed and no substantial question of law was found to exist.

01Facts

The appellants (Allottees) purchased an apartment in the "Arya Hamsa" project, which was completed and received an occupancy certificate in 2015.

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Subsequently, the Respondent Developer constructed an adjacent project, "Arya Hamsa Grande," which was registered under the RERA Act 2016.

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Both projects were developed under separate joint development agreements and sanction plans.

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The Allottees filed a complaint under Section 31 of the RERA Act, seeking revocation of the second project's registration and imposition of penalties, contending that the sharing of common amenities (clubhouse, roads, etc.) between the two projects infringed upon their exclusive rights.

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Both the RERA Authority and the Karnataka Real Estate Appellate Tribunal (K-REAT) dismissed the complaint, citing specific clauses in the Allottees' registered Sale Deed that permitted shared usage.

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The Allottees appealed to the High Court of Karnataka.

02Issues

i.1. Whether the restrictions in the Sale Deed regarding the shared use of common amenities are void under Section 11 of the Transfer of Property Act, 1882.

p. 8 / para. 9

ii.2. Whether the relevant clauses in the Sale Deed are void for uncertainty under Section 29 of the Indian Contract Act, 1872.

p. 8 / para. 9

03Law Applied

Section 11 of the Transfer of Property Act (TPA), which stipulates that when an absolute interest is created in property, any direction restricting its enjoyment is void, unless such direction is for the beneficial enjoyment of the transferor's remaining property.

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The precedent Indu Kakkar v. Haryana State Industrial Development Corpn. Ltd., establishing that Section 11 only applies where an absolute interest is created in favor of the transferee.

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Section 29 of the Indian Contract Act, 1872, which declares agreements void if their meaning is not certain or capable of being made certain.

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Provisions in the judgment · 8 · Linked ones open on LawLens

Real Estate (Regulation and Development) Act, 2016. Section 4 Section 14 Section 31 Section 58 Section 60 Section 61

Transfer of Property Act, 1882 Section 11

Indian Contract Act, 1872 Section 29

04Reasoning

Regarding the TPA, the Court reasoned that Section 11 was inapplicable because the Allottees did not hold an "absolute interest" in the common areas; their absolute interest was limited to their specific flat, while amenities like the clubhouse and roads were subject to shared usage rights.

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Under Section 11's second paragraph, the Court noted that directions limiting enjoyment are valid if they secure the beneficial use of another property (the adjacent project).

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The Court found that the Allottees had explicitly consented to these arrangements in Clauses 1.11 to 1.13 of their registered Sale Deed, which allowed the developer to provide amenities for all units in various phases, whether located inside or outside the specific project land.

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Moving to the Contract Act, the Court rejected the "uncertainty" argument, holding that Section 29 cannot invalidate a registered Sale Deed that clearly defines consideration and transfer terms, especially when the deed remains unchallenged in a civil court.

p. 14