Supreme Court Judgement on Apartment Maintenance Charges
The Supreme Court of India has clarified the legal process of apartment maintenance charges and responsibility in residential societies. These rulings define the responsibilities of the developers, Resident Welfare Associations (RWAs), and homeowners in managing the maintenance fees and enforcing compliance. Understanding Supreme Court decisions on apartment maintenance charges helps protect homeowners’ rights and prevent disputes.
What Are Apartment Maintenance Charges?
Maintenance in apartments is the fee that the housing societies or property management charge to maintain the upkeep of common areas and facilities, as well as repairs and day-to-day running. Such Supreme Court determinations on apartment maintenance charges normally involve:
- Security Services: Salaries of the security staff and the cost of surveillance systems.
- Sanitation and Cleaning: Cleaning communal facilities (corridors, lobbies, stairs, and parking spaces).
- Power in Common Areas: Lift, lighting, and common power.
- Water Supply: Borewell maintenance, water purification, or tanker supply costs.
- Repairs and Maintenance: The elevators, plumbing, and other equipment are serviced frequently.
- Waste management: Garbage collection and disposal fees.
- Facilities: Swimming pools, gymnasium, clubhouses, multifunctional halls, children’s playgrounds, etc.
- Reserve Funds: It is a contribution to a corpus fund in case of an unexpected repair or emergency.
Read More on: Apartment Maintenance Charges- Rules and Regulations
Key Issues Leading to Legal Disputes Over Maintenance Charges
Disputes over the Supreme Court judgment on apartment maintenance charges often arise due to various factors:
- Lack of Clear Communication: Misunderstanding between apartment owners and the maintenance committee may cause disputes over charges.
- Unclear or Excessive Charges: Unreasonable or poor maintenance charges can result in a lack of satisfaction and disputes amongst the residents.
- Irregular or Improper Billing: Inconsistent billing practices, late penalties, or errors often escalate into disputes.
- Disagreements Over Service Quality: The condition of facilities is substandard, or service standards are not up to par, resulting in resident complaints.
- Differing Expectations Between Buyers and Developers: Mismatches between promised and delivered services lead to legal conflicts.
- Disputes Over Ownership and Liability: The problem is that the misunderstanding regarding ownership or maintenance problems leads to conflicts.
- Delayed Handover of Maintenance Responsibility: Delays in transitioning maintenance responsibilities from developers to residents can create disputes.
Supreme Court’s Landmark Rulings
The Supreme Court has taken many radical steps in spelling out the roles of the maintenance charges and taxation of the cooperative societies:
1. Rasila S. Mehta vs. Nariman Bhavan Custodian (2011)
The Court ruled that the Special Court Act of 1992 applied, whereby the Custodian needs to pay maintenance and repair expenses on the attached properties. It also retained interest in and recovery of penalties in court proceedings on arrears.
2. ITO, Mumbai vs. Venkatesh Premises Co-Op. Society Ltd. (2018)
The Court ruled that maintenance fees, non-occupancy charges, transfer fees, and amenity fund contributions collected by cooperative societies are not taxable under the principle of mutuality.
3. Padmini Infrastructure Developers (I) Ltd. vs. Royal Garden RWA (2021)
The failure to make necessary calculations and limit the maintenance charges in the case resulted in the rejection of the maintenance charges on unsold flats, and the Court identified the liability of the case.
4. Utpal Trehan vs. Home Developers Ltd. DLF (2022)
The Court ruled that developers are not allowed to charge maintenance fees after the dealing with the responsibility to a resident association.
Key Decisions and Their Consequences
- The rulings of the Supreme Court have been able to establish clear guidelines for the maintenance charges in residential societies and the responsibilities:
- Equal Responsibility of All Residents: In clarifying this, the Court mentioned that all the residents share equally in some of the common expenses like the care of the common spaces and services, and thus no resident can be left without contributing to the maintenance of the property.
- Relative Charges due to Apartment Size or Usage: Maintenance charges must be allocated proportionately according to the size of the apartment or the level of its usage in a way that encourages fairness in how these charges are calculated.
- Responsibilities of the developers till the handover to the RWA: The developers have a role to play in maintaining the maintenance charges until the handover of the control to the Resident Welfare Association (RWA), such that the residents are not subjected to lousy services during the transition.
- Focus on Fairness, Transparency, and Accountability: The Court noted that there must be some form of fairness and transparency by the Court in how it runs the maintenance charges, and thus these charges needed to be well communicated, itemised, and that the charges only served the benefit of the residents.
Compliance with Supreme Court Guidelines
To ensure adherence to the Supreme Court’s guidelines on maintenance charges, stakeholders should:
- Transparency in Cost Disclosure: Developers should give a breakdown of the maintenance costs so that no one can claim some hidden or arbitrary expenses.
- Separate Maintenance Accounts: Maintenance and corpus funds must be held in separate accounts certified by a Chartered Accountant.
- Proportional Charges: It is well established that apartment size or use should be used to determine maintenance costs to be fair to the residents.
- Timely Formation of the RWA: The developers must transfer maintenance management to the RWA within the stipulated time.
- Audit and Accountability: Funds are used under regular audit monitoring, and the residents or the RWA are given annual reports.
- Advance Notice of Charges: Homeowners must be informed of the structure and frequency of maintenance charges.
- Raising Disputes through RERA Complaint Forums: The residents can file a complaint with the RERA authority to put the related grievances concerning the maintenance charges to rest.
- GST Compliance: Maintenance charges above ₹7,500 per month are subject to 18% GST, requiring proper tax filings.
- No Income Generation for Developers: Developers can not use maintenance funds.
Challenges in Implementing the Guidelines
Implementing the Supreme Court’s guidelines poses certain challenges, such as:
- Irregular Billing Practices: Poorly itemised bills, unclear payment cycles, and unjustified penalties can lead to confusion and disputes.
- Delayed Handover to RWAs: Developers frequently delay transferring maintenance responsibilities, creating prolonged reliance on them and dissatisfaction among residents.
- Service Quality Disputes: Residents may face subpar services despite paying charges, including issues with cleanliness, repairs, and security.
- Unclear Proportional Charges: The implementation of charges that vary according to the size or the use of the apartment must possess clear methodologies, which do not necessarily exist.
- Lack of Financial Transparency: Lack of trust and responsibility is due to failure to observe such conditions as individual bank accounts and audited reports.
- Legal and GST Complexities: Navigating RERA complaint forums and GST compliance for charges over ₹7,500 per month remains challenging for RWAs and residents.
- Lack of Awareness: The citizens are usually unaware of the Supreme Court ruling on society maintenance charges / RERA declaration on maintenance charges, which results in a lack of control over the compliance loopholes.
Legal Recourse for Residents
Residents facing disputes or non-compliance with the Supreme Court judgement on apartment maintenance charges have several legal avenues to protect their rights:
- RERA Complaint Forum: Residents can file unreasonable charges and non-adherence to agreements as complaints to the RERA authority.
- Consumer Protection Act: Complaints of unfair practice or service defects can be solved through the consumer courts.
- Civil Litigation: Residents can file civil suits for non-transparency or failure to deliver promised services.
- Approaching the Cooperative Societies Registrar: Some of the disputes handled by the Registrar include mismanagement of funds and billing.
- High Courts or Supreme Court: Wider areas of legal dispute may be taken to the higher courts to be interpreted and resolved.
- Mediation and Arbitration: The alternative dispute resolution mechanisms provide friendly ways of resolving disputes without protracted legal battles.
Read Also: Tips for Managing an Apartment Complex
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FAQs
The Supreme Court ruling on apartment maintenance fees emphasized transparency, fairness, and proportionality in the charges, based on the size or use of the apartment, thereby making developers and RWAs accountable
Maintenance charges are calculated by dividing total society expenses among apartments, either proportionately by flat area (per sq. ft.) or equally per unit, depending on society rules.
No, you cannot decline to pay maintenance charges to the society, to which, as a member of society, you must pay a proportion of maintenance charges to maintain common areas and facilities.
A Builder must pay maintenance for unsold flats until the RWA assumes responsibility.