corporate law
It is often challenging to ascertain the binding effect and nature of resolutions passed by apartment owners’ associations on their members. Key questions arise regarding the enforceability of rules and regulations established by these associations, the governing enactments, and the nature of the resolutions. To address these issues, it is essential to refer to the relevant statute governing the administration of Apartment Owners’ Associations in Karnataka.
The Karnataka Apartment Ownership Act, 1972 (hereinafter referred to as "the Act") provides a framework for the ownership, transferability, and management of apartments in Karnataka.
Section 24 of the Act outlines the nature of decisions made by the apartment owners’ association and their binding effect on owners. According to this section:
The Act determines that all apartment owners, tenants, or any other users of the property must comply with its provisions, as well as the declaration and Bye-Laws established by the Association.
It is a well-established legal principle that agreements, decisions, and determinations made by the apartment owners’ association under the Act of 1972 are binding on all involved parties. For resolutions and decisions to be enforceable, they must align with the provisions of the Act and adhere to the voting percentages set forth in the compliant Bye-Laws. Notably, the Bye-Laws serve as an agreement between the members and the association, thereby making all resolutions, agreements, and decisions made under these Bye-Laws binding on its members.
This principle was reaffirmed in the case of T.P. Daver v. Lodge Victoria, where the Supreme Court, referencing Bonsor v. Musicians’ Union and Maclean v. Workers, emphasized that a contract is formed once members accept the rules and regulations of the association, making them binding on the parties involved.
The detailed understanding of the Karnataka Apartment Ownership Act, 1972, especially Section 24, is crucial for apartment owners and associations. Awareness of the binding nature of resolutions enhances compliance and clarity within the community. Adhering to the established Bye-Laws not only ensures governance but also fosters harmony among members.