The National Company Law Appellate Tribunal (NCLAT) has issued a significant ruling ensuring that apartment owners’ associations gain control over the maintenance of their housing societies. The verdict mandates that real estate developers must transfer management responsibilities of common areas and facilities to the owners’ association once it is legally registered.
NCLAT Ruling: Protecting Homebuyers’ Interests
A bench led by NCLAT Chairperson Justice Ashok Bhushan, along with technical members Barun Mitra and Arun Baroka, emphasized that real estate companies cannot resist transferring maintenance duties to registered associations. The ruling, dated March 18, 2025, clarifies that developers must hand over possession of common areas and maintenance funds once the association is legally formed.
This ruling came in response to a plea by the Supernova Apartments Owners Association, seeking control over their housing society’s maintenance from Supertech Ltd. The case highlights a long-standing issue where developers retain control of maintenance through third-party agencies, even after homebuyers have taken possession.
Background of the Supernova Case
Supertech Ltd launched the Supernova Project in Noida’s Sector 94, comprising residential towers Nova Residence (East and West). Builder Buyer Agreements were executed in 2011–12, and the project was registered under the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) as Supernova Phase I. The Noida Authority granted an Occupancy Certificate (OC) in July 2018, after which homebuyers received possession of their flats.
In September 2019, Supertech signed an agreement with YG Estates Facilities Management Pvt. Ltd., assigning it the responsibility of maintaining the common areas of all its projects, including Supernova. However, the Supernova Apartments Owners Association was formally registered on May 27, 2023, and demanded the transfer of maintenance responsibilities and control over the Interest-Free Maintenance Security (IFMS) fund.
Legal Battle for Control Over Maintenance
The matter escalated when the association filed a plea with the tribunal, seeking a directive for the transfer of maintenance from YG Estates. The Interim Resolution Professional (IRP) overseeing Supertech Ltd’s insolvency proceedings supported the association’s claim. On December 19, 2024, NCLAT directed the transfer of maintenance duties to homebuyers. However, YG Estates refused to comply, leading to further legal battles.
On January 31, 2025, the association attempted to take over maintenance responsibilities, but the matter was referred to the city magistrate. YG Estates sought legal clarification, citing pending dues as a reason for withholding the transfer.
NCLAT’s Final Verdict: Homebuyers’ Association Prevails
After multiple hearings, NCLAT rejected all objections raised by YG Estates, reaffirming that under the Insolvency and Bankruptcy Code (IBC), the IRP holds authority over Supertech’s assets, including project maintenance. The tribunal emphasized that once an association is legally registered, the builder must hand over maintenance responsibilities.
The tribunal ruled:
- The developer’s nominee (YG Estates) cannot refuse to transfer maintenance duties to the homebuyers’ association.
- The association is legally entitled to take over the maintenance of the housing society.
- Any outstanding dues can be addressed separately before the IRP, but maintenance control must be handed over immediately.
- The tribunal rejected claims that the association’s registration was not legally valid, stating that once registered, it is presumed to have met all legal requirements.
Impact of the Ruling on Homebuyers and Housing Societies
The NCLAT’s decision reinforces the statutory rights of apartment owners’ associations, ensuring that developers cannot retain control over maintenance through third-party agencies. This landmark ruling will have far-reaching implications:
- Homebuyers will have greater control over the management of common areas and facilities.
- Developers can no longer misuse maintenance funds or impose arbitrary charges.
- Apartment owners’ associations will have more financial transparency, ensuring better upkeep of housing complexes.
- Other associations across India can cite this ruling to claim their rightful control over maintenance from developers.
The tribunal also clarified that YG Estates can submit details of outstanding dues before the IRP, and the homebuyers’ association has the right to contest any such claims.
Conclusion
The NCLAT’s ruling is a major victory for homebuyers across India, setting a precedent for all apartment owners’ associations seeking control over maintenance from developers. This decision not only strengthens homebuyers’ rights but also ensures greater transparency and accountability in housing society management. Going forward, developers must adhere to this legal framework and transfer maintenance duties to registered associations without unnecessary delays or resistance.
