NCLAT empowers homebuyers; orders transfer of maintenance to owners association

The management of common areas and facilities of a housing complex must be transferred from the real estate developer to an apartment owners association once it is registered, the National Company Law Appellate Tribunal (NCLAT) has said, strengthening homebuyer’s rights by ensuring that they take charge of residential societies even if a project remains incomplete.

An NCLAT chairperson Justice Ashok Bhushan-led bench ruled a real estate company cannot resist the transfer of maintenance responsibilities to the association once it is registered. “The law clearly envisaged, handing over possession, handing over common area and facilities to the association after registration of association,” said the bench, which included Barun Mitra and Arun Baroka as technical members, in a March 18 order.

The ruling came in response to Supernova Apartments Owners Association’s plea seeking control over the maintenance of their housing society in Uttar Pradesh’s Noida.

Supertech launched the Supernova project in Noida’s Sector 94, consisting of residential towers Nova Residence (East and West). Builder Buyer Agreements were executed in 2011–12, and the project was registered with the Uttar Pradesh Real Estate Regulatory Authority as Supernova Phase I. The Noida Authority issued an occupancy certificate in July 2018, after which possession was handed over to homebuyers.

Supertech signed an agreement with YG Estates Facilities Management Private Limited on September 15, 2019, for the maintenance of all its projects, including Supernova. Supernova homebuyers formed the association registered on May 27, 2023, and demanded the transfer of maintenance responsibilities, including control over the Interest-Free Maintenance Security fund.

The matter escalated when the association moved the tribunal, seeking a direction for the maintenance. The Interim Resolution Professional (IRP) overseeing Supertech Ltd’s insolvency proceedings supported the association’s claim.

NCLAT on December 19, 2024, directed the transfer of maintenance duties to the homebuyers. YG Estates refused to comply, prompting the association to attempt taking control on January 31. The matter was escalated to the city magistrate, and YG Estates sought legal clarification, citing outstanding dues.

After multiple hearings, NCLAT rejected the objections raised, reaffirming that under the Insolvency and Bankruptcy Code, the IRP has authority over the corporate debtor’s (Supertech) assets, including project maintenance. The tribunal ruled that the association being legally registered was entitled to take over maintenance.

“When the statute obliged the promoter to handover the facilities to the association and there is deeming fiction, we are of the view that YG Estates which is nothing but a related party to the corporate debtor and agency nominated by the corporate debtor to carry out the maintenance cannot refuse handover such maintenance to the association,” the tribunal said.

“We are satisfied that YG Estates has no right to resist the handing over of maintenance to the association. The association having been formed and its registration being current, it has all rights and obligations...”

The tribunal rejected a contention that the registration of the association was not as per law. It said the issue regarding non-fulfillment of the conditions for registration cannot be allowed to be raised. “When the association has been registered, it has to be presumed that registration was made after compliance with all necessary requirements,” NCLAT said.

The NCLAT’s decision reinforces the statutory rights of apartment owners’ associations, ensuring that maintenance responsibilities are transferred from promoters to home buyers. It clarified real estate companies under insolvency cannot retain control over common area maintenance through third-party agencies.

NCLAT said issues such as pending dues can be raised before the IRP, which is in charge of all projects and management. “We grant liberty to YG Estates to place its details of dues payable by the homebuyers/association...” It added it is equally open for the homebuyers/association to give the details of liability to YG Estates.