Calcutta High Court directs Competent Authority to enquire alleged irregularities in Diamond City West Apartment Owners’ Association

calcutta high court

Calcutta High Court: In a petition seeking Court’s opinion about the Competent Authority’s obligation to investigate the irregularities regarding illegal functioning of the Diamond City West Apartment Owners’ Association (Association) under Section 16-B of the West Bengal Apartment Ownership Act, 1972 (the Act), a single-judge bench comprising of Sabyasachi Bhattacharyya,* J., held that the Competent Authority is obligated to investigate the complaints regarding the functioning of the Association and directed the Competent Authority to conduct a preliminary investigation and form an opinion within two weeks. The Court rejected the respondents’ arguments against individual members filing complaints with the Competent Authority.

Factual Matrix

In the instant matter, the petitioner is a flat owner and a Board Manager of the Diamond City West Apartment Owners’ Association, which is a residential complex registered under the Act. The petitioner lodged complaints about the illegal functioning of the Association and provided evidence, but the respondent-authorities have ignored them. The complaints concern serious allegations of misappropriation of funds from the public and the petitioner fears account manipulation once evidence is given to the respondents 2 to 11, who are allegedly involved in the misconduct.

The petitioner raised these grievances through numerous emails and WhatsApp messages, but the respondent authorities allegedly suppressed these allegations. It was claim that the Association’s President has never included these grievances as an agenda in Annual General Meetings (AGMs) or Special General Meetings (SGMs).

The petitioner asserted that when they raised grievances marked as Annexure P-10, there was no functioning Grievance Redressal Committee, as two members had become Board Managers and resigned. The Committee was reinstated after the writ petition was filed, with members selected by the respondents.

The petitioner preferred the writ petition before this Court contending that the Competent Authority is obligated to investigate the irregularities under Section 16-B of the Act.

Moot Point

Whether the Competent Authority under the Act has a duty to investigate complaints raised by the petitioner regarding the functioning of the Association?

Legal Arguments

The petitioner contended that the provision of Bye-Law 16(4) of the West Bengal Apartment Ownership Bye-Laws, 2022, is not mandatory. It contended that there is a discrepancy in the number of car parking spaces in the residential society as per the deed of declaration filed under the West Bengal Apartment Ownership Rules, 1974. It was contended that this inconsistency requires amendment, but the respondents 2 to 11 have taken no steps to address it.

The respondent 1-Competent Authority argued that the Act does not grant Competent Authority powers equivalent to a Civil Court. The disputes raised in the case are beyond the jurisdiction of the Competent Authority, as the Competent Authority cannot adjudicate disputed facts, which falls under the jurisdiction of a Civil Court. It was contended that the Act does not confer any statutory right on members, managers, or office bearers of an association to file a petition before the Competent Authority for adjudication. Furthermore, there is no provision in the Act to bar the jurisdiction of Civil Courts. It was further contended that Section 16-B(2) of the Act allows the Competent Authority to act only upon receipt of complaints substantiated by a majority of members dealing with issues like violations of statutory compliance or maintenance of Bye-Laws.

The respondents. 2 to 11 argued that the writ petition is an attempt to address private disputes under the guise of representations to the CA to invoke Article 226 of the Constitution of India. They claim there has been no violation of any statutory provision to warrant Article 226.

Legal Principles

  • Section 16-B of the Act empowers the Competent Authority to investigate and take action if the Board of Managers or Manager of an Association fails to perform its functions under the Act or Bye-Laws, and this is detrimental to the interests of the Association, apartment owners, or against public interest.

  • The Competent Authority can take action based on its own initiative or on the complaint of any person. There is no statutory requirement for the complaints to be forwarded by the Association or the majority of its members.

Court’s Assessment

The Court observed that the scope of the suit between the Association and the promoter does not prevent the Competent Authority from looking into allegations regarding the functioning of the Association raised by one of its members. It was observed that the Competent Authority’s power to act on complaints is not limited to complaints made by the Association or a majority of its members, it also extends to cases where the Association or its top management might be involved in the alleged wrongdoings.

The Court opined that the argument that individual members’ complaints cannot be entertained by the Competent Authority without the Association’s resolution is not supported by law. The Court stated that the Competent Authority’s role is to investigate such allegations, and opposing this role is premature and not justified.

The Court instructed the Competent Authority to conduct a preliminary investigation and form an opinion on whether to issue a show-cause notice to the Manager/Board of Managers based on the allegations.

Court’s Decision

The Court held that the Competent Authority has the duty to conduct a preliminary inquiry into the complaints raised by the petitioner regarding the alleged irregularities in the functioning of the Association and its Board of Managers. The Competent Authority must form an opinion under Section 16B(2) of the Act to determine if a show-cause notice is needed for the Manager/Board of Managers. This inquiry should be completed within a fortnight from the date of the decision.

The Court dismissed the stay order request, emphasizing that it was unnecessary in light of the nature of the order.

[Deepak Agarwal v. State of W.B., 2023 SCC OnLine Cal 3561, order dated 12-10-2023]

*Judgment by Justice Sabyasachi Bhattacharyya

Advocates who appeared in this case :

Mr. Arnab Das, Mr. Amritam Mandal, Ms. Akansha Yadav, Ms. Shipra Naskar, Counsel for the Petitioner

Mr. Suman Ghosh, Mr. Soumen Chatterjee, Counsel for the State

Mr. Sabyasachi Chowdhury, Mr. Suddhasatva Banerjee, Mr. Rajarshi Dutta, Mr. Ashique Mondal, Mr. Proteek Debnath, Counsel for the Respondent 2 to 11

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