The KARNATAKA OWNERSHIP FLATS (REGULATION OF THE PROMOTION OF CONSTRUCTION, SALE, MANAGEMENT AND TRANSFER) ACT, 1972.

THE KARNATAKA OWNERSHIP FLATS (REGULATION OF THE 
PROMOTION OF CONSTRUCTION, SALE, MANAGEMENT AND TRANSFER) 
ACT, 1972 
ARRANGEMENT  OF  SECTIONS 
Sections: 
 1.  Short  title, extent and commencement. 
 2.  Definitions. 
 3. General liabilities of promoter. 
 4. Promoter before accepting advance payment or deposit to enter into agree  
  ment  and agreement  to be registered. 
 5. Promoter to maintain separate account or sums taken as advance or 
  deposit and to be trustee therefor and disburse them for purposes for 
  which given.  
 6. Responsibility for payment of outgoings till property is transferred. 
7. After plans and specifications are disclosed no alterations or additions  with out      
      consent of persons who have agreed to take the flats; and  defects noticed   
      within a year to be  rectified. 
 8. Refund of amount paid with interest for failure to give possession within speci 
  fied time or further time allowed. 
 9. No mortgage etc., to be created without consent of parties after execution of    
        agreement for sale. 
10. Promoter to take steps for formation of co-operative society or company. 
11. Promoter to convey title, etc., and execute documents, according to agree  
  ment. 
12. General liabilities of a person who takes a flat. 
13. Manager not to cut off, with-hold, curtail or reduce essential supply 
   or service. 
14. Offences by promoter. 
15. Offences by Companies. 
16. Power to make rules. 
17. Act to be in addition to Transfer of Property Act and to over-ride 
   contract to the contrary. 
18. Act not to apply to the State Government, Housing Board, etc.  
 
* * * *  
 
 STATEMENT OF OBJECTS AND REASONS 
 Act 16 of  1973.-  Separate law is being made to  declare that flats or 
apartments in multistoreyed building ma y, for all purposes, be heritable and 
transferable immovable property.  Owners  of such flats or apartments enjoy 
exclusive ownership of their flats or  apartments while retaining an undivided 
interest in the common areas and facilities which are to be used and owned by all 
such owners jointly. 
 An enterprising individual or group of individuals may either construct out of 
his or their own funds multistoreyed bu ildings consisting of a number of self 
contained flats or apartments and sell them to individuals on ownership basis, or 
construct such buildings after collecti ng contributions from  intending purchasers 
of such flats or apartments. 
 In the interest of the intending purchasers who advance funds it is necessary 
to regulate the construction, sale , management and transfer of flats or 
apartments by individuals or group of  individuals who construct such 
multistoreyed buildings. 
 Hence the Bill. 
 (Published in the Karnataka Gazette (Ext raordinary) Part IV-2A  dated 2-12-
1972 as No. 580.) 
* * * * 
1[KARNATAKA]1 ACT NO. 16 OF 1973 
(First published in the 1[Karnataka Gazette]1 Extraordinary on the Twenty-third day of 
July, 1973) 
THE 1[KARNATAKA]1 OWNERSHIP FLATS (REGULATION OF THE  
PROMOTION OF CONSTRUCTION, SALE,  
MANAGEMENT AND TRANSFER) ACT, 1972. 
(Received the assent of the President on the Twenty-ninth day of June, 1973) 
 An Act to regulate in the 1[State of Karnataka ]1 the promotion of the 
construction of, the sale and manageme nt and the transfer of flats on 
ownership basis. 
 W HEREAS it is expedient to make provision for the regulation of the promotion 
of the construction, sale and managem ent and transfer of flats taken on 
ownership basis in the 1[State of Karnataka]1; 
 B E it enacted by the 1[Karnataka]1 State Legislature in the Twenty-third Year 
of the Republic of India as follows:- 
 1. Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 01.11.1973 
 1. Short title, extent and commencement.- (1) This Act may be called the 
1[Karnataka]1 Ownership Flats (Regulation of the Promotion of Construction, 
Sale, Management and Transfer) Act, 1972. 
 1. Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 01.11.1973 
 (2) It extends to the whole of the State of Karnataka. 
 (3) It shall come into force on such  1[date]1 as the State Government may, by 
notification in the official Gazette, appoint. 
 1. Act came into force on 01.04.1975 by notification. Text  of the notification is at the end          
of the Act   
 2. Definitions.-   In this Act, unless the context otherwise requires,- 
 (a) ‘flat’ means a separate and self -contained set of premises used or 
intended to be used for residence or office or show-room or shop or godown (and 
includes a garage), the premises forming part of a building; 
 Explanation.-  Notwithstanding that provision is made for sanitary, washing, 
bathing or other conveniences as common to  two or more sets of premises, the 
premises shall be deemed to be separate and self-contained; 
 (b) ‘prescribed’ means  prescribed by rules made under this Act; 
 (c) 'promote’ means a person who constr ucts or causes to be constructed a 
block or building of flats or apartments for the purpose of  selling some or  all of 
them to other persons or to a company, co-operative society or other association 
of persons and includes his assignees; and where the person who builds and the 
person who sells are different persons, the term includes both; 
 (d) ‘Registrar’ means the Registrar as defined in the Kar nataka Co-operative 
Societies Act. 1959 or, as the case may be, in the Companies Act, 1956; 
 (e) ‘to construct a block or building of flats’ includes to convert a building or 
part thereof into flats. 
 3. General liabilities of promoter.- (1) Notwithstanding anything contained 
in any other law, a promoter who intends to constr uct or constructs a block or 
building of flats, all or so me of which are to be taken or are taken on ownership 
basis, shall in all transactions with pers ons intending to take or taking one or 
more of such flats, be liable to give or  produce or cause to be given or produced 
the information and the documents hereinafter in this section mentioned. 
 (2) A promoter, who constructs or int ends to construct such block or building 
of flats, shall,- 
  (a) make full and true disclosure of t he nature of his title to the land on 
which the flats are constructed, or are to be constructed; such title to the land as 
aforesaid having been duly certified by an Advocate of not less than seven years 
standing; 
  (b) make full and true disclosure of all encumbrances on such land, 
including any right, title, interest or claim of any party in or over such land; 
  (c) allow inspection on reasonable not ice of the plans and specifications 
of the building built or to  be built on the land; such plans and specifications 
having been approved by the local authority which he is required so to do under 
any law for the time being in force; 
  (d) disclose the nature of fixtures , fittings and amenities (including the 
provision for one or more lifts) provided or to be provided; 
  (e) disclose on reasonable notice or dem and if the promoter is himself the 
builder, the prescribed particulars as respects the design and the materials to be 
used in the construction of the building and if the promoter is not himself the 
builder disclose, on such notice or dem and, all agreements ( and where there is 
no written agreement, the details of all agreements) entered into by him with the 
architects and contractors regarding the design, materials and construction of the 
building; 
  (f) specify in writing the date by which possession of the flat is to be 
handed over; 
  (g) prepare and maintain a list of fl ats with their numbers already taken or 
agreed to be taken and the names and addre sses of the parti es and the price 
charged or agreed to be charged therefor, and the terms and conditions if any on 
which the flats are taken or agreed to be taken; 
  (h) state in writing, the precise nat ure of the organisation of persons to be 
constituted and to which title is to  be passed, and the terms and conditions 
governing such organisation of persons who have taken or are to take the flats; 
  (i) not allow persons to enter into  possession until a completion certificate 
where such certificate is required to be given under any law, is duly given to the 
local authority; 
  (j) make a full and true disclosure of  all outgoings (including ground rent 
if any, municipal or other  local taxes, taxes on income, water charges and 
electricity charges, revenue assessment, interest on any mortgage or other 
encumbrances, if any); 
  (k) make a full and true disclosur e of such other information and 
documents in such manner as may be prescribed and give or demand true 
copies of such of the doc uments referred to in any of the clauses of this sub-
section as may be prescribed at a reasonable charge therefor. 
  4. Promoter before accepting advance payment or deposit to enter into 
agreement and agreement to be registered.-  Notwithstanding anything 
contained in any other law a promoter who intends to c onstruct or constructs a 
block or building of flats, all or some of which are to be taken or are taken  on 
ownership basis, shall, before he acc epts any sum of money as advance 
payment or deposit, which shall not be mo re than twenty per cent of the sale 
price, enter into a written agreement for sale with each of su ch persons who are 
to take or have taken such flats, and the agreement shall be registered under the 
Registration Act, 1908 and such agreement  shall contain the prescribed 
particulars; and to such agreement ther e shall be attached such documents or 
copies thereof, in respect of such matters, as may be prescribed. 
 5. Promoter to maintain separate account of sums taken as advance  or 
deposit and to be trustee therefor  and disburse them for purposes for 
which given.-  The promoter shall maintain a separate account in any bank of 
sums taken by him, from persons intendi ng to take or who have taken flats, as 
advance or deposit, including any sums so taken towards the share capital for  
the formation of a co-operative society or a company, or towards the outgoings 
(including ground rent, if any, municipal or  other local taxes, taxes on income, 
water charges, electricity charges, revenue assessment, interest on any 
mortgage or other encumbrances, if any);  and he shall hold the said moneys for 
the purposes for which they were given and shall disburse the moneys for those 
purposes, and shall on demand in writing by  an officer appointed by a general or 
special order by the State Government  for the purpose, make full and true 
disclosure of all transactions in respect of that account. 
 6. Responsibility for payment of out goings till property is transferred.-  
A  promoter shall, while he is in po ssession and where he colle cts from persons 
who have taken over flats or are to take  over flats sums for the payment of 
outgoings even thereafter, pay  all outgoings (including ground rent, municipal or 
other local taxes, taxes on income, wate r charges, electricity-charges, revenue 
assessment, interest on any mortgage or ot her encumbrances, if any), until he 
transfers the property to the persons taking over the flats, or to the organisation 
of any such persons. 
 7. After plans and specifications  are disclosed no alterations or 
additions without consent of persons who have agreed to take the flats; 
and defects noticed within a year to be rectified.- (1) After  the plans and 
specifications of  the build ing, as approved by the loca l authority as aforesaid,  
are disclosed or furnished to the person w ho agrees to take one or more flats, 
the promoter shall not make,- 
  (i) any alterations in the structures described therein in respect of the flat 
or flats which are agreed to be taken, without the prev ious consent of that 
person; or 
  (ii) any other alterations in the stru cture of the building,  or construct any 
additional  structures, without the previous  consent of all the persons who have 
agreed to take the flats. 
 (2) Subject to the provisions of sub-section (1), the building shall be 
constructed and completed in accordanc e with the plans and specifications 
aforesaid. 
 (3) If any defect in the building or mate rial used, or if any unauthorised change 
in the construction is brought to the notic e of the promoter wit hin a period of one 
year from the date of handing over possessi on, it shall wherever possible, be 
rectified by the promoter without further charge to the persons who have agreed 
to take the flats, and in other cases su ch persons shall be entitled to receive 
reasonable compensation for such defect or change. 
 (4)  Where there is a dispute as regards any defect in the building or material 
used, or any unauthorised change in the construction or as to whether it is 
reasonably possible for the promoter to rect ify any  such  defect or change or as 
regards the amount of reas onable compensation payable in respect of any such 
defect or change which cannot be,  or is not, rectified by the promoter the matter 
shall, on payment of such fee as may be prescribed, be referred for decision to 
such officer not lower in rank than a Superintending Engineer as the State 
Government may by general or special order specify in this behalf, within a 
period of two years from the date of handi ng over possession.  Such officer shall 
after such enquiry as he deems necessary, record his decision, which shall be 
final. 
 8. Refund of amount paid with inte rest for failure to give possession 
within specified time or further time allowed.-  If,- 
 (a) the promoter fails to give possessi on in accordance with the terms of his 
agreement of a flat duly completed by the date specified,  or any further 
date or dates agreed to by the parties; or 
 (b) the promoter for reasons beyond his control and of his agents, is unable to 
give possession of the flat by the date specified, or the further agreed date 
and a period of three months thereafter, or a further period of three months 
if those reasons still exist, 
then, in any such case, the promoter  shall be liable on demand (but without 
prejudice to any other remedies to which he may be liable) to refund the amounts 
already received by him in respect of the  flat (with simple interest at nine per 
cent per annum from the date he received the sums till the date the amounts and 
interest thereon is refunded), and the amounts and the interest shall be a charge 
on the land and the construction,  if any, thereon in which t he flat is or was to be 
constructed to the ext ent of the amount due, but subject to any prior 
encumbrances. 
 9. No  mortgage etc., to be creat ed without consent of parties after 
execution of agreement for sale.-  No promoter shall,  after he executes an 
agreement to sell any flat, mortgage or cr eate a charge on the flat or the land, 
without the previous c onsent in writing of the persons  who take or agree to take 
the flats, and if any such mortgage or charge is made or created without such 
previous consent after the agreement referred to in section 4 is registered, it shall 
not affect the right and interest of such persons. 
 10. Promoter to take steps for formation of co-operative society or 
company.- (1) As soon as a minimum number of persons required to form a co-
operative society or a com pany have taken flats, the promoter shall within the 
prescribed period submit an application to the Registrar for registration of the 
organisation of persons who take the  flat s as a co-operative society, or as the 
case may be, as a company; and the promoter  shall join, in respect of the flats 
which have not been taken, in such applicat ion for membership of a co-operative 
society or as the case may be, of a company. 
 (2) Nothing in sub-section (1) shall affe ct the right of the promoter to dispose 
of the remaining flats in accordance with the provisions of this Act. 
 11. Promoter to convey title, et c., and execute documents, according to 
agreement.- A promoter shall take all necessary  steps to complete his title and 
convey to the organisation of persons, who ta ke flats, which is registered either 
as a co-operative society or as a company as aforesaid, or to an association of 
flat-takers his right, title and interest  in the land and building and execute all 
relevant documents theref or in accordance with t he agreement executed under 
section 4 and if no period for the execution of the conveyance is agreed upon, he 
shall execute the conveyance within the prescribed period and also deliver all 
documents of title relating to the proper ty which may be in his possession or 
power. 
 12. General liabilities of a person who takes a flat.-  (1) Every person who 
has executed an agreement to take a flat s hall pay at the proper time and place, 
the price, the municipal taxes, water and electricity charges, ground rent (if any), 
and other public charges payable in respect of the flat taken by him and where a 
co-operative society or a co mpany of persons taking the flats is to be constituted 
co-operate in the formation of such society or company as the case may be. 
 (2) Any person who has executed an agreement to take a flat and who, 
without reasonable excuse fails to comply  with or contravenes sub-section (1) 
shall, on conviction, be punished with fine which may extend to one thousand 
rupees. 
 13. Manager not to cut off, with- hold, curtail or reduce essential supply 
or service.- (1) No person, who is a promot er, or who is in charge of 
management or connected with the management of a block or building of flats 
whether as member of a managing committee,  Director, Secretar y or otherwise, 
or is responsible for the maintenance ther eof (hereinafter in this section referred 
to as “the manager”), shall, without just and sufficient cause, either  by himself or 
through any person, cut off, with-hold or in any manner curtail or reduce, any 
essential supply or service enjoyed by the person who has taken a flat (or by any 
person in occupation thereof through or under him) in respect of the flat taken, or 
agreed to be taken by him. 
 (2) The person who has taken or agreed to take the flat or the occupier may, if 
the manager has contravened the provisions of sub-section (1), make an 
application to the Court for a direction to restore such supply or service. 
 (3) If the Court on enquiry finds that the applicant or the person through or 
under whom he is in occupation has been in enjoyment of the essential supply or 
service and that it was cut off or with-held or curtailed or reduced by the manager 
without just and sufficient c ause, the Court shall make an order directing the 
manager to restore such supply or servic e before a date to be specified in the 
order. 
 (4) The Manager who fails to restore t he supply or service before the date so 
specified, shall for each day during wh ich the default continues thereafter be 
liable upon a further direction by the Court to that effect, to fine which may extend 
to one hundred rupees. 
 (5) Notwithstanding anything contained in any law for the time being in force,- 
  (a) in any area for which a Court of  Small Causes is established under the 
Karnataka Small Causes Courts Act 1964, that Court; and 
  (b) elsewhere, the Court of the Civil Judge, shall have jurisdiction to 
decide any application made under sub-sect ion (2) of and no other court shall 
have jurisdiction to entertain such application.  No appeal shall lie from any order 
made on such application. 
 (6) The District Court, may, for the purpos e of satisfying itself that the order 
made on an application made under sub-section (2) was according to law, call for 
the case in which such order was made and pass such order with respect thereto 
as it thinks fit. 
 (7) Any manager who contravenes the prov isions of sub-section (1) shall, on 
conviction, be punished with imprisonment for a term which ma y extend to three 
months or with fine or with both. 
 (8) An offence under sub-section (7) shall be a cognizable offence. 
  Explanation I.- In this section, essential s upply or service includes the supply 
of water, electricity lights in passages and on stair cases, lifts and conservancy or 
sanitary service. 
 Explanation II.- For the purposes of this sect ion, withholding any essential 
supply or service shall include acts or om issions attributable to the manager on 
account of which the essential supply or service is cut off by the local authority or 
any other competent authority.   
 14. Offences by  promoter.-  Any promoter who, without reasonable excuse, 
fails to comply with or contravenes any prov isions of this Act or of any rule made 
thereunder shall (where no other penalty is expressly provided for) on conviction, 
be punished with imprisonment for a term wh ich may extend to one year or with 
fine which may extend to two thousand rupees, or with both; and a promoter who 
commits  criminal breach of trust of  any amount advanced or deposited with him 
for the purposes mentioned in section 5 shall, on conviction be punished with 
imprisonment for a term which may extend to  four years, or with fine, or with 
both. 
 15. Offences by Companies.- (1) If the person committing an offence under 
this Act is a company, every person who at the time the offence was committed 
was in charge of, and was responsible to the company for the conduct of 
business by the company, as well as the company, shall be deemed to be guilty 
of the offence and shall be liable to be proceeded against and punished 
accordingly: 
 Provided that, nothing contained in this  sub-section shall render any such 
person liable to such punishment provided in this Act if he proves that the offence 
was committed  without his knowledge or t hat he exercised all due diligence to 
prevent the commission of such offence. 
 (2) Notwithstanding anything contained in  sub-section (1) where an offence 
under this Act, has been committed with the consent or connivance of, or is 
attributable to any negligence on the part of, any director, manager, secretary or 
other officer of the company, such dire ctor, manager, secretary or other officer 
shall also be deemed to be guilty of that  offence and shall be liable to be 
proceeded against and punished accordingly. 
 Explanation.- For the purpose of this section,- 
 (a) ‘company’ means a body corpor ate and includes a firm or other 
association of individuals; and 
 (b) ‘director’ in relation to a firm means a partner in the firm. 
 16. Power to make rules.- (1) The State Government may, subject to the 
condition of previous publication, by notification in the official Gazette, make rules 
to carry out the purposes of this Act. 
 (2) In particular and without prejudice to  the generality of the foregoing power, 
such rules may provide for all or any of the following matters, namely:- 
  (a) the particulars as respects t he design and the materials to be used in 
the construction of the building and t he other information and documents to be 
disclosed, the manner in which discloser to be made and the documents of which 
true copies shall be given by the promoter; 
  (b) the particulars to be contai ned in the agreement for sale and the 
documents or copies thereof to be attached to such agreement; 
  (c) the period within which the prom oter shall submit an application for 
registration of a co-operative society or a company; 
  (d) the period within which the promoter shall execute the conveyance; 
  (e) any other matter which has to be, or may be, prescribed under this 
Act. 
 (3) Every rule made under this Act shall be laid as soon as may be after it is 
made before each House of the State Legislature while it is in session for a total 
period of thirty days which may be comprised in one session or in two successive 
sessions, and if, before the expi ry of the session in which it is so laid or the 
session immediately following, both Houses  agree in making any modification in 
the rule or both Houses agree that the rule should not be made, the rule shall 
from the date on which the modification or annulment is  notified by the State 
Government in the official Gazette have effect only in such modified form or be of 
no effect, as the case may be; so however, that any such modification or 
annulment shall be without  prejudice to the validity of anything previously done 
under that rule. 
 17. Act to be in addition to Transf er of Property Act and to over-ride 
contract to the contrary.-The provisions of this Act, except where otherwise 
provided, shall be in addition to the prov isions of the Transfer of Property Act, 
1882, and shall take effect notwithstanding anything to the contrary contained in 
any contract. 
 18. Act not to apply to the State Government, Housing Board, etc.-
Nothing contained in this act shall apply to the State Government or to the 
Karnataka Housing Board constituted under the Karnataka Housing Board Act, 
1962 (Karnataka Act 10 of 1963) or to the Board of Trustees for the Improvement 
of the City of Mysore constituted under  the City of Mysore Improvement Act, 
1903 (Mysore Act 3 of 1903) or to the Boar d of Trustees for the Improvement of 
the City of Bangalore constituted under the City of Bangalor e Improvement Act, 
1945 (Mysore Act 5 of 1945). 
* * * * 
NOTIFICATION 
Bangalore, dated 6th March 1975  [No. FD 27 KHB 75] 
 S.O.  753. - In exercise of the powers c onferred under sub-section (3) of 
section 1 of the Karnatak a Ownership Flats (Regulatio n of the Promotion of 
Construction, Sale, Management and Transfer) Act, 1972 (Karnataka Act No. 16 
of 1973), the Government of Karnataka  hereby appoints the fi rst day of April 
1975 as the date on which the said Act shall come into force. 
      By Order and in the name of the  Governor of Karnataka, 
 
    K.S.RASHEED, 
 Under Secretary to Government, 
  Finance Department (Housing). 
 (Published in the Karnataka Gazette (Ext raordinary) Part IV-2c (ii) dated 10-3-
1975 as No. 806.)  
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