What is Association of People ?

As an alternate to cooperative housing societies, members of a group was allowed to create an Association of Apartment Owners (Persons) for the administration of the affairs of the apartments and the property appurtaining thereto and for the management of common areas and facilities.

Under Bombay NTC Act, formally the association was known as NTC while group not registered under any law is informally Association of Persons (AOP).

Bombay NTC Act 1959

Non Trading Corporations were required to register under provisions of Bombay NTC Act 1959. The entity (NTC) was hybrid of cooperative society, partnership firm and a company, composed of its member to carry out non-trading activities. It was considered as an entity like company, but was unable to trade and hence no equity capital like company existed. Unlike partnership there is no agency principle apply.

Why form AOP or Co operative housing Society ?

The formation of an Association or Society of Apartment Owners is for the self-interest of the apartment owners. Without such a body, the many problems of sharing common services and areas, and undertaking maintenance work for the entire complex, may not be properly handled. However, instead of leaving it to the apartment owners to voluntarily come together to form an association, it is considered a good move to put a provision in the Act, making it mandatory for individual owners to become members, with the promoter being made responsible for its registration. Besides, the legislation also provided required legal backing to a number of issues, which arise in the ownership, and management of an apartment complex.

Byelaws

The byelaws of Association included the constitution, structure, and powers of the Association and its office-bearers, are framed, and these abide the Association. The Act also deal with maintenance, repair and replacement of the common areas and facilities and payment for these, as well as the manner of collecting the share of common expenses from the apartment owners/occupants.

Role of State Government

Before repeal of the Act, State government through administrator used to

  • Register NTC
  • Check Compliance
  • Audit
  • Liquidation of NTC etc.

Taxation

By default if group of persons whether incorporated or not, work together but does not comply with one of essential condition as particular statute provide, such group is considered as Association of Person (AOP), and under Income Tax law, it attract the highest tax slab on its income.

Repeal of Bombay NTC Act 1959

13329 ‘NTC’ were registered in Gujarat till February 2005, when Government of Gujarat repealed the Bombay NTC Act 1959. Existing NTC’s thereafter are treated as mentioned in provision of sec. 7 of Bombay General Clause Act 1904. Repeal Act did not clarify how exactly the existing entities will be treated till the date of repealing the relevant legislation by government of Gujarat.

Reason for Repeal

The Bombay Non-trading Corporations Act, 1959 provides for incorporation, regulation and winding up of non-trading corporations, which are formed for the purpose of promoting or encouraging commerce, industry, literature, arts, science, diffusion of useful knowledge, foundation and maintenance of libraries, museums or such other purposes… (emphasis supplied) 2.7 This was the object of putting the aforesaid Act on the statute book. What follows in the Statement of Objects and Reasons of the Repeal Act is the reason for which the said Act came to be repealed;

…On gaining experience, it has been observed that these types of activities can be undertaken by forming a society under the Societies Registration Act, 1860 or under the Bombay Public Trusts Act, 1950 and therefore, it does not seem necessary to have such a special legislation for the above referred purposes. It is, therefore, considered necessary to repeal the said Act. This Bill seeks to repeal the Bombay Non-trading Corporations Act, 1959, in its application to the State of Gujarat…

Effect of Repeal

Where, this act or any Bombay Act (or Maharashtra Act) made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made then, unless a different intention appears, the repeal shall not

  1. Revive anything not in force or existing at the time at which the repeal takes effect; or
  2. Affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
  3. Affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
  4. Affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
  5. Affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;
    and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed.

Reference

  1. The Bombay Non-Trading Corporations Act, 1959
  2. The Bombay Non-Trading Corporations (Gujarat Amendment) Act, 1963
  3. Registration Certificate under NTC
  4. Bombay General Clause Act 1904
  5. High Court Judgment

10 thoughts on “Association of People – Non Trading Company (NTC)

  1. Where we have to register our non treading corporation (housing flate organisation located in JUNAGADH?

  2. I am a member of a society registered under NTC. The society had prepared a scheme of collecting transfer fee on transfer by sale. This amount keep increasing and now the charge is Rs 50000. Mow I transferred my flat by a gift deed to my son and the society has charged me transfer fee. Is society right in doing so? they had collected this amount from me as deposit and without proper discussion in AGM they decided to charge. Please guide me.

    1. As the NTC act was cancelled in 2005, NTC is governed by the MOA and AOA and resolution passed in AGM. In this case the first step for you would be to ask for MOA, AOA and Copy of resolution passed in AGM and check details.

      In case you do not receive a satisfactory answer, options with you are

      A. Call for SGM with support of at least 1/3 members (MOA and AOA would have an exact number. Please check). Get relevant resolutions passed.
      B. File a case in civil court against the current management committee.

      1. But main point is legal validity of NTC to take money on name of share certificate transfer. Can such old NTC now take money on name of share certificate transfer ? When NTC is not there, how the association can ask for share certificate transfer?

      2. NTC act has got repealed but the existing NTC are still valid body. These bodies are governed by their byelwas / MOA / AOA and resolution passed in their AGM. If above allow them to take transfer fee, then they can charge.

  3. Good Morning Sanjaybhai
    I have one question that there is land asset under NTC that was purchased in 2001 and now the members want to sell it as on today then what are the parameters need to check out and to whom the members can sell the land assets and what are other elements to keep in mind and how to calculate capital gain on the same.
    looking forward to hear you soon.

  4. HALLOW SIR,
    WE HAVE PURCHASED A FLAT IN 1993 FROM THE MEMBERS OF NTC, (SHARE CERTIFICATE HOLDER) AND NAME OF MY FATHER WAS INITIATE AS OWNER IN SHARE CERTIFICATE VIA A.G.M RESOLUTION.
    AT THAT TIME SALE DEED WAS NOT REGUSTERED, IS THIS TRANSFER IS LEAGAL OR NOT ?
    IS SALE DEED WAS COMPELSORY FOR TRANSFER OF NTC PROPERTY OR NOT ?

    1. Based on available information, one can assume that NTC is land owner and they have constructed the flats and allotted flats to members based on share certificate. Answer to your questions are based on above assumption.

      1. Yes transfer is valid.
      2. Again it depends on who is the owner of the land. If NTC is owner of land and constructed the property. Then based on share certificate allocation is valid. If not, then it is not valid.

      1. Respected Sanjay Sir,

        I am interested in buying the resale flat registered under NTC in 1995. The seller party owns original sale deed made in 1995. The property owners does not have a share certificate with them. Is it valid to buy the property just on the basis of sale deed or certificate is mandatory? The owners of the flat are insisting that the sale deed is a legal proof of ownership and NTC share certificate in name of owner is not a mandatory requirement now. Guide me in this matter. Thanking you,

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