Based on the facts stated by you, the Tamil Nadu Apartment Ownership Act, 1994 ("TNAOA") and the Rules framed thereunder contemplate that the bye-laws of an apartment owners' association must be consistent with the Act and cannot override its statutory provisions. Therefore, while the Association has flexibility in framing bye-laws on procedural matters, such bye-laws cannot be inconsistent with the Act, the Rules, or the registered Declaration.
With respect to proxy voting, the first issue is whether the TNAOA, the Rules, or the registered bye-laws specifically permit voting by proxy. If the Act or the registered bye-laws authorize proxy voting, then a duly appointed proxy may ordinarily attend and vote in accordance with the authority conferred. However, where the owner personally attends the meeting, the proxy's authority ordinarily ceases for that meeting, and the owner alone is entitled to exercise the voting right. Any vote cast by the proxy after the owner's presence is recorded should not ordinarily be counted.
Regarding the basis of voting, the scheme of the TNAOA is founded upon the concept of "percentage of undivided interest (UDS)" in the common areas and facilities. Consequently, where the Act, Declaration or bye-laws require decisions based upon percentage interest, voting should ordinarily be proportionate to the owner's undivided interest rather than one vote per apartment. Introducing a "one apartment, one vote" system through the bye-laws, if inconsistent with the statutory scheme or the registered Declaration, may not be legally sustainable.
Where an owner owns multiple apartments, his voting rights would ordinarily correspond to the aggregate undivided interest attached to all such apartments. Likewise, the owner may authorize a proxy to represent him in respect of all such units, unless the bye-laws specifically restrict the scope of a proxy or prescribe otherwise. There is generally no legal prohibition on the same proxy representing more than one owner, provided each owner has executed a valid proxy in accordance with the bye-laws and the proxy does not violate any restriction contained therein.
Coming to the maintenance funds, your understanding is substantially correct. Since the project consists of seven blocks forming part of one approved integrated apartment complex with common infrastructure such as roads, STP, parks, clubhouse, swimming pool, badminton and tennis courts, common entry and exit, and common facilities, the Association is ordinarily expected to manage the common funds for the benefit of the entire complex. The maintenance collected from apartment owners is generally intended for the maintenance, repair and upkeep of the common areas and common facilities of the project as a whole.
While the Association may, for accounting convenience, maintain block-wise expenditure statements or internal cost centres to monitor expenses, creating separate maintenance reserves exclusively for individual blocks and restricting their utilization only to those blocks may not be consistent with the concept of common ownership and common maintenance envisaged under the TNAOA, unless such segregation is expressly authorized by the registered Declaration or the Act itself. The Association cannot, merely through its bye-laws, create rights or obligations that are inconsistent with the statutory framework governing the apartment complex.
Accordingly, if the entire project has been approved as one integrated development and all apartment owners possess proportionate undivided interests in the common areas and common facilities, the better legal view is that the Association should maintain common accounts for common expenses. Separate accounting for administrative purposes may be maintained, but earmarking surplus maintenance collected from one block exclusively for that block's future repairs, thereby excluding its use for common obligations of the Association, may be open to legal challenge unless supported by the Declaration and the Act.
Therefore, while drafting the new bye-laws under the TNAOA, it is advisable to ensure that the provisions relating to proxy, voting rights, quorum, maintenance funds, reserve funds, and common expenses strictly conform to the TNAOA, the Tamil Nadu Apartment Ownership Rules, the registered Declaration and Deed of Apartments, as the bye-laws cannot curtail or enlarge statutory rights created by the Act.