Sarayu Properties & Hotels Pvt. Ltd. Vs District Deputy Registrar (Bombay High Court)
Summary: The Bombay High Court considered a writ petition filed by Sarayu Properties & Hotels Pvt. Ltd. challenging the Competent Authority’s order dated 27 June 2024 granting deemed conveyance in favour of a co-operative housing society under Section 11 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA). The dispute concerned land admeasuring 334 sq. mtrs., forming part of a larger plot admeasuring 919 sq. mtrs. situated at 9th Road, Bandra (West), Mumbai. The promoter contended that the agreements executed with flat purchasers on 20 July 1997 contemplated only a lease of the land and conveyance of the building, and that the Competent Authority could not direct transfer of ownership rights contrary to those contractual provisions.
The petitioner relied upon several clauses of the agreements executed under Section 4 of MOFA, including Clauses 20, 21, 36 and 42, to argue that the society was entitled only to leasehold rights in the land.transferable development rights (TDR), additional floor space index transferable development rights (TDR), additional floor space index (FSI), or development potential arising from subsequent changes in Development Control Regulations. According to the promoter, the Competent Authority exceeded its statutory jurisdiction by granting ownership conveyance and potentially affecting the promoter’s contractual development rights. The petitioner relied on judicial decisions distinguishing leasehold interests from ownership title.
The respondent society argued that Section 11(1) of MOFA requires a promoter to convey the right, title and interest actually possessed by the promoter in the land and building. Since the petitioner admittedly owned the land outright and did not hold it merely as a lessee, it was required to transfer ownership rights rather than substitute a leasehold interest. The society relied on Section 2(c), Section 11(1), Rule 5 and Clause 13 of Form V under the MOFA Rules. It also cited decisions including Nalini Thakkar Vs Mulund Ambe Mahal Co-operative Housing Society Ltd., Gayatri Construction Vs State of Maharashtra and Nihalchand Laloochand Pvt. Ltd. in support of the statutory obligation to convey ownership rights.
Justice Avinash G. Gharote examined Section 11 of MOFA and held that the statutory provision requires the promoter to transfer the title actually possessed by it to the organisation of flat purchasers. The Court emphasised that the petitioner admittedly held ownership title to the property, and therefore the Competent Authority was justified in directing conveyance of ownership rights rather than merely granting a lease. The Court further relied on Clause 13 of the prescribed Form V and the accompanying note describing that clause as non-derogable. Accordingly, the contractual clauses contemplating a lease could not prevail over the statutory requirement of Section 11(1). The Court found no ground to interfere with the deemed conveyanceorder on this issue.
On the promoter’s claim concerning additional construction and future development potential, the High Court clarified that questions relating to the use of additional TDR, FSI or development rights reserved under the flat purchase agreements were outside the Competent Authority’s jurisdiction in deemed conveyance proceedings. Such claims could be pursued through an appropriate civil suit. The deemed conveyance already granted to the society, whether registered or unregistered, would remain subject to any such claim and decree passed by the Civil Court. Consequently, the Bombay High Court dismissed the writ petition while expressly preserving the promoter’s right to seek adjudication of its asserted development rights before the Civil Court. The ruling distinguishes the statutory obligation to convey ownership title under MOFA from separate contractual disputes concerning future development potential.
Cases Discussed
- Nalini Thakkar & Ors. Vs Mulund Ambe Mahal Co-op. Hsg. Soc. Ltd. & Ors. (Bombay High Court) – 2021 SCC OnLine Bom 6590. Relied upon by the respondent society in support of the statutory obligation under MOFA to convey the promoter’s rights in the land and building.
- Gayatri Construction Vs State of Maharashtra & Ors. (Bombay High Court) – 2024 SCC OnLine Bom 438. Relied upon by the respondent society for the proposition that contractual restrictions cannot defeat the statutory requirement to convey the promoter’s rights in the land.
- Nihalchand Laloochand Pvt. Ltd. (Bombay High Court) – 2008 (6) Mh.L.J. 47. Relied upon by the respondent society in support of the contention that statutory provisions of MOFA prevail over inconsistent contractual clauses.
- Kiran Tandon Vs Allahabad Development Authority & Anr. (Supreme Court) – (2004) 10 SCC 745. Relied upon by the petitioner in support of the distinction between leasehold rights and ownership title.
- The Collector of Bombay Vs Khatizabai Dharsi Somji Dossa (Bombay High Court) – 1961 SCC OnLine Bom 32. Relied upon by the petitioner concerning the legal distinction between a lease and ownership title.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard Mr.Khandeparkar, the learned counsel for the petitioner. The petition questions the order dated 27.06.2024 passed by the Competent Authority under Section 11 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, (“MOFA”) granting a deemed conveyance to the respondent No.2 in respect of land admeasuring 334 sq.mtrs. which is the part of the larger area admeasuring 919 sq. mtrs. of plot bearing C.T.S. No.1073-B (part) 9th Road, TPS- IV, Bandra (West), Bombay – 400 050.
2. Mr.Khandeparkar, the learned counsel for the petitioner contends, that since Section 4 agreement dated 20.07.1997 (page 44), which is the standard agreement with all the flat purchasers, contains, a clause that what would be granted to the society, would be a lease of the land and a conveyance of the building, the Competent Authority by passing the impugned order and granting conveyance of the land, has clearly erred in law, as it could not have gone beyond the terms of Section 4 agreement. He invites my attention to Clauses 20, 21, 36 and 42 of the aforesaid agreement to contend that they only contemplate grant of a lease and not otherwise. He further submits, that under the terms of the Section 4 agreement, the petitioner, has reserved its right to utilize its entire original plot, by making additional construction by using additional T.D.R., which may be permissible to be loaded on the plot or permissible to be otherwise used, on account of change in the Development Control Regulation. He submits that clauses of the Section 4 agreement, indeed reserved such a right in the petitioner, for which he invites my attention to clauses (g) and (j) (page 46) clauses 13, 17 and other clauses of the aforesaid agreement, which permit him to do so. He therefore contends that the Competent Authority while directing a deemed conveyance under Section 11(3) of MOFA, could not have transgressed the terms of Section 4 agreement by directing the conveyance instead of lease in favour of the respondent No.2 or for that matter, done away with the rights of the petitioner to make further development in terms of the clauses, as contained in Section 4 agreement. For the purpose of substantiating his submission, that a lease cannot be construed as a title, he places reliance upon the judgment of this Court in the case of The Collector of Bombay vs. Khatizabai Dharsi Somji Dossa, reported in 1961 SCC OnLine Bom.32, paragraphs 29 to 33 and the judgment of the Supreme Court in the case of Kiran Tandon vs. Allahabad Development Authority & Anr. reported in 2004(10) SCC 745 paragraphs 21 and 22.
3. He also invites my attention to Rule 9 (2) (iii) of Rules under Real Estate Regulatory Authority (RERA), to contend that considering the changes in circumstances, which has occurred over a period of time, both in the law and factuality, according corrections in the law, have been reflected there, and that should also be the approach of the Competent Authority under Section 11 (3) of MOFA. He however, does not dispute, that in the present case, the petitioner is the owner of the property, having absolute title and is not a lessee of the said property from any one.
4. Mr.Kamat, the learned senior counsel for the respondent 2, submits, that though the Section 4 agreement contemplates, a lease to be granted in favour of the society, in respect of the land in question, however, Section 11(1) of MOFA, contemplates a situation of transfer of right, title and interest of the Promoter, which in view of the definition in Section 2 (c) of MOFA includes the owner of the property and therefore, in this case, since it is an admitted position, that the petitioner owns the property, it is the title he possesses, which is required to be transferred to the society and not a lease, as may be contemplated by clauses 20, 21 and 36 of Section 4 agreement, as according to him Section 11(1) of MOFA would have an overriding effect upon the clauses of the agreement, which is supported by clause 13 of Form-V under Section 4 read with Rule 5 of MOFA. In this context, he places reliance upon the judgments of this Court in case of Nalini Thakkar & Ors. vs. Mulund Ambe Mahal Co-op. Hsg. Soc. Ltd. & Ors., reported in 2021 SCC Online Bom. 6590, paragraphs 14 and 15 and in the case of Gayatri Construction vs. State of Maharashtra & Ors., reported in 2024 SCC OnLine Bom. 438. He also relies upon the judgment in the case of Nihalchand Laloochand Pvt. Ltd. reported in 2008 (6) Mh.L.J. 47, paragraph 14 to contend that the provision of MOFA would override any clause in the Section 4 agreement. He therefore, submits that any claim by the petitioner, of grant of lease, instead of conveyance, would not stand to reason.
5. The learned AGP appearing for the respondent No.1 supports the impugned order.
6. Section 11 of MOFA reads as under:
“11. Promoter to convey title, etc, and execute documents, according to agreement
(1) A Promoter shall take all necessary steps to complete his title and convey to the organisation of persons, who take flats, which is registered either as a co-operative society or as a company as aforesaid, or to an association of flat takers or apartment owners his right, title and interest in the land and building, and execute all relevant documents therefor in accordance with the 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 property which may be in his possession or power.
(2) It shall be the duty of the promoter to file with the Competent Authority, within the prescribed period, a copy of the conveyance executed by him under subsection (1).
(3) If the Promoter fails to execute the conveyance in favour of the co-operative society formed under Section 10 or, as the case may be, the company or the association of apartment owners, as provided by sub-section (1), within the prescribed period, the members of such co-operative society or, as the case may be, the company or the association of apartment owners may, make an application, in writing, to the concerned Competent Authority accompanied by the true copies of the registered agreements for sale, executed with the promoter by each individual member of the society or the company or the association, who have purchased the flats and all other relevant documents (including the occupation certificate, if any), for issuing a certificate that such society, or as the case may be, company or association, is entitled to have an unilateral deemed conveyance, executed in their favour and to have it registered.
(4) The Competent Authority, on receiving such application, within reasonable time and in any case not later than six months, after making such enquiry as deemed necessary and after verifying the authenticity of the documents submitted and after giving the promoter a reasonable opportunity of being heard, on being satisfied that it is a fit case for issuing such certificate, shall issue a certificate to the Sub-Registrar or any other appropriate Registration Officer under the Registration Act, 1908, certifying that it is a fit case for enforcing unilateral execution of conveyance deed conveying the right, title and interest of the promoter in the land and building in favour of the applicant, as deemed conveyance.
(5) On submission by such society or as the case may be, the company or the association of apartment owners, to the Sub-Registrar or the concerned appropriate Registration Officer appointed under the Registration Act, 1908, the certificate issued by the Competent Authority along with the unilateral instrument of conveyance, the Sub-Registrar or the concerned appropriate Registration Officer shall, notwithstanding anything contained in the Registration Act, 1908, issue summons to the promoter to show cause why such unilateral instrument should not be registered as ‘deemed conveyance’ and after giving the promoter and the applicants a reasonable opportunity of being heard, may, on being satisfied that it was a fit case for unilateral conveyance, register that instrument as ‘deemed conveyance’.”
7. The language of Section 11 (1) of MOFA contemplates that a Promoter has to take all necessary steps to complete his title and convey to the organization his right, title and interest in the land and building. This would indicate, that the title, which the Promoter, possesses, will in turn has to be transferred to the society of flat purchasers and therefore it is not necessary to go into the issue that Section 4 agreement contemplates a lease as Section 11 of the MOFA will prevail. In the instant case, it is not disputed that the Promoter is the owner of the land and therefore, has a clear title to the land in question and not a lease, in view of which, the direction for deemed conveyance, vis-a-vis the title, which the respondent No.2 possesses, the order of the Competent Authority of the title of the respondent No.2 to be transferred to the society of the flat purchasers, cannot be faulted with. The plea, that as the agreement, contemplates grant of lease and therefore, under Section 4 read with Section 11 of MOFA, nothing else could have been directed to be conveyed by the Competent Authority, is mis-conceived, as what is mandated in Section 11 (1) of MOFA, would hold the field. This position, is equally supported by Form-V, clause 13, which is in pursuance to Section 4 of MOFA and Rule 5 of Rules famed thereunder and Note 1 appended thereunder, which says that clause 13 of Form-V is non-derogable. In that light of the matter, the grant of conveyance by the Competent Authority, by the impugned order cannot be interfered with.
8. That leads me to the contention of Mr.Khandeparkar, the learned counsel for the petitioner that Section 4 agreement confers right upon the petitioner to utilize the land, by making additional construction, either by loading or making use of additional F.S.I. which may become available to the plot in question, considering the amendments in the Development Control Regulation or any other accretion, which may come with the plot on account thereof. This position, is disputed by Mr.Kamat, the learned senior counsel for the respondent No.2, contending that it is not within the domain or jurisdiction of the Competent Authority to decide this, which is correct.
9. However, it is equally necessary to state that any claim for utilization of the potential of the entire plot, on account of any accretions, to it, either by loading T.D.R. or FS.I. which may become available due to change in the Regulations, which the petitioner claims, in terms of the clauses of Section 4 agreement, is a claim which can always be agitated by the petitioner by instituting appropriate suit in that regard, and therefore, any deemed conveyance which has been granted in favour of the respondent No.2 society whether it is registered or not, would always be subject to such a claim being raised by the petitioner before the Civil Court and any decree being passed therein.
10. In view of what has been stated above, I do not see any reason to interfere in the impugned order. The petition is dismissed however, subject to what has been stated above.
