Sukruti Apartment Co-op Hsg. Soc. Ltd. Vs Tirumala Developers & Ors. (Bombay High Court)
Summary: The Bombay High Court, in Sukruti Apartment Co-operative Housing Society Ltd. v. Tirumala Developers and Others, Appeal From Order No. 326 of 2021, decided on 21 March 2022, dismissed the housing society’s appeal against an interim order staying implementation of a unilateral deemed conveyance certificate issued under Section 11(4) of the Maharashtra Ownership Flats Act, 1963 (MOFA). The dispute concerned whether the Competent Authority could authorise conveyance of the entire property measuring approximately 1,203.90 square metres when the agreements executed by the promoter with individual flat purchasers contemplated creation of a leasehold interest for 98 years over only approximately 668 square metres, along with conveyance of the constructed building. The High Court held that the society’s entitlement was governed by the terms of the agreements and that the Competent Authority could not grant rights exceeding those contractually contemplated. The decision was rendered in an appeal against an interim stay, and the underlying civil suit remained pending.
The property originated from a conveyance deed dated 31 December 1979, under which Sukruti Builders, the promoter, purchased Plot No. 2, Survey No. 161, CTS Nos. 526/1 to 526/9, situated at Mulund East, Mumbai, measuring approximately 1,203.90 square metres, together with an existing structure known as Bhavani Shankar Bungalow. The promoter subsequently constructed Sukruti Apartments, comprising a ground floor and seven upper floors, on part of that land. Individual agreements for sale were executed with flat purchasers, who later formed the appellant co-operative housing society, registered on 6 October 1986.
The agreements specifically described the portion of land used for construction of Sukruti Apartments and its appurtenant area as approximately 668 square metres, excluding the land occupied by existing structures. Clause 28 provided that the housing society would receive a lease for 98 years at a nominal annual rent of ₹150 in respect of that portion of the land, together with conveyance of the newly constructed building. The distinction between the larger plot and the limited leasehold area was central to the Court’s determination. The agreements did not contemplate an outright transfer of ownership of the entire larger property to the housing society.
Subsequently, on 17 October 2015, Sukruti Builders transferred the larger property to Kishor Associates, subject to the rights of the society. Kishor Associates thereafter conveyed its rights to Tirumala Developers by a deed dated 31 March 2016. Meanwhile, the society had applied on 4 September 2015 under Section 11(3) of MOFA for a unilateral deemed conveyance certificate covering the entire larger plot. Tirumala Developers sought intervention before the Competent Authority, but the authority issued a certificate on 31 May 2016 in favour of the society for execution of conveyance concerning the larger property. The judgment records varying figures at different points for the area described in the certificate; these have been preserved in the full text without reconciliation.
Tirumala Developers challenged the certificate through writ proceedings. On 5 July 2019, the writ petition was withdrawn with liberty to institute a substantive civil suit. The developer thereafter filed S.C. Suit No. 2354/2019 before the City Civil Court at Bombay, seeking a declaration that the certificate dated 31 May 2016 was illegal, void and not binding upon it. By an order dated 7 April 2021, the trial court stayed the effect and implementation of the certificate. The housing society challenged that interim order before the High Court under Order XLIII Rule 1(r) of the Code of Civil Procedure, 1908.
The High Court examined the relationship between Sections 5A, 10 and 11 of MOFA, particularly the scope of the Competent Authority’s powers under Sections 11(3) and 11(4). Referring to Zainul Abedin Yusufali Massawawala v. Competent Authority, Mazda Construction Company v. Sultanabad Darshan CHS Ltd., Jamuna Darshan CHSL v. J.M.C. & Meghani Builders and Grand Paradi CHSL v. Mont Blanc Properties & Industries Pvt. Ltd., the Court reiterated that the statutory conveyance mechanism enforces the obligation already undertaken by the promoter. The Competent Authority must consider the agreements between the promoter and purchasers and cannot confer rights beyond those agreements. These principles have also been examined in subsequent Bombay High Court proceedings concerning the extent of land conveyable under MOFA.
The Court also referred to Angeline Pereira, Writ Petition No. 4373/2017, for the proposition that complicated disputes concerning title or exact quantification of floor space index cannot be conclusively adjudicated in deemed conveyance proceedings. It specifically observed that the agreements with the flat purchasers had been executed in 1981, before the prescribed form of agreement under MOFA was introduced in 1986. Consequently, the society’s entitlement could not be enlarged by reference to statutory agreement requirements introduced subsequently. This distinction between earlier contractual rights and later model-agreement requirements was also central to the Grand Paradi and Jamuna Darshan line of decisions.
The society contended that approximately 668 square metres was disproportionately small having regard to the constructed area and that it had been paying municipal taxes in respect of land exceeding that extent. The High Court rejected those arguments as grounds for interfering with the interim order, emphasising that the promoter had agreed to create a leasehold interest over approximately 668 square metres and not to transfer the entire property. The Court nevertheless clarified that the society was not precluded from seeking adjudication of its rights, title and interest by instituting an appropriate civil suit.
Accordingly, the High Court dismissed the appeal from order, leaving the trial court’s interim protection undisturbed. Interim Application No. 2843 of 2021 was disposed of as infructuous, and the hearing of S.C. Suit No. 2354/2019 was expedited. The decision does not finally determine competing ownership claims in the larger property; it addresses the limits of deemed conveyance under the agreements and the propriety of continuing the interim stay pending substantive civil adjudication.
List of Cases Discussed
1. Zainul Abedin Yusufali Massawawala v. Competent Authority, District Deputy Registrar, 2016 SCC OnLine Bom 6028 (Bombay High Court) — Relied upon for the proposition that the Competent Authority exercising jurisdiction under MOFA cannot disregard the extent of the promoter’s obligations under agreements with flat purchasers. Disputes concerning substantive property title remain subject to civil adjudication. Related discussion: Bombay High Court on deemed conveyance and title.
2. Mazda Construction Company v. Sultanabad Darshan CHS Ltd., 2012 SCC OnLine Bom 1266, also reported at 2013 (2) ALL MR 278 (Bombay High Court) — Applied for the principle that the Competent Authority substitutes the promoter for performance of the statutory conveyance obligation but cannot grant rights beyond the agreements governing the transaction. Related discussion: Judicial principles concerning Mazda Construction.
3. Jamuna Darshan CHSL v. J.M.C. & Meghani Builders and Others, 2009 SCC OnLine Bom 42 (Bombay High Court) — Relied upon concerning the contractual nature of the promoter’s conveyance obligation and the effect of agreements executed before the statutory form was prescribed. Related discussion: Jamuna Darshan and the Grand Paradi principle.
4. Grand Paradi CHSL v. Mont Blanc Properties & Industries Pvt. Ltd. & Another, 2010 SCC OnLine Bom 608 (Bombay High Court) — Applied regarding the limitation of conveyance rights to the nature and extent of interests agreed under the flat purchase contracts, including the distinction between leasehold and ownership rights. Related discussion: Grand Paradi and contractual conveyance rights.
5. Angeline Pereira v. Suyog Industrial Estate Premises & Others, Writ Petition No. 4373/2017 (Bombay High Court) — Relied upon for the principle that disputes concerning ownership, title and exact quantification of FSI cannot be finally adjudicated in proceedings for unilateral deemed conveyance under Section 11 of MOFA.
FULL TEXT OF THE JUDGMENT OF BOMBAY HIGH COURT
1. On 31st May 2016, Competent Authority under Section 5A of the Maharashtra Ownership Flats Act, 1963 (“said Act” for short), in exercise of powers under Section 11(4) of the said Act, issued a Certifcate, in favour of Sukruti Apartment Co-operative Housing Society Limited-appellant, for enforcing unilateral execution of conveyance deed. M/s. Tirumala Developers (plaintiff-respondent no.1) questioned its validity in the suit instituted in the City Civil Court, Bombay. Pending suit, the learned Judge, by order dated 7th April, 2021 stayed the implementation of order of Competent Authority. Feeling aggrieved by that order, appellant-defendant no.1, has challenged it, in this appeal under Order 43(1)(r) of the Civil Procedure Code.
Background facts are as under :
2. M/s. Sukruti Builders-defendant no.3 (hereinafter called “Promoter”), by deed of conveyance dated 31st December, 1979 purchased land bearing Plot no.2, Survey No.161, C.T.S. No. 526/1 to 526/9, Mulund (E), Mumbai admeasuring about 1203.9 sq.mtrs (“said larger plot” for short) alongwith the structure standing thereon known as “Bhavani Shankar Bungalow” from its owners, Urmila K. Madeka and others, through its partners for the consideration and on terms and conditions, more particularly set out therein. Whereafter, Promoter constructed a building on part of the said plot of land, known as “Sukruti Apartments” consisting of ground and seven upper floors and sold flats, vide individual agreements. Later, the flat purchasers formed a Co-operative Housing Society-the appellant herein. A, recital in the agreements, executed by the Promoter reads as under :
“AND WHEREAS M/s. Sukruti Builders are constructing the building consisting of ground and seven upper floors on the portion of the said land (excluding the land under the existing structures), tentatively named “Sukruti Apartments” as per plans, specifications and designs sanctioned by the B.M.C and the said portion of land under the said new building under construction and land appurtenant thereto admeasures about 668 sq.meters, as shown on the plan annexed to the agreement. (emphasis supplied)
The next recital, contains a stipulation that, the Co-operative Housing Society of the flat owners of the Sukruti Apartments, shall have ‘lessees interest’, in the said portion of the said land on which the new building is being constructed, as per details set out in Clause-28 of the agreement. Clause-28 of the agreement, reads as under :
“28. The title which is intended to be created in favour of the Co-operative Society Association or Limited Company, as the case may be in respect of the said new property shall be as under :-
(a). There will be a lease for a term of 98 years at a token rent of Rs.150/- per annum in respect of the said portion of the said land under the aforesaid new building named ‘SUKRUTI APARTMENTS’ and the land appurtenant thereto being part of the said land described in the Schedule I hereunder written and shown on the aforesaid sketch plan hereto annexed, and a Conveyance of the said new building constructed thereon.”
AND
SCHEDULE I ABOVE REFERRED TO :
ALL THAT piece or parcel of land with hereditaments, premises and buildings, admeasuring 1203.90 square metres or thereabout, bearing Survey No.161, Pot No.2 and bearing City Survey No.526 and 526/1 to 9 of Mulund (East), bearing Municipal T-ward No.478 and 479 and situate at Lokmanya Tilak Road, Mulund (East), in the Registration Sub-District and District of Bombay City and Bombay Suburban and bounded on or towards North by Lokmanya Tilak Road, on or towards South by property known as Kesar Baug Dhayphule Private Scheme, on or towards East by the property of Lahensingh Shersingh and Ratanbai Bomanji Patel and on or towards West by property of Vasant Gauri Jadhavji Narbheram and Others.”
3. Thus, under the agreement for sale executed with flat purchasers, promoter had agreed to create ‘lease interest’ in respect of portion of larger plot admeasuring 668 sq.mtrs, in favour of the appellant Society for a term of 98 years.
Dates and Events after Agreements with Flat Purchasers :
4. On 6th October 1986, flat purchasers registered the Society. On 17th October 2015, the Promoter (defendant no.3), sold said larger plot admeasuring 1203.9 sq.mtrs to defendant no.4, subject to rights of the appellant-Society. Later, by Deed of Conveyance dated 31st March, 2016 defendant no.4, sold his rights in the larger plot to the plaintiffs, M/s. Tirumala Developers-respondent no.1. In the meanwhile, on 4th September, 2015 the appellant-Society filed an application under Section 11(3) of the said Act, for a Certifcate to execute unilateral deemed conveyance in respect of said larger plot admeasuring 1203.9 sq.mtrs. Whereafter on 11th April 2016, M/s. Tirumala Developers (plaintiffs), sought intervention in the proceedings before the Competent Authority. However, on 31st May 2016, Competent Authority, issued a Certifcate in favour of Society for executing unilateral conveyance deed in respect of larger plot admeasuring 1209.90 sq.mtrs. Feeling aggrieved by the order dated 31st May 2016, passed by the Competent Authority, plaintiffs questioned its validity in Writ Petition. On 5th July 2019, petition was withdrawn with a liberty to file substantive suit. Pursuant to the liberty, M/s. Tirumala Developers-plaintiffs, instituted S.C. Suit No. 2354/2019 in the City Civil Court at Bombay, seeking declaration that, order dated 31st May, 2016 passed by the Competent Authority, granting unilateral execution of conveyance deed in respect of larger plot admeasuring 1203.90 sq.mtrs was illegal, bad in law, null and void and not binding upon the plaintiffs. Pending suit, the learned trial Court, stayed the effect and implementation of the said order dated 31st May 2016 and restrained the appellants from acting in furtherance of the said order.
5. Question, that falls for consideration is, “Whether, order of Competent Authority, granting unilateral execution of conveyance deed, in favour of appellant-society, in respect of larger plot, was in accordance with the Agreements for sale, executed by the Promoter in favour of flat purchasers ?”
6. In cases of (i) Zainul Abedin Yusufali Massawawala Vs. Competent Authority District, 2016 SCC Online Bom. 6028; (ii) Mazda Construction Company v. Sultanabad Darshan CHS Ltd. 2012 SCC Online 1266; (iii) Jamuna Darshan CHSL Vs. J.M.C. & Meghani Builders and Ors., 2009 SCC Online Bom 42; and (iv) Grand Paradi CHSL Vs. Mont Blanc Properties & Industries Pvt. Ltd. & Anr. 2010 SCC Online Bom.608, this Court held, that :
(i) Reading of Section 10 and 11 of the MOFA, with Section 5A would make it amply clear, what is to be performed by the Competent Authority is the duty and obligation which the Promoter is to perform in law i.e. to convey the title and execute the documents according to agreements;
(ii) When Section 10 and 11 are read together and harmoniously with the preceding Sections, it is to be held that, the Competent Authority has to take into account, entitlement of parties in terms of agreement executed between them and the Promoter.
(iii) Competent Authority cannot permit the parties to pray something that is beyond their agreement with the Promoters and other relevant documents.
7. Therefore, if the Promoter fails to execute the conveyance in favour of Society or Company, or Association of apartment owners, as the case may be, the Company or Association of apartment owners, may apply under Section 11(3) of the Act, for a Certifcate of their entitlement to have unilateral deemed conveyance; In that event, jurisdiction of Competent Authority is confned to sub-section (4) of Section 11. In the case of Angeline Pereira, (WP-4373/2017), this Court has held that, “Contentions regarding title, in respect of the property in question or adjudication in respect of the property in question or adjudication in respect of entitlement of exact quantifcation of FSI on plot in question, cannot be gone into the proceedings under Section 11 of the MOFA”.
Herein, the Promoter had executed agreement with flat purchaser in the year 1981 i.e. before the format of the agreement was prescribed under the MOFA. However, format, under the Act, was prescribed for the first time in the year 1986. Therefore, flat purchasers would be entitled for conveyance of the property, only in terms of agreements with Promoter and nothing more. Therefore, Society could not have applied for conveyance of said larger plot in question and further Competent Authority could not have granted the same. Reason being, Promoters had agreed to create ‘lease interest’ in favour of Society in plot admeasuring 668 sq.mtrs only and not 1203.90 sq.mtrs. Contention of Mr. Damle, learned Counsel for the appellants, that plot admeasuring 668 sq.mtrs (part of said larger plot), which Promoter has agreed to convey, being disproportionate to constructed area of the building and since appellants are paying Municipal taxes for the area exceeding 668. sq.mtrs, Certifcate granted by Competent Authority, cannot be faulted with, requires no consideration. Contention is rejected. However, appellants are not precluded from seeking adjudication of their right, title and interest in property in question by filing suit. For all that reasons, impugned order calls for no interference. Appeal is dismissed.
8. With dismissal of the Appeal from Order, Interim Application No. 2843 of 2021, taken out for stay, does not survive. The same also stands disposed of.
9. Hearing of S.C. Suit No.2354/2019 is expedited.
