Introduction
The Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 (hereafter referred as the Act) aims to safeguard the interests of flat buyers, regulate real estate transactions, and ensure transparency and accountability in property dealings.
Conveyance refers to the formal transfer of property ownership from the promoter (builder) to the Company, cooperative housing society (CHS) or the legal body of flat buyers. Whereas Deemed conveyance occurs when the promoter fails to execute the conveyance, and the land is transferred to the society by competent authority, allowing society or legal body to become the rightful owner.
Under section 11(1) of the Act, it is mandatory for a promoter to transfer their ownership rights in land and buildings to the organization representing flat purchasers, such as a registered cooperative society, company, or apartment owners. This involves the execution of appropriate documents as per the agreement specified in section 4 of the Act. If there is no specified timeframe for the conveyance, the promoter is required to complete it within four months from the establishment date of the society or company, in accordance with Rule 9 of the Maharashtra Ownership Flats Rules, 1964.
Without conveyance, flat buyers may lack legal recognition and face uncertainties regarding their rights. Conveyance makes the property marketable by recording the title in property cards and revenue records, providing transparency in ownership transition and instilling confidence among all parties involved. Additionally, a housing society with proper conveyance can undertake redevelopment projects, securing additional Floor Space Index (FSI) and Transfer of Development Rights (TDR) for future development options.
Provisions of Section 11 after the 2008 Amendment
The 2008 Amendment (Mah.4 of 2008) introduced crucial additions to the Act, specifically focusing on Section 11 from 11(2) to 11(5). This amendment was necessitated by the prevalence of promoters who, despite properties rightfully belonging to registered co-operative societies, companies, or apartment owners, denied conveyance to retain control over property. Such actions by promoters often stem from motives like financial constraints, insolvency, ongoing legal disputes, incomplete development, leverage in negotiations, negligence, or intentional delays aimed at financial gains or control over maintenance.
Subsequent to the amendment introducing Section 11(3) to the act, if the promoter fails to transfer ownership to the Cooperative society, company, or association of apartment owners formed under section 10 within the stipulated period, members of such legal entity representing flat buyers may file a written request with the relevant Competent Authority. This request must include authenticated copies of the sale agreements signed between the promoter and each member, along with all pertinent documents, including the occupation certificate if accessible. The purpose of this request is to seek issuance of a certificate confirming the entitlement of the society, company, or association to a unilateral deemed conveyance in their favour, which can then be registered accordingly.
Competent Authorities
District Deputy Registrars of Co-operative Societies are appointed as Competent Authorities asper section 5A of the Act in the state for the purpose of deemed conveyance. Whereas in CIDCO areas of Mumbai, the competent authority appointed for deemed conveyance is the Joint Registrar of Co-operative Societies (CIDCO).
Case Overview: Ravi Jagganath Agarwal v/s. Prince Tower CHS Ltd
In the resent ruling on 8th April 2024 by Justice Sandeep V. Marne, by High Court of Bombay in the case of Ravi Jagganath Agarwal v/s. Prince Tower Co-operative Housing Society Limited and Others (hereafter referred as Prince Tower Chs.ltd )on 8th April 2024 delivered by Justice Sandeep V. Marne. Ruled that despite numerous litigations among the involved parties regarding the property’s title and the petitioner’s liability, the competent authority is well within its right to issue an order of deemed conveyance.
In the given case the petitioner challenged an order granting deemed conveyance of land to cooperative society by the competent authority. The petitioner had bought the land in a public auction organised by Municipal Corporation of Grater Mumbai (MCGM) due to unpaid property taxes by the promoter. The society had filed a civil suit against the auction, and the petitioner also filed suits against flat occupiers for eviction under the Maharashtra Rent Control Act. The society later applied for deemed conveyance which was granted by the competent authority, leading to the current legal dispute.
Petitioner, argued that the Competent Authority’s deemed conveyance order is erroneous as it addresses an issue already before the City Civil Court in a suit filed by the Society, highlighting the impropriety of simultaneous proceedings on the same matter. Petitioner also contends that since the Society has challenged the Certificate of Sale granted to the petitioner by MCGM, disputing their ownership, they cannot seek deemed conveyance from the petitioner whose title is contested.
Petitioner asserted that the Society members are tenants, not owners, which is evidenced by MCGM’s correspondence, and until this status gets clarified, whereas the agreements among promoter and respondents are unregistered the deemed conveyance application should not have been entertained. Petitioner emphasized that Section 11 of Act cannot be used as a shortcut to confer title when a suit for the same purpose has been pending, hence petitioner urged for the Competent Authority’s order to be set aside or remanded for fresh consideration.
Respondent represented by Senior Adv. Godbole, opposed the petition and supports the Competent Authority’s deemed conveyance order, citing Section 4A of Act which allows unregistered agreements to be used as evidence for specific performance. In addition, agreement between the promoters and tenets specified ownership of flat to tenants in the developed building and transfer of land title via conveyance to the housing society and apartment hence agreement indicates no futility to petitioners rights.
Senior Adv. Godbole argues that the petitioner, despite knowing about the building’s existence on the land and the promoter’s obligation to convey it to the Society, acquired the property through auction. Whereas the suit challenging the ownership asper the prayers society has sought a declaration that the auction held in Petitioner’s favour by MCGM is not binding on the Society. Alternatively, society sought registration of a Co-operative Housing Society and for execution of Deed of Conveyance by Petitioner in favour of the Society as unilateral deemed conveyance was not introduced in the Act back in 2004. Mr. Godbole contends that the petitioner stepping into the promoter’s shoes doesn’t affect the Society’s right to seek deemed conveyance.
The court ruled in favour of the respondent, deeming the petition misconceived as the Competent Authority’s order granting unilateral deemed conveyance to the Society valid. The dispute over who is obligated to convey the land and building to the Society whether the original promoter or the petitioner is irrelevant due to the deemed conveyance order. However The court noted that initially, the promoter was obligated to convey the land and building to the Society, a duty that transferred to the petitioner after purchasing the land and building in an auction sale.
The court believes that the Society’s right to seek conveyance under Section 11(1) of the Act remains unaffected by the petitioner’s purchase transaction. Considering the broad objective behind the amended provisions of the Act, setting aside the deemed conveyance order and directing the Society to pursue their suit would contradict the purpose of unilateral deemed conveyance in the Act. Therefore, the court dismisses the petition, keeping all rights and contentions of parties in pending suits open for future decision, unaffected by this judgment, and without any orders as to costs. The judgement of court is in accordance to the with various previous judgement but an existing twist in the facts does make this judgement stand out.
Comparison with Previous Rulings
The judgement in this case departs from the landmark rulings of Mazda Construction Company vs Sultanabad Darshan Chs ltd from 2012. Where litigation was pending regarding the inclusion of areas labelled as “garden” and “access” which were also transferred by the deemed conveyance, it was held the Competent Authority had overstepped its bounds as amidst contested claims and ongoing litigation, and non-adherence to the agreement’s terms which did not include areas titled “garden” and “Access”. As the competent authority cannot hence the order was set aside.
In the case of Tushar Jivram Chauhan And Anr vs The State Of Maharashtra from 2015, order for deemed conveyance was contested due to discrepancies in the conveyed area, unauthorized tenancies, and discrepancies between agreements and actual conveyance. The petitioners urged adherence to contractual terms and sanctioned plans asper Municipal Documents. It was held the competent authority has limited powers asper sections 10 and 11of the Act hence they should ensure parties have adhere to the agreed terms before seeking conveyance and adhere to prescribed procedure for fair opportunity. As conveyance orders extend beyond agreed areas according to agreement and lack proper communication to concerned parties it was quashed and set aside.
As in the discussed case of Prince Tower Chs.ltd the Agreement between promoter and purchasers had provisions of deemed conveyance and the existing litigation between the parties had an alternative prayer which stated in event of Petitioner being treated as owner of the suit property, he be directed to register a Co-operative Society and to convey the land and building in such Society where as no land in addition to the agreed land has been conveyed. Therefore, the action of the Competent Authority is found to be in accordance with the act and agreement, and thus the Competent Authority did not exercise non-existing authority.
Conclusion
In conclusion recent ruling in the case of Prince Tower Chs.ltd the High Court’s affirmation of the competent authority’s order signifies the importance of interpreting and enforcing the Act strictly to prevent any abuse of legal principles and procedures or attempts to divert attention away from the essential process of conveyance. As conveyance is right of the Society, flat owners, Company formed by the flat purchasers it can be enforced irrespective of other litigation proceedings. However it is crucial to be done by adhering to the Agreement terms and keeping all the rights and contentions of parties in pending suits open, which should be decided uninfluenced by the observations made in the judgment.
Bombay High Court has illustrated that despite complex legal disputes, the Competent authorities retain the power to issue deemed conveyance orders despite the power being limited thereby facilitating the rightful transfer of ownership in accordance with legislative intent.
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Written By ;- Krishna Aghav | 3rd Year student of BA.LLB (Hons) | Maharashtra National Law University, Mumbai.
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