High Court Directs Unilateral Deemed Conveyance for Thane Housing Societies, Overruling Competent Authority.
09 May 2025
Property Law >> Personal Law
In a significant ruling that reinforces the rights of flat purchasers under the Maharashtra Ownership Flats Act, 1963 (MOFA), the Bombay High Court has set aside an order by the Competent Authority that had rejected an application for unilateral deemed conveyance. The decision mandates the issuance of a certificate of unilateral deemed conveyance to an Association of Cooperative Housing Societies in Thane, encompassing eight buildings with 740 flats and 29 commercial shops.
The case, challenging the Competent Authority's order dated October 15, 2024, revolves around a long-standing dispute between the Association of Cooperative Housing Societies (the Petitioner) and M/s. National Stone Quarry (Respondent No. 6, the Competent Authority, and other respondents including the promoter, Respondent No. 1, and land owners). The Petitioner, an umbrella body for three housing societies (Rameshwar CHS, Mansarovar CHS, and Girija CHS) formed between 2004 and 2011, sought the conveyance of leasehold rights for the property located at Survey No.194/1B, Village Maziwada, Pokharan Road No.3, Thane.
Background of the Dispute:
The land in question, ad-measuring 53,600 square meters, was subject to a 99-year lease granted in 1963. Subsequently, development agreements were executed in 1995 and 2002 with Abhinav Real Estate Private Limited, leading to the construction of eight buildings. Despite the completion of these buildings and the registration of the cooperative societies, the promoter, Respondent No. 1, failed to execute the conveyance deed or assignment of lease within the statutory four-month period mandated by Rule 9 of the MOFA Rules.
This inaction prompted the three societies to form a common Association in April 2022 to pursue deemed conveyance. After a legal notice went unheeded, the Association filed an application under Section 11(3) of the MOFA Act.
Competent Authority's Grounds for Rejection:
The Competent Authority rejected the application based on four primary grounds:
- A status quo order granted by the High Court in an unrelated suit (Notice of Motion No. 2905 of 2009 in Suit No. 36 of 1969).
- The Petitioner-Association was not constituted in accordance with the individual agreements with flat purchasers.
- The project was part of a larger layout still under phased development, and conveyance could only occur upon completion of the entire development.
- The Petitioners were claiming rights in lands earmarked for public purposes (such as Recreational Ground - RG, High Capacity Mass Transit Route - HCMTR) not part of the property agreed to be conveyed.
High Court's Analysis and Decision:
The High Court meticulously addressed each of the Competent Authority's grounds for rejection, finding them to be "either factually untenable or legally unsustainable".
- Status Quo Order: The Court clarified that the status quo order was not binding on the Petitioner or the promoter, as neither was a party to the suit. Furthermore, the suit pertained to redemption of mortgaged property and had no bearing on the statutory obligations under MOFA.
- Constitution of the Association: The Court emphasized that the Petitioner-Association is duly registered under the Maharashtra Cooperative Societies Act, 1960, and its formation by registered societies, with the knowledge and consent of the promoter, falls within the statutory framework. It held that the MOFA governs pre-conveyance obligations, while the MCS Act governs societies post-registration, and individual agreements cannot restrict the right to form such an apex body.
- Phased Development and Indefinite Delay: This was a crucial point. The Court strongly criticized the Competent Authority's reasoning that conveyance could be delayed indefinitely due to future phases of development. Citing its own judgment in Flagship Infrastructure Ltd. v. The Competent Authority, the Court reiterated that clauses in agreements that postpone conveyance indefinitely or tie it to uncertain future events are "void and unenforceable" as they contradict the statutory mandate of Section 11 of MOFA and Rule 9 of the MOFA Rules. The Court noted that the first building was completed 20 years ago, and no further phases have been constructed, applying the maxim "commodum ex injuria sua nemo habere debet" (no person should benefit from his own wrong) against the promoter for delaying the rights of the society.
- Claim for Excess Area/Public Purpose Land: While the promoter argued that the Petitioners were seeking double the agreed area and including lands reserved for public purposes, the Court examined the Architect's Certificate and sanctioned plan. It found that the claimed area of 27,266.651 sq. mtrs. represented the proportionate share based on the sanctioned built-up area of 42,890.404 sq. mtrs., especially considering the utilization of Transferable Development Rights (TDR) by the developer for reservations. The Court clarified that the prospect of future FSI utilization is not a valid justification to refuse deemed conveyance. It stated that the Competent Authority's role is limited to verifying statutory compliance, not adjudicating complex civil disputes over area or proprietary interests.
Conclusion:
The High Court concluded that the Competent Authority's judgment was unsustainable. It held that the conditions for granting a certificate of deemed conveyance under Section 11(3) of MOFA were plainly fulfilled: the promoter had a statutory and contractual obligation to convey, a proper organization of flat takers existed, and the promoter had failed to convey within the stipulated time.
The Court has made the rule absolute, directing the issuance of the deemed conveyance certificate. However, it has clarified that this decision does not foreclose the rights of the respondents to seek adjudication of their independent civil rights, including claims of excess area or proprietary interest, before a competent civil forum. The High Court's judgment is confined solely to the determination of the Petitioners' entitlement under Section 11(3) of the MOFA.