The Bombay High Court has clarified that when a promoter enters into a development agreement defining a single plot for a housing project, the statutory obligation under the Maharashtra Ownership of Flats Act, 1963, to execute conveyance extends to the entire plot - regardless of the existence of pre-existing structures - provided the contractual terms and statutory conditions are satisfied. This ruling reinforces the protective intent of MOFA and curbs promoter attempts to retain land through fragmented interpretations of agreements.
Background & Facts
The Dispute
The petitioner, Ghatkopar Chandrodaya Co-operative Housing Society Limited, sought deemed conveyance of a single plot measuring 955.50 sq. mtrs. plus an 84.60 sq. mtrs. road setback area under Section 11 of the Maharashtra Ownership of Flats Act, 1963 (MOFA). The plot contained two buildings: a newly constructed building (New Chandrodaya) sold to flat purchasers, and an older, tenanted structure (Old Chandrodaya) constructed in 1967. The promoter, Tara Construction, had sold flats in the new building and formed the society in 1997 but failed to execute conveyance. Instead, it conveyed the entire plot in 1996 to a third party, Thakershi Meghji Goshar, whose legal heirs (Respondents 5 and 6) now oppose the conveyance.
Procedural History
- 1996: Promoter executed a conveyance deed in favor of Thakershi Meghji Goshar, a partner’s spouse.
- 1997: Flat purchasers formed the cooperative housing society; registration granted by Deputy Registrar.
- 2023: Society filed Application No. 61 of 2023 before the District Deputy Registrar seeking deemed conveyance under Section 11 of MOFA.
- February 2024: Competent Authority rejected the application on three grounds: (i) invalid property card, (ii) non-joinder of necessary parties, and (iii) claim over land under the old building.
- 2024: Writ petition filed before the Bombay High Court challenging the rejection.
Relief Sought
The petitioner sought a certificate for unilateral conveyance of the entire plot, including the land under both buildings, to the society, subject to lease-back arrangements for the old building as contemplated in the agreement.
The Legal Issue
The central question was whether Section 11 of MOFA requires a promoter to convey the entire plot described in the development agreement - even when a pre-existing structure remains under separate management - or whether conveyance is limited only to the land proportionate to the newly constructed building.
Arguments Presented
For the Petitioner
The petitioner argued that the agreement, read as a whole, treated the entire plot as a single development unit under Section 4 of MOFA. Clause 14 of Annexure A unambiguously obligated the promoter to execute conveyance of the "property" - defined as the entire plot after deduction of setback area - once all conditions (completion, sale, registration, receipt of dues) were met. The petitioner relied on the statutory duty under Section 11(3) and Rule 9 of the MOFA Rules, which mandate conveyance within four months of society registration. It further contended that non-joinder and property card defects were curable and不应 override substantive rights.
For the Respondent
Respondents 5 and 6 argued that Section 11 of MOFA applies only to convey the land proportionate to the constructed building, citing Government Resolution 2018 and Mazda Construction Company. They contended that Clause 8 of the agreement preserved the promoter’s ownership over the old building and its land, granting only an optional right to sell flats there in future. They asserted that Clause 14’s reference to "property" must be read in light of Clause 8, which explicitly recognizes the old building as a separate, retained asset. They further claimed that the competent authority’s interpretation was reasonable and not liable to interference under Article 227.
The Court's Analysis
The Court undertook a holistic interpretation of the agreement, emphasizing that Section 4 of MOFA requires promoters to disclose the entire plot’s title, layout, and area. The agreement’s Schedule A defined a single plot of 955.50 sq. mtrs. with a road setback, and both buildings were acknowledged as standing on this unified land. Clause 2 incorporated Annexure A - including Clause 14 - as integral to the agreement, making its terms binding.
"Clause 14 states that after completion, sale of all premises, registration of the society, and receipt of dues, the seller shall execute conveyance of the property in favour of the common organisation. The property is nothing but the said plot referred in the agreement."
The Court rejected the argument that Clause 8 created a permanent exception to conveyance. While Clause 8 granted the promoter temporary rights to manage, lease, or optionally sell flats in the old building, it did not extinguish the statutory duty under MOFA to convey the entire plot. The Court held that dual ownership, if any, was transitional and could not override the finality of Clause 14.
The Court distinguished Mazda Construction Company, noting that case involved conflicting agreements and unclear title, whereas here, the agreement was unambiguous and the plot description consistent. The Court emphasized that MOFA exists to prevent indefinite delay in conveyance, and procedural defects like an outdated property card cannot defeat substantive rights when the identity of the land is undisputed.
Regarding non-joinder, the Court noted that Respondents 5 and 6, as legal heirs of the 1996 transferee, were already parties to the proceedings. Their presence rendered the objection of non-joinder legally untenable.
The Verdict
The petitioner won. The Court held that Section 11 of MOFA mandates conveyance of the entire plot described in the development agreement when the contractual conditions are fulfilled, irrespective of the existence of a pre-existing structure. The Competent Authority’s order was set aside, and the society’s application for deemed conveyance was allowed.
What This Means For Similar Cases
Entire Plot Must Be Conveyed Under MOFA When Defined as Single Unit
- Practitioners must now argue that Section 11 of MOFA applies to the full plot described in Schedule A, not just the built-up area of the new building.
- Promoters cannot evade conveyance by claiming separate ownership of pre-existing structures unless the agreement contains explicit, unambiguous exclusions.
- Societies should insist on conveyance of the entire land described in the original agreement, even if parts are tenanted or separately managed.
Clause 8 Does Not Permanently Exclude Land from Conveyance
- The "option" to sell flats in the old building under Clause 8 is a contingent right, not a permanent reservation of title.
- Any lease-back arrangement under Clause 8 must be implemented after conveyance, not as a substitute for it.
- Courts will not permit promoters to use Clause 8 to indefinitely retain land ownership after society formation.
Procedural Defects Are Curable in MOFA Proceedings
- Minor defects in revenue documents (e.g., outdated property cards) cannot be grounds for rejecting a deemed conveyance application if the land description is consistent across all records.
- Non-joinder of legal heirs is not fatal if the heirs are already parties to the proceedings.
- Competent authorities must focus on contractual and statutory compliance, not technicalities, when adjudicating under Section 11.
