Competent Authority's Deemed Conveyance Order Under MOFA Is Summary, Title Disputes Can Be Adjudicated in Civil Suit: Supreme Court - 2025-04-21

SC Upholds Deemed Conveyance Order, Clarifies Limited Scope of Competent Authority Under MOFA

New Delhi – The Supreme Court, in a significant ruling on property law, has held that an order granting a 'deemed conveyance' by a competent authority under Section 11 of the Maharashtra Ownership Flats Act, 1963 (MOFA) is the result of a summary proceeding and does not conclusively decide questions of title. The bench, led by Justice Abhay S. Oka , clarified that aggrieved parties retain the right to file a civil suit to establish their title, even after such an order is passed.

The Court dismissed an appeal challenging a Bombay High Court order that had upheld a deemed conveyance certificate for an entire plot of land in favour of a cooperative housing society, despite a portion of the plot belonging to a third party.

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Background of the Dispute

The case originated from a property dispute between the heirs of the Shah family. A large plot of land in Vile Parle, Mumbai, was originally owned by Champaben Hiralal Shah. In 1987, through a deed of dissolution of their family firm, the plot was partitioned between two brothers, Lalbhai H. Shah and Arun H. Shah .

• Lalbhai 's Plot: Allotted for development. Lalbhai later brought this plot into a new partnership firm (the developer, Respondent no. 10), which constructed a building and sold flats to members of the respondent cooperative society.
• Arun's Plot : A smaller portion with an existing building (Building No. 3) was allotted to Arun H. Shah HUF (the appellant).

The deed of dissolution explicitly stated that upon development, the developer or the subsequent cooperative society would execute a perpetual lease for the Arun Plot in favour of Arun H. Shah HUF.

After decades of delay by the developer in conveying the title, the cooperative society filed an application under Section 11 of MOFA, seeking deemed conveyance of the entire larger plot. The competent authority granted the certificate, which was upheld by the Bombay High Court, leading to the present appeal in the Supreme Court.

Arguments Before the Court

Appellant's Arguments ( Arun H. Shah HUF): - The competent authority under MOFA lacks the jurisdiction to grant conveyance for the " Arun Plot ," as it was never part of the development agreement between the promoter and the flat purchasers. - The authority cannot adjudicate on complex and disputed questions of title, especially when they affect the rights of third parties like the appellant. - The proceedings under Section 11 are summary in nature and cannot be a substitute for a civil suit to determine ownership rights.

Respondent's Arguments (The Cooperative Society): - The developer's obligation under the flat purchase agreements was to convey the property, and the appellant's rights were protected by the provision for a perpetual lease. - The larger plot was never officially subdivided, making conveyance of the whole plot necessary. - The MOFA is a beneficial legislation designed to protect flat purchasers from malpractices by developers, and the deemed conveyance mechanism is a crucial tool to enforce their rights.

Supreme Court's Analysis and Ruling

The Supreme Court undertook a detailed interpretation of the powers vested in the competent authority and the registering officer under Section 11 of the MOFA. The bench made several key observations:

> "The competent authority, while following the summary procedure, cannot conclusively and finally decide the question of title. Therefore, notwithstanding the order under sub-section (4) of Section 11, the aggrieved parties can always maintain a civil suit for establishing their rights."

The Court highlighted that the purpose of Section 11 is to provide a speedy remedy to flat purchasers against promoters who fail to convey title. The proceedings are summary, as evidenced by the rules prohibiting cross-examination.

The bench also clarified the role of the registering officer under Section 11(5), stating: > "The registering officer has no power to sit in appeal over the order of the competent authority... He can refuse registration only on the grounds indicated... such as non-payment of stamp duty or a prohibitory court order."

Applying these principles to the facts, the Court found that the competent authority's order was justified. It noted that the 1987 deed of dissolution, which was binding on the appellant, itself envisioned the execution of a conveyance for the larger plot to a cooperative society, subject to a perpetual lease in favour of the appellant. The impugned order, by mandating the execution of this lease, had in fact protected the appellant's interests.

> "In this case, substantial justice has been done by protecting the appellant's rights as a perpetual lessee with a right to develop the Arun plot. Therefore, interference in writ jurisdiction was not warranted," the Court concluded.

Final Decision and Implications

The Supreme Court dismissed the appeal and upheld the orders of the competent authority and the Bombay High Court. It directed that the registration of the deemed conveyance certificate would be subject to the cooperative society executing a permanent lease in favour of the appellant, as per the terms of the 1987 deed of dissolution and a subsequent 1991 lease deed.

This judgment reinforces the pro-buyer stance of MOFA while balancing the rights of all parties. It clarifies that the deemed conveyance route is a summary remedy to enforce a promoter's obligation and is not a final adjudication of title, for which the doors of the civil court remain open.