MOFA: Promoter Can't Build on Disclosed Recreational Ground Without Flat Purchasers' Specific Informed Consent; Blanket Agreement Clauses Ruled Insufficient: Bombay High Court - 2025-01-31

Bombay High Court: Promoter Cannot Build on Disclosed Recreational Ground Without Flat Purchasers' Specific Informed Consent

Mumbai, Maharashtra – In a significant ruling reinforcing the rights of flat purchasers under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), the High Court of Bombay has held that a promoter cannot construct an additional building on a Recreational Ground (RG) area shown in the sanctioned layout plan disclosed to flat purchasers without their specific, informed consent. Hon'ble Shri Justice Madhav J.Jamdar , in a judgment dated January 31, 2025, emphasized that general or blanket consent clauses embedded in sale agreements do not meet the statutory requirement of "informed consent."

The Court allowed the Second Appeal (SA/223/2019) filed by Shri. Vitthal Laxman Patil , quashing the concurrent dismissals of his suit by the Trial Court and the Principal District Judge, Thane. The suit sought to prevent Kores (India) Ltd. Real Estate Division (the Promoter) from constructing an additional building (No.16) on a designated Recreational Ground in the Kores Nakshatra Complex, Thane.

Case Background: Dispute Over Recreational Space

The dispute originated from Regular Civil Suit No. 376 of 2010, where flat purchasers, including Shri. Vitthal Laxman Patil , challenged the promoter's plan to construct " Build ing No. 16" on land designated as "R.G.-2" (Recreational Ground No. 2) in the layout plans shown to them at the time of purchasing their flats. The Kores Nakshatra CHS Association Ltd., an apex body of 15 cooperative housing societies comprising 420 flat owners in the complex, intervened in support of the appellant.

The core legal question before the High Court was: "Whether, after making disclosure to flat purchasers of a sanctioned layout plan showing a certain number of buildings and open and amenity spaces including Recreation Ground ('RG') and their locations as per the requirements of Maharashtra Ownership Flats Act (“MOFA”), it is permissible to a promoter to construct an additional building on the RG area shown in the layout plan without seeking consent from the flat purchasers?"

Notably, an earlier order by a Single Judge of the High Court in this Second Appeal had made observations (in paragraph 17) emphasizing the materiality of the disclosed RG locations to the purchasers' decision. The Supreme Court, while modifying a remand order, had explicitly stated that this paragraph 17 was "not disturbed," thereby confirming its findings regarding the promoter's duty of disclosure and conformity.

Arguments Presented

Appellant's Contentions (Shri. Vitthal Laxman Patil ): * Represented by Senior Counsel Mr. Ram Apte, the appellant argued that Build ing No. 16 was not depicted in the brochure or the sanctioned layout plan shown to the flat purchasers. * The Thane Municipal Corporation (TMC) had initially, by letter dated November 21, 2009, indicated that plans for Build ing No. 16 could not be sanctioned on the RG plot. * Under MOFA, any alteration or addition to the disclosed plans requires the prior consent of the flat purchasers. * Reliance was placed on several judgments, including Jayantilal Investments v. Madhuvihar Co-operative Housing Society , to underscore the promoter's duty of full disclosure and the necessity of informed consent.

Respondent No.1's Contentions (Kores India Ltd.): * Senior Counsel Mr. Y.S. Jahagirdar, for the promoter, submitted that necessary disclosures were made in the sale agreements. * Clauses in the agreement allegedly granted the promoter liberty for future development and modifications, constituting informed consent. The sanctioned plan also mentioned "future expansion." * It was argued that the RG area was not being reduced but merely relocated and, in fact, increased. * A letter from the TMC dated April 22, 2010, was cited to suggest no curtailment of the RG area.

Court's Analysis: Upholding MOFA's Spirit

Justice Jamdar meticulously examined Sections 3, 4, 7, 7A, 10, and 11 of MOFA, the MOFA Rules, and the Model Form V agreement. The Court underscored the legislative intent behind MOFA: to protect flat purchasers from abuses and malpractices by promoters.

Key Legal Principles Applied:

Duty of Full Disclosure (Sections 3 & 4 MOFA, Form V): The Court reiterated the Supreme Court's stance in Jayantilal Investments that a promoter has an unfettered statutory obligation to make true and full disclosure of the entire project/scheme to flat takers at the time of the agreement. This includes details of FSI, TDR, and common areas.

Informed Consent (Section 7 MOFA): The judgment heavily relied on the interpretation that "consent" under Section 7 of MOFA must be "informed consent." Citing Madhuvihar CHS (High Court, post-SC remand) , Bajranglal Eriwal , and Neena Sudarshan Wadia , the Court held:

Blanket or general consent clauses obtained at the time of signing the sale agreement do not constitute informed consent.

Informed consent must be specific, freely given after a full disclosure of the particular project or alteration the developer intends to implement.

• • "The word 'consent' in the context of the section does not mean implied consent such as by conduct or acquiescence... Consent in this section is to be understood to mean as positive consent to specific items of work or alteration..." (Para 21, quoting Neena Sudarshan Wadia ).

Application to the Facts:

The Court found that the layout plan shown to purchasers (page 79 of compilation) clearly depicted the location of the RGs. While a sanctioned layout (page 78) mentioned "future expansion," this had materialized as Build ings 14 and 15, with the RG in question shown opposite them.

Crucially, the Court scrutinized Clause 2 of the "Agreement For Sale" which the promoter claimed constituted disclosure and consent. Justice Jamdar observed:

"A bare perusal of the disclosure and consent as contained in clause No.2 of the “Agreement of Sale” is not the informed consent... By no stretch of imagination, it can be said that the said disclosure is full disclosure and consent obtained is an informed consent." (Para 24)

The Court noted that the agreement's disclosure clauses lacked specific particulars regarding FSI, TDR utilization for the new building on the RG, as mandated by Form V of MOFA Rules.

The Court also considered the promoter's obligations under Sections 10 and 11 of MOFA (formation of society and conveyance of title) and the implications of failing to do so, referencing Dosti Corporation , which held that a defaulting promoter cannot exploit FSI/TDR for additional buildings not in the initially approved and disclosed plan without explicit permission.

The Verdict and Its Implications

The High Court answered the substantial question of law in favor of the appellant, holding that:

"...it is not permissible for the promoter to construct an additional building on the R.G. area shown in layout area without seeking consent of the flat purchasers. As already held hereinabove the consent, if any, as contained in the agreement executed by the flat purchasers can not be termed as informed consent." (Para 30)

Consequently, the judgments of the lower courts were quashed and set aside. The suit was decreed, granting the following reliefs: * Declaration that TMC's sanction for Build ing No. 16 plans was illegal. * Direction to TMC to cancel/revoke the sanctioned plans for Build ing No. 16. * Permanent injunction restraining the promoter from constructing Build ing No. 16 or creating any third-party interests therein.

The Court noted that the prayer for formation of society was partly worked out as the society had since been registered, granting liberty to the society to pursue other reliefs. A request to stay the order was rejected by the Court.

This judgment serves as a strong reminder to promoters of their stringent obligations under MOFA regarding disclosure and the necessity of obtaining specific, informed consent from flat purchasers before making material alterations to sanctioned plans, particularly concerning common amenities like recreational grounds promised at the time of sale.