S.11 MOFA: Promoter-Landowner Must Convey Full Ownership, Not Just Lease, To Society; Fresh Deemed Conveyance Plea After Rejection With Liberty Is Maintainable: Bombay HC - 2025-05-08

Law, Judgments & Legal Insights.

Bombay High Court Clarifies Scope of Deemed Conveyance Under MOFA: Promoter's Full Title Transferable, Contested Wing Excluded

Mumbai: In a significant ruling clarifying the powers of the Competent Authority under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), the Bombay High Court, presided by Hon'ble Shri Justice Sandeep V. Marne , has held that a promoter who is also the landowner is obligated to convey full ownership rights to a co-operative housing society, not merely leasehold rights, even if the flat purchase agreements stipulate a lease. The Court also ruled on the maintainability of a fresh application for deemed conveyance after a previous one was rejected with liberty, and determined the exclusion of a contested building wing from such conveyance.

The judgment arose from two writ petitions challenging an order dated November 12, 2024, by the District Deputy Registrar, Co-operative Societies, Mumbai City (4) (Competent Authority), which granted a certificate of unilateral deemed conveyance in favour of Vijay-II Co-operative Housing Society Ltd. ( Vijay-II CHS ).

Background of the Dispute

The case involved a layout developed by promoters (referred as the Bhatia family and M/s. Vijay Builders) on a plot in Borivali, Mumbai. The development included buildings known as Vijay-I and Vijay-II . A structure referred to as 'Wing-D' became a central point of contention.

Writ Petition No. 18739 of 2024: Filed by the Promoters, challenging the deemed conveyance order primarily on grounds of res-judicata (arguing a fresh application by Vijay-II CHS was barred), the grant of ownership rights instead of leasehold rights as allegedly mentioned in MOFA agreements, and the inclusion of Wing-D and its associated land in the conveyance to Vijay-II CHS .

Writ Petition No. 4649 of 2025: Filed by Vijay Co-operative Housing Society Ltd. ( Vijay CHS , another society in the same layout), challenging the Competent Authority's order to the extent it granted a right of way from the main S.V. Road and setback area benefits to Vijay-II CHS .

Previously, Vijay-II CHS 's initial application for deemed conveyance (No. 28/2023) was rejected by the Competent Authority on September 25, 2023. The rejection was primarily because it was filed by a Board of Administrator deemed unauthorized for such a major decision, and the Authority had also made observations that Vijay-II CHS was entitled only to leasehold rights and that Wing-D was a separate structure. However, liberty was granted to file a fresh application. Vijay-II CHS then filed Application No. 142/2024, which was allowed by the impugned order dated November 12, 2024, granting conveyance of land on an ownership basis, including Wing-D.

Key Arguments Presented

Promoters' Contentions (Argued by Senior Advocate Mr. Pravin Samdani): * The fresh application by Vijay-II CHS was barred by res-judicata due to findings in the earlier order of September 25, 2023. * Wing-D was a separate, independent building, not part of Vijay-II CHS , and its occupants were not members. * MOFA agreements only contemplated demise of leasehold rights; the Competent Authority under Section 11 of MOFA could not grant ownership rights contrary to these agreements.

Vijay CHS 's Contentions (Argued by Mr. Sachindra B. Shetye ): * The Competent Authority erred in granting Vijay-II CHS a right of way from the main S.V. Road and setback area benefits, as Vijay-II CHS had alternative access.

Vijay-II CHS 's Contentions (Argued by Mr. Piyush Raheja ): * Res-judicata was not applicable as liberty was granted to file a fresh application, and the previous application was rejected on a technicality (filed by an administrator). * Under Section 11 of MOFA, a promoter (who is also the landowner) is obligated to transfer their entire right, title, and interest in the land. * Wing-D was an integral part of Vijay-II CHS 's building as per sanctioned plans and actual construction.

High Court's Reasoning and Analysis

The Court meticulously examined each contention:

1. Res-Judicata: Justice Marne held that the principle of res-judicata did not bar the fresh application. The Court noted, "once the application was held to be not maintainable [due to being filed by the Administrator], the Competent Authority could not have gone into other contentious issues between the parties on merits." The liberty granted was for a fresh application, allowing all issues to be re-agitated. The Court distinguished the Faime Makers Pvt. Ltd. case, where liberty was conditional upon resolving court complications.

2. Nature of Conveyance: Leasehold vs. Ownership: This was a pivotal issue. The Court emphasized the objective of MOFA: to protect flat purchasers and ensure promoters transfer their complete title. The judgment states: "Section 11 of MOFA does not permit a promoter, who is owner of land, to grant only leasehold rights in the land or building in favour of the society. Whatever is owned by the promoter must fall in the ownership of the society." The Court further clarified that the expression "in accordance with the agreement executed under section 4" in Section 11(1) of MOFA cannot be interpreted to allow promoters to convey less than their full title if they are the landowners. "The contractual covenant in MOFA Agreement cannot defeat the statutory right of association of flat purchasers to have promoter’s title in the land and building conveyed in its name in entirety." Relying on its previous decisions in Gayatri Constructions and Sarayu Properties & Hotels Pvt. Ltd. , the Court affirmed that "the Competent Authority possesses the necessary jurisdiction to direct conveyance of land and building on ownership basis where the promoter is owner of the land by ignoring covenant in the Agreement..."

3. Status of Wing-D and Area of Conveyance: The Court found that Wing-D was consistently treated as a separate entity. The MOFA agreements contemplated excluding land for a third structure (Wing-D). Crucially, Vijay-II CHS itself had never treated Wing-D as part of its building – its occupants were not members, it had separate utilities and taxes, and society documents consistently referred to 40 flats (excluding Wing-D). The Court observed, "Having not treated Wing-D as a part of its building at any point of time, the Society cannot now conveniently claim ownership of Wing-D building and land utilised for its construction." Thus, Wing-D and the land proportionate to its built-up area (as per the promoters' architect's calculations, which were 129.18 sq.mtrs. plus proportionate RG and setback benefits) were to be excluded from the conveyance to Vijay-II CHS . Vijay-II CHS was held entitled to conveyance of 1399.04 sq.mtrs. land, plus 246.89 sq.mtrs. recreational ground, and 335.78 sq.mtrs. setback/DP road area benefit, on an ownership basis.

4. Right of Way ( Vijay CHS 's Petition): The Court dismissed Vijay CHS 's petition, finding no illegality in granting Vijay-II CHS the benefit of the setback/DP road area, similar to what Vijay CHS itself received. The right of way from S.V. Road was deemed a sanctioned access for the entire layout, benefiting all buildings.

5. Scope of Competent Authority's Powers and Remedy of Civil Suit: The Court reiterated that while a certificate of deemed conveyance is not a final adjudication of title (and aggrieved parties can file civil suits, as held in Arunkumar S. Shah HUF ), Section 11 MOFA provides a "speedy remedy through summary proceedings... to ensure that the societies do not have to engage themselves in long legal battles..."

Final Decision and Implications

The High Court:

* Partly allowed the Promoters' Writ Petition (No. 18739/2024).

* Set aside the Competent Authority's order dated November 12, 2024.

* Remanded Application No. 142/2024 to the Competent Authority to issue a fresh certificate of unilateral deemed conveyance to Vijay-II CHS for the modified land area (excluding Wing-D's share) on an ownership basis. The remand is for the ministerial act of issuing the corrected certificate.

* Dismissed Vijay CHS 's Writ Petition (No. 4649/2025).

This judgment provides crucial clarity on the interpretation of Section 11 of MOFA, reinforcing the rights of flat purchasers to obtain full ownership from promoters who own the land, irrespective of restrictive clauses in agreements. It also delineates the circumstances under which distinct parts of a development may be treated separately for conveyance purposes and affirms the maintainability of fresh applications for deemed conveyance when prior rejections come with liberty.