Deemed conveyance can’t be denied due to delay on part of the builder: HC

MUMBAI: In a significant ruling strengthening the rights of homebuyers, the Bombay high court (HC) on Friday held that a developer’s failure to complete a housing project within the stipulated time cannot be used as a reason to deny flat owners their right to deemed conveyance under the Maharashtra Ownership Flats Act (MOFA), 1963.

Deemed conveyance refers to the legal transfer of land and building title from the builder to the housing society, even without the builder’s cooperation, once the society is formed and other legal conditions are met.

Justice Amit Borkar, presiding over a single-judge bench, passed the order while allowing a petition filed by an association of three cooperative housing societies. The group had challenged a decision by the competent authority rejecting their application for deemed conveyance.

The dispute dates back to 1995, when Abhinav Real Estate Pvt Ltd (now Neelkanth Realtors Pvt Ltd) undertook the development of 52,609 sq m of land in Majiwada, Thane. This development plan was reaffirmed in 2002. Eventually, eight residential buildings housing 740 flats and 29 commercial units were constructed and sold to individual buyers. Housing societies — Rameshwar CHS (2004), Mansarovar CHS (2005), and Girija CHS (2011) — were formed under MOFA.

In 2024, frustrated by the builder’s prolonged failure to execute conveyance deeds, the three societies joined forces and formed an association to seek deemed conveyance from the competent authority under MOFA.

However, the builder opposed the move, arguing that the association was formed improperly and that it was already facing de-registration proceedings. The competent authority rejected the application, citing that the land was part of a larger layout and that the builder had plans for further development using additional Floor Space Index (FSI) and Transferable Development Rights (TDR).

Justice Borkar dismissed the developer’s contentions, stating, “The right of flat purchasers to receive conveyance crystallises once the society is formed. This right does not depend on any vague promises or future intentions of the promoter to construct additional buildings or complete an entire layout.”

He added, “Once a reasonable time has passed, the promoter is legally bound to convey the property. In this case, the promoter has neither completed the remaining development nor provided any concrete plan to do so. They cannot be permitted to use their own delay as a shield to obstruct the rights of the society.”

The court directed the District Deputy Registrar, Cooperative Societies, Thane, to issue a deemed conveyance certificate to the association, effectively granting ownership rights to the housing societies.