Deemed conveyance can’t be denied if flat purchase agreement mandates promoter to do so: Bombay High Court

MUMBAI: The Bombay high court on Tuesday held that the Competent Authority is bound to grant Deemed Conveyance if the flat purchase agreement contains an obligation on part of the promoter to convey his right, title and interest in the land in favour of the housing society.

A single judge bench of justice Sandeep Marne said the Competent Authority is not supposed to entertain, go into or consider title disputes between the original owners and promoters while considering applications for unilateral deemed conveyance under Section 11(3) of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act (MOFA), 1963.

“If the agreement for flat purchase under Section 4 of MOFA contains obligation on the part of the Promoter to convey his right, title and interest in the land in favour of the Society, the Competent Authority has no option but to issue a certificate of deemed conveyance as per Section 4 Agreement,” said the judge.

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The bench clarified that Section 11 of MOFA imposes an obligation on the promoter to complete his title and to convey his right, title and interest in the land to the Society. Section 11(3), the court said, is a special provision empowering the Competent Authority to do something which the promoter had failed to do despite the mandate of Section 11(1). “Thus, the role of Competent Authority under Section 11(3) is limited to conveying what is agreed upon in the (flat purchase) agreement executed under Section 4,” the court added.

The court was hearing separate petitions filed by the New Manoday Co-operative Housing Society, located in Kanheri village in Borivali East, challenging orders passed by the Competent Authority under MOFA on October 18, 2023, rejecting its application for a unilateral deemed conveyance of land measuring 1,583 square meters.

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The second petition challenged a January 24, 2024, order of the minister, co-operation directing the divisional joint registrar of co-operative societies to initiate action for de-registration of the New Manoday housing society.

Why were these orders passed?

Both the orders had been passed in view of pendency of a civil dispute between the legal heirs of the original landowners regarding some properties, including the 1,583 sq mtrs land on which the society building was constructed way back in 1977. The housing society was registered in November 1978.

While the housing society filed for unilateral deemed conveyance with the Competent Authority under MOFA, the legal heirs of the original landowner filed an application for de-registration of the housing society. They also carried the matter in appeal before the minister, after the divisional joint registrar rejected their plea on April 24, 2023.

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Justice Marne allowed the petitions, saying the Competent Authority neither had jurisdiction nor was he supposed to go into the title disputes between the parties. “All that the Competent Authority was required to do in the present case was to simply read the covenants of agreement executed with the flat purchasers by the promoter,” said the court.

“Failure to perform obligation by the promoter in the present case under Section 11(1) is writ large. Once this position was clear before the Competent Authority, there was no scope for the authority to reject Society’s application for issuance of certificate of unilateral deemed conveyance,” it added and directed the competent authority to issue the unilateral deemed conveyance to the housing society.

As regards the minister’s order, the court said he failed to appreciate that ordering deregistration of cooperative housing society at this distant point of time – after around 46 years -- would result in a completely chaotic situation so far as management of the affairs of the building is concerned.