Bombay High Court
Rohini Gupta AND ANRversusDistrict Deputy registrar Coperative Societies AND ORS
- Decided
- Disposal
- Disposed Off
Holding
The Court held that the petitioners, by actively participating in the construction and retaining ownership of the building under the lease, qualify as promoters under Section 2(c) of MOFA, and therefore the Competent Authority correctly exercised jurisdiction under Section 11(3) to grant the deemed conveyance.
Summary
The petitioners, heirs of a 1975 leaseholder, challenged a 23 June 2025 order of the District Deputy Registrar that issued a certificate of unilateral deemed conveyance of 3,901.70 sq.m. of land to Respondent No.3 Society under the Maharashtra Ownership Flats Act (MOFA). The core issue was whether the petitioners, as lessors who actively participated in the construction of the building, qualify as "promoters" under Section 2(c) of MOFA and thus bear the statutory duty to convey both land and building ownership under Section 11(1). The Court examined the lease deed, which gave the lessor control over construction, materials, insurance and eventual ownership of the building, concluding that the lessor indeed acted as a promoter. Consequently, the Court held that a failure to convey existed, giving the Competent Authority jurisdiction to issue the deemed conveyance. The Court rejected the petitioners' arguments on estoppel, natural‑justice violation and lack of jurisdiction, and dismissed the writ petition, upholding the order of deemed conveyance.
Issues considered
- The petitioners' status as "promoters" under Section 2(c) of the Maharashtra Ownership Flats Act, 1963.
- Whether the Competent Authority had jurisdiction under Section 11(3) of MOFA to issue a certificate of unilateral deemed conveyance when an assignment of leasehold rights had already been executed.
- Whether the order of deemed conveyance violated principles of natural justice or was barred by estoppel.
- The extent of rights (leasehold vs ownership) that a promoter can convey under MOFA.
Legislation cited
Subjects
- promoter
- MOFA
- unilateral deemed conveyance
- leasehold
- ownership rights
- natural justice
- estoppel
- co‑operative society
- construction participation
- statutory obligation
Judgment
Neeta Sawant WP 5991 of 2026
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.5991 OF 2026
Rohini Gupta and Anr. ...Petitioners
V/s.
District Deputy Registrar, Cooperative Societies ...Respondents
and Ors.
Mr. Karl Tamboly with Mr. Nilesh Modi i/b M/s. Rustamji & Ginwala Law
Firm for the Petitioner.
Mr. Mayur Khandeparkar with Mr. Devansh Shah, Mr. Hitesh
Rajpurohit, Ms. Ami Oza, Mr. Bishwajeet Mukherjee, Ms. Humera Syed,
Mr. Omkar Mendarkar, Mr. Naman Gupta and Ms. Akanksha Yadav i/b
Impetus Legal Advocates & Legal Consultants for the Respondent No.3
Ms. Savina Crasto, AGP for the Respondent-State.
CORAM: SANDEEP V. MARNE, J.
RESD. ON: 25 AUGUST 2026
PRON. ON: 08 SEPTEMBER 2026
JUDGMENT:
1) Petitioners are the original landowners and are aggrieved by
the order dated 23 June 2025 passed by the District Deputy Registrar, Co-
operative Societies, Mumbai City-3 and Competent Authority
(Competent Authority) issuing Certificate of unilateral deemed
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conveyance of land admeasuring 3901.70 sq.m. in favour of Respondent
No.3-Society.
2) Petitioners’ father late Kundanlal Laxmichand Gupta was
granted land admeasuring 5356.1 sq.yds. equivalent to 4460.37 sq.m. at
Survey no.71, CTS No. 1049/D of Juhu Village, Mumbai Suburban District
under the subdivision sanctioned by Municipal Corporation of Greater
Mumbai (MCGM) vide letter dated 8 November 1974. By Indenture of
Lease dated 4 February 1975, Petitioners’ father granted lease in respect
of larger property in favour of Deepak B. Raheja (Respondent No.5) and
Kamla C. Wadhwa for a period of 98 years commencing from 4 February
1975 and expiring on 14 October 2072. Respondent Nos.4 to 7
constructed building known as “Queens Park” on portion of the larger
property, i.e., portion of land admeasuring 3901.70 sq.m. (said property).
Respondent Nos.4 to 7 sold flats to various purchasers by executing
agreements under Section 4 of Maharashtra Ownership Flats (Regulation
of the promotion of construction, sale, management and transfer) Act,
1963 (MOFA) with the purchasers. The flat purchasers formed
Respondent No.3 Society. By Indenture of Assignment dated 17 March
1978, Respondent Nos.4 to 7 assigned the leasehold rights in respect of
the said property in favour of Respondent No.3 Society for a term of 98
years.
3) On 25 February 2008, Respondent No.3 Society filed
application before the Competent Authority under Section 11 of MOFA
seeking unilateral deemed conveyance of the said property to which late
father of the Petitioner was impleaded as a party Respondent. Upon
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receipt of notice in the name of their late father, Petitioners informed the
Competent Authority that their father had passed away in the year 1981.
The application was allowed by order dated 23 June 2025. Petitioners
claim that they were served with copy of Writ Petition No.15689 of 2025
filed by Chandresh Desai and Shruti Desai on 16 November 2025 in which
there were impleaded and that at this stage they acquired knowledge in
respect of the order dated 23 June 2025 passed by the Competent
Authority. In Writ Petition No.15689 of 2025 filed by Chandresh Desai &
Shruti Desai, the order dated 23 June 2025 passed by the Competent
Authority was challenged and the petition was dismissed on 1 December
2025 since the same was filed by members of the third Respondent-
society.
4) Petitioners have now filed the present Petition challenging
the order dated 23 June 2025 passed by the Competent Authority.
5) Mr. Tamboly, the learned counsel appearing for the
Petitioners submits that the Competent Authority has grossly erred in
exercising jurisdiction under Section 11 of MOFA in the facts and
circumstances of the present case where there is no failure on the part of
the Promoter to fulfill obligation under Section 11(1) of MOFA and
towards fulfillment of that obligation, the Promoters have already
assigned leasehold rights in the land in favour of Respondent No.3
Society vide Indenture of Assignment dated 17 March 1978. That
therefore there is no failure on the part of the Promoters within the
meaning of sub-sections (1) or (3) of Section 11 of MOFA and that
therefore the Competent Authority did not have jurisdiction to entertain
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the application filed by the third Respondent Society. That in any case,
the Competent Authority could not have conveyed ownership rights in
respect of the land in favour of the third Respondent Society. That
Petitioner’s father had granted only leasehold rights in favour of the
promoter and under Section 11(1), promoter can only convey to the
Society what belongs to him. That what is not owned by the Promoter
cannot be conveyed in favour of the Society. He invites my attention to
the relevant clauses in the Agreement for Sale executed with the flat
purchasers which envisaged assignment of only leasehold rights. That
mere covenants in the lease deed for ownership of the building at the end
of lease tenure does not mean that the lessors would lose title qua the
land to the Society. He submits that a private arrangement agreed
between the promoters and flat purchasers for acquisition and ownership
rights in the land does not bind the Petitioners. That in any case,
Petitioners/their father have not been paid the premium as agreed in the
agreements for sale. That mere collection of amounts of Rs.10 per sq.ft.
by the promoter for purchase of right of reversion of the said property did
not mean that the Society would automatically acquire ownership in
respect of the land. He submits that the Society is estopped from claiming
ownership rights once it executed Indenture of Assignment of leasehold
rights. He relies on judgment of the Apex Court in Sanjit Singh Salwan
and Ors. Vs. Sardar Inderjit Singh Salwan and Ors. 1 He relies on
judgment of this Court in Vaidehi Akash Housing Pvt. Ltd. vs. New D.N.
Nagar Co-op. Housing Society Union Ltd. and Others2 in support of his
contention that provisions of MOFA cannot be foisted on Petitioners
1
2025 SCC Online SC 1697
2
2014 SCC Online Bom 5068
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when there is no privity of contract between the society and them. That in
the present case, Petitioners do not have any privity of contract with the
Society and therefore Section 11 jurisdiction cannot be enforced against
the Petitioners by assuming that Petitioners had any statutory or
contractual obligation under the Act. He relies on judgment of this Court
in Grand Paradi CHSL and Ors. Vs. Mont Blanc Properties & Industries
Pvt. Ltd.3 in support of the contention that when agreements provide for
assignment of lease, ownership in the land can never be conveyed in
favour of society. The order passed by the Competent Authority is nullity
since the same is passed against a dead person. That in any case, it is
passed in violation of principles of natural justice. Mr. Tamboly
accordingly prays for setting aside the impugned order of the Competent
Authority.
6) Mr. Khandeparkar, the learned counsel appearing for
Respondent No.3 Society opposes the Petition submitting that the
authority has rightly exercised jurisdiction under Section 11(3) of the
MOFA That Petitioners, in their capacity as landowners, have also
participated in construction of the building and accordingly assumed
obligations of a promoter within the meaning of MOFA. That Petitioners
have caused construction of the building. He takes me through various
clauses of the lease deed in support of his contention that Petitioners
have actively participated in construction of the building. That the lease
was executed only for the purpose of construction of the building. That
this is not a normal/regular lease. He submits that in similar
circumstances, this Court in Haroon Hussain Khatri and Anr. vs. The
3
2010 SCC OnLine Bom 608
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Competent Authority and District Deputy Registrar, Co-operative
Societies, Mumbai Suburban and Ors.4 has held that when construction
is actually caused by the landowners through the lessee, the landowners
are also required to be treated as promoters within the meaning of
Section 2(c) of MOFA.
7) Mr. Khandeparkar further submits that Clause 40 of MOFA
agreements executed with the flat purchasers provide for the promoters
to perfect their title in the land for the purpose of conveyance thereof in
favour of the organization of flat purchasers. That the members of the
Society have contributed for purchase of ownership rights in the land in
accordance with the negotiations between the developers and
landowners.
8) Mr. Khandeparkar submits that the plea of violation of
principles of natural justice raised on behalf of the Petitioners is clearly
misplaced. Petitioners have admittedly received the notice in the
application but took a chance of not appearing before the Competent
Authority. That in any case, no prejudice is caused to the Petitioners who
are already divested of their title in respect of the land. He relies on the
judgment of the Apex Court in Chairman, Board of Mining Examination
and Chief Inspector of Mines & Anr. vs. Ramjee 5 in support of his
contention that natural justice is not an unruly horse and so long as
fairness is shown by the decision maker to the man proceeded against, no
breach of natural justice can be complained of. He submits that there is
no warrant for interference in the impugned order in exercise of
4
Writ Petition No.7627 of 2026 decided on 19 June 2026
5
(1977) 2 SCC 256
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extraordinary jurisdiction under Article 227 of the Constitution of India
since the justice is not on the side of the Petitioners. He relies on
judgment of the this Court in Sushanku Builders Ltd. vs. Apex Grievance
Redressal Committee6 and submits that the SLP against the judgment is
dismissed on 16 May 2025. In support of the plea of absence of prejudice,
he relies on judgment of the Apex Court in State of U.P. vs. Sudhir
Kumar Singh7. Mr. Khandeparkar accordingly prays for dismissal of the
Petition.
9) Rival contentions urged on behalf of the parties now fall for
my consideration.
10) The short issue involved in the present Petition is whether
Petitioners can be treated as "promoters" within the meaning of Section
2(c) of the MOFA. The Petitioners are actually the legal heirs of the
original landowner late Kundanlal Laxmichand Gupta. He executed
Indenture of Lease dated 4 February 1975 in favour of the lessees. The
lease is in respect of the larger property for the period of 98 years. The
building is constructed on the said property (forming part of larger
property) by the lessees / Respondent Nos.4 to 7. The Petitioners have
therefore come out with a case that the promoters in the present case are
Respondent Nos.4 to 7, who had the statutory obligation to convey ‘their’
right, title and interest in the land and the building in favour of third-
Respondent Society. The Petitioners therefore contended that the Society
can, at the best, step into the shoes of the promoters and become lessee
of the Petitioners for remainder period of lease, which is in subsistence
6
Writ Petition No. 8931 of 2024 decided on 27 March 2025.
7
(2021) 19 SCC 706
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till 14 October 2072. It is also contended by the Petitioners that the
leasehold rights have actually been transferred by Respondent Nos.4 and
7 in favour of the Society vide Indenture of Assignment dated 17 March
1978 and that therefore the Society has already secured rights of the
promoters under Section 11 of MOFA and there was no ‘failure’ within the
meaning of Sections 11(1) and (3) on the part of the promoters for the
Competent Authority to exercise jurisdiction.
11) Thus, broadly, two objections are raised by the Petitioners
viz., (i) Respondent No.1-Society cannot secure rights higher than that of
promoters and that therefore they can only secure lease in respect of the
said property, and (ii) since lease is already assigned in favour of the
Society by Indenture of Transfer dated 17 March 1978, the Competent
Authority did not have jurisdiction to entertain application for deemed
conveyance under Section 11(3) of MOFA. I proceed to consider the
objections.
12) To answer the first question as to whether the Petitioners can
secure rights higher than the one possessed by the promoter, rival
positions taken by the parties need to be appreciated. While Petitioners
contend that under Section 11(1) of MOFA, Respondent No.3-Society
cannot secure rights which the promoters did not possess and that
therefore it can secure only leasehold rights in respect of the said
property, it is the contention of the Society that role of the
Petitioners/their father is not restricted in the present case as mere
landowners, but they have actually assumed the obligations of being
promoter(s) and that therefore, whatever rights were possessed by the
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Petitioners, must necessarily be transferred to the Society. To decide the
rival contentions, it would be necessary to have a quick look at only two
provisions of MOFA. Section 2(c) of MOFA defines the term ‘promoter’ as
under:
(c) “promoter” means a person and includes a partnership firm or a body or
association of persons whether registered or not who constructs or causes to be
constructed a block or building of flats or apartments for the purpose of selling
some or all of them to other persons, or to a company, co-operative society or
other association of persons, and includes his assignees; and where the person
who builds and the person who sells are different persons, the term includes
both
13) Thus, promoter is a person, who himself constructs the
building of flats or even a person, who causes construction of a building
comprising of flats. In a given case, the landowner himself can subject the
land to a housing scheme and construct the building if he has necessary
expertise and wherewithal. However, on many occasions, in absence of
expertise and wherewithal with the landowner, he/she requires services of
a professional developer for construction of the building. In the former
case when building is constructed by the landowner himself, there can be
no difficulty in identifying the promoter since the landowner himself
becomes the promoter. In the latter case, a development agreement is
usually executed under which the developer pays consideration to the
landowner (in cash or in the form of constructed area or both) and in return
gets to sell the flats in the building, as if they are his own. In the latter
case therefore, the developer usually is the promoter.
14) However, use of the expression ‘causes to be constructed’ in
Section 2(c) of MOFA widens the definition of the term 'promoter' and
brings within its net every person who causes construction of a building
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comprising of flats. Thus, if landowner merely engages a developer and
constitutes the housing scheme giving full freedom to the developer to
construct the building as per his choice, landowner cannot be said to have
caused construction of the building. On the other hand, if the landowner
participates in the construction activity, thereby deciding the manner in
which the building should be constructed by the developer and/or takes
part in construction thereof and/or sale of flats, in such circumstances,
the landowner can be said to be wearing two hats i.e., landowner as well
as promoter. Therefore, level of participation by the landowner in the
housing project determines whether he is promoter or not.
15) MOFA is a beneficial legislation aimed at the objective of
protecting the interests of flat purchasers as well as their organisation. In
that sense, the definition of the term promoter is deliberately kept
expansive to bring within its net every person, who causes construction of
a building through another person. Therefore, the promoter is not
restricted only to a person, who actually constructs the building. Even a
person, who engages services of professional developer, but also takes
active part in cause of construction would be included in definition of the
term promoter.
16) Mr. Tamboly has relied on judgment of this Court in Vaidehi
Akash (supra) in support of his contention that the Petitioners cannot be
treated as promoters even though they may have engaged a developer to
construct the building. In Vaidehi Akash, the issue with regard to rights
of third-party flat purchasers in redevelopment project undertaken by the
housing society was under consideration. In Vaidehi Akash, the
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developer had created third party rights in favour of various flat
purchasers in respect of sale component of the project during subsistence
of the society’s redevelopment agreement. After the redevelopment
agreement was terminated by the society, flat purchasers sought to
enforce obligations under the flat-purchase agreements against the
society contending that the same were executed during valid subsistence
of the redevelopment agreement. A coordinate Bench of this Court held
that contract between the developer and the society was on a principal-
to-principal basis and that the same did not constitute a partnership or a
joint venture or agency between the two. It was therefore held that third-
party purchasers with whom developer might have entered into
agreements for sale would not have any privity of contract with the
society and that the society would not be responsible for any claims made
by such purchasers against the developer in their respective agreements
for sale. This Court held in paragraphs 82 to 93 as under:
82. The purchasers' rights may, thus, be examined from two angles, one from
the standpoint of the contract between the Society and Vaidehi (who was their
vendor) and the other from the standpoint of the obligations of the Society, if
any, under MOFA.
83. No doubt Vaidehi had been conferred with the authority to deal with the
free sale component of the project by the Society under the Society
Development Agreement, but the question is whether such authority was to be
exercised by Vaidehi for its own sake or on its own account as an independent
contractor or as an agent of the Society. Some of the important clauses of the
Society Development Agreement may be noted in this behalf. These are as
follows:
……
84. The clauses quoted above, read together and in their proper perspective to
be gathered from the whole agreement, clearly envisage the development and
sale of the free sale component of the project by Vaidehi on their own account
and as an independent contracting party and not as agents of the Society. The
contract between Vaidehi and the Society is on a principal to principal basis; it
neither constitutes a partnership nor a joint venture or agency between the two.
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The third party purchasers with whom Vaidehi might enter into agreements for
sale would have no privity of contract with the Society and the Society would in
no way be responsible for any claim made by such purchasers against Vaidehi
under their respective agreements for sale.
85. There being no privity of contract between the Society and the third party
purchasers claiming under Vaidehi, the third party purchasers cannot claim
specific performance of their respective agreements for sale except through
Vaidehi. They stand or fall by Vaidehi. If the rights of Vaidehi are brought to an
end upon a lawful termination of the Society Development Agreement, the third
party purchasers cannot lay any independent claim against the Society or
anyone claiming through the Society. The agreements with third party
purchasers are premised upon a valid, subsisting and enforceable agreement
between their vendors, namely, Vaidehi and the owners, namely, the Society
and in fact refer to the Society Development Agreement in this behalf.
Admittedly, therefore, the third party purchasers had, or at any rate, ought to
have, notice of the Society Development Agreement and its terms and
conditions and Vaidehi's obligations to perform the same. If Vaidehi fails to
perform these obligations, the purchasers cannot but suffer the consequences.
In other words, the purchaser's rights are subject to Vaidehi's rights and not
higher than those. Therefore, from a contractual standpoint, the third party
purchasers have no case against the Society or Rustomjee, who claim through
the Society.
86. Let us now consider if these third party purchasers have any rights under
MOFA against the Society. It is submitted on their behalf that the Society is very
much a ‘promoter’ within the meaning of MOFA as regards their respective
agreements for sale. Learned Counsel for the purchasers rely upon the
definition of “promoter” contained in Section 2(c) of the MOFA. The definition
is in the following terms:
xxx
87. It is submitted that the Society can at any rate be said to have caused the
building of flats to be constructed for the purpose of selling the same and as a
person, who causes such building to be built, is as much a promoter as a person
who sells premises in such building.
88. The Society is the owner of the property and has entered into an agreement
with the developers, i.e. Vaidehi, for redevelopment of its property. The
redevelopment envisages construction of the Society's building to accommodate
its members and also construction of building/s of flats/premises to be sold to
outsiders. The agreement authorizes or entitles the developers to construct
such building/s and sell flats/premises therein to outsiders. Such authority or
entitlement is to the developers' account and in their own right and as an
independent contractor. If in exercise of such authority or entitlement, a
building is constructed by the developers, it cannot be said that such building is
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caused to be constructed by the Society within the meaning of Section 2(c) of
the MOFA.
89. Any other interpretation would lead to anomalous consequences, which
could never have been contemplated by MOFA. The owners of lands entering
into agreements for sale or development agreements with promoters/developers
would be held as being subject to all liabilities of a promoter, such as liability of
disclosure of plans and specifications, outgoings etc. under Section 3 of the
MOFA, entering into agreements in accordance with Section 4, giving
possession of flats and suffering the consequences of Section 8, forming co-
operative societies of flat purchasers under Section 10 and so on. This would be
plainly inconceivable.
90. Prima facie, thus, there is no case to treat the Society, who is merely in the
position of an owner vis-a-vis the third party purchasers, as a ‘promoter’ within
the meaning of MOFA and foist the obligations of a promoter on the Society in
relation to the purchasers.
91. Besides what is discussed above, there are many other difficulties in the way
of many of these third party purchasers. In the first place, it now transpires from
the various proceedings that their vendor, Vaidehi, has proceeded to allot an
area far in excess of its entitlement, which was merely 2,53,500 sq.ft. FSI to start
with and thereafter restricted to 57050 sq.ft. (i.e. after the Rustomjee
Agreement). In fact, what Vaidehi appears to have dealt with is an area far in
excess of even the total FSI (at the rate of 2.4) available on the entire land.
Secondly, the individual transactions are evidenced only in a few cases by
registered agreements with Vaidehi. Many transactions are contained in
unregistered agreements or even allotment letters which are not even stamped.
Many of these transactions appear to be simply financial arrangements. Each
individual case of a third party purchaser would thus be subject to different
considerations based on the entitlement of Vaidehi at the relevant point of time
and the nature and incidents of the individual transaction. But we are dealing
here with the rights of the individual purchasers vis-a-vis the Society and
Rustomjee claimed through Vaidehi and not their rights qua Vaidehi. All these
purchasers certainly have independent rights to claim damages against Vaidehi,
peculiar to their individual cases, but they have prima facie no right to claim
anything from the Society and Rustomjee, much less specific performance of
their individual agreements. In the premises, the individual features of their
respective cases, as noted above, have no relevance to our discussion in this
group of Motions and need not be discussed any further. Even the best placed
amongst them have no leg to stand on as against the Society or Rustomjee.
92. That brings us to sum up the result of the above discussion on the prima
facie case on merits of individual stakeholders. Prima facie, it is clear that
Vaidehi has committed breaches of the Society Development Agreement and
that the termination of the Agreement by the Society was legal and proper.
Vaidehi has not made out any case of its readiness and willingness to perform
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its obligations under the Society Development Agreement. Vaidehi is not
entitled to specific performance of the Society Development Agreement or
restrain the development of the suit property by the Society or Rustomjee. The
Rustomjee Agreement and its confirmation by the Society by the Confirmation
and Supplementary Agreements as well as further Agreement dated 29 January,
2011 between the Society and Rustomjee are valid and proper. Members of the
Society opposing the development through Rustomjee are not entitled to any
interim relief either on the basis of the aforesaid agreements being in breach of
the Society Development Agreement or on the basis of breach of bye-laws or
contravention of the State Government circular dated 3 January, 2009 or on
account of the alleged non-performance of the offer letter by MHADA or the
booklet or directives of MHADA or indeed on account of any alleged FSI
violation or usurpation. The decisions of the Society in connection with the
present dispute are prima facie taken bona fide and none of the challenges of
the members opposing redevelopment are prima facie sustainable. None of the
third party purchasers, who claim through Vaidehi under their respective
agreements for sale/allotment letters, have any case for specific performance of
their respective agreements against the society or Rustomjee. None of these
purchasers has any enforceable right under MOFA against the Society or
Rustomjee.
93. Even the considerations of balance of convenience and irreparable injury
clearly weigh in favour of the Society and its members, who support the
redevelopment project. The fundamental basis or rather the very raison d'etre of
the entire redevelopment project is the need for housing of 480 members of the
Society. These members have already surrendered their tenements to enable the
Society to carry out the redevelopment project first through Vaidehi and later
through Rustomjee, as noted above. Since 2006, these members have been
living in temporary alternative accommodations. The buildings on the suit
property occupied by these members have since been demolished and a rehab
building for their permanent alternative accommodation is under construction.
The development of the free sale component is inextricably linked to the
construction of the rehabilitation component. The cost of the construction of
the rehabilitation component has to be necessarily funded from and out of the
development and sale of the free sale component. Any relief granted to either of
the stakeholders, namely, Vaidehi or the members opposing the redevelopment
project or the third party purchasers, who claim through Vaidehi, will
necessarily impact the construction of the rehabilitation component adversely
and jeopardize the members' right to their permanent alternative
accommodation. The members cannot be asked to wait indefinitely for years for
getting something which they are legally entitled to and which legal
entitlement is not even questioned by any other stakeholders.
17) Relying on the judgment in Vaidehi Akash, Mr. Tamboly has
contended that since there is no privity of contract between the
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Petitioners and flat purchasers, MOFA Agreements cannot be sought to be
enforced against the Petitioners. Mr. Tamboly has also placed reliance on
judgment of Division Bench of this Court in Deepak Prabhakat Thakoor
and Ors. vs. Maharashtra Housing and Area Development Authority
and Ors.8 in support of his contention that view adopted by this Court in
Vaidehi Akash (supra) has been approved by the Division Bench, in which
it is held in paragraph 11 as under:
11. We are in respectful agreement with all these findings on law. We
emphatically reaffirm Vaidehi Akash.
18) The judgment in Vaidehi Akash governs the relationship
between flat purchasers, old developer, the housing society and the new
developer qua a redevelopment contract. This Court held that the Society
therein did not form any partnership or a joint venture or agency with the
old developer. This Court held that contractual arrangement between the
old developer and the Society was on a principal-to-principal basis. In my
view, Vaidehi Akash principles have no application to the facts of the
present case. This is not a redevelopment project where MOFA
obligations are sought to be enforced against the cooperative housing
society or against the new developer appointed by the society. The case
involves execution of lease by the landowner and lessee constructing the
building. Therefore, whether landowners are promoters or not needs to be
decided on the basis of the terms of the lease.
8
2023 SCC OnLine Bom 2234
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19) Accordingly, I proceed to consider the terms and conditions
of the Lease Deed dated 4 February 1975. Relevant clauses of the Lease
Deed are as under:
(c) At their own responsibility and at their own costs and expenses of not less
than Rupees Ten Lacs to construct and erect and complete and completely
furnish for occupation within three years from the date hereof or within such
extended period as may be agreed between the Lessor and the Lessee s upon the
said demised premises one or more building or buildings for such purpose as
may be allowed under the Development plan and the Rules of the Bombay
Municipal Corporation..
(d) During the erection and construction of any building or buildings and during
the making of any such alterations as aforesaid;
….
(ii) In the course of making such construction alteration or addition as
aforesaid or in repairing the new building or buildings, the Lessees shall
make use of materials which shall not be unsound or unfit for the
purpose intended nor make any deviation in the new building or
buildings from the plans and specifications approved by the Bombay
Municipal Corporation;
(iii) If the Lessees shall fall or neglect to fulfil and observe the aforesaid
provisions, it shall be lawful for the Lessor and/or his Architects and
Engineers and/or his agent and servants to require the Lessees to remove
such unsound and unfit materials and to substitute such as shall be
sound and fit in place and stead thereof, as also to correct every such
deviation from the approved plans and specifications.
(l) Throughout the said term, at his own expense to keep every building or
buildings for the time being standing on the said demised premises (excluding
the plinth) insured in the joint names of the Lessor and the Lessees against loss
or damage by fire and in addition thereto such other causes as may be required
by law from time to time in a sum equal to the full insurable value thereof in
some reputable insurance company selected by the Lessor..... PROVIDED
ALWAYS that in case the said building or buildings shall not be kept so insured
as aforesaid, or in case the Lessees shall at any time fail to produce the said
policy and/or the receipts as aforesaid, then in such cases without prejudice to
the proviso for re-entry and all other rights and remedies of the Lessor, it shall
be lawful for the Lessor but not obligatory upon the Lessor to insure the said
building or buildings and all monies expended by the Lessor in doing so shall be
paid by the Lessees in the same manner as rent in arrears....
(n) At the Expiration or sooner determination of the said term to equitly
delivery up to the lessor the said demised premises including the building or
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buildings which shall have been standing thereon during the said term and all
drains and appurtenances together with all fixtures, windows, doors, fastenings,
portions, pipes, pumps, rails, poles, locks and keys and all other fixtures which
during the last seven years of the said term shall have been fastened to the said
building or buildings or any part thereof in such good and substantial repair and
condition and so maintained paved and cleaned as aforesaid and in all respect
in such state and condition as shall be consistent with the due performance of
the several provisions and covenants hereinbefore contained;
3. ... PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that
these presents are on the express condition that if the new building or buildings
on the said demised premises shall not be completed and made fit for
occupation within the time aforesaid or within such extended time as may be
mutually agreed upon or if the said monthly rent or any part thereof payable in
the manner hereinbefore mentioned shall be in arrears for the space of three
months after the same shall have become due and payable on any of the said
days whereon the same ought to be paid as aforesaid or if any of the covenants
and stipulations herein contained and on the part of the Lessees to be observed
and performed by the Lessees shall not be performed or observed or if the
Lessees shall raise any objection to the amount of the monthly rent hereby fired
for any reason whatsoever then and in any of the cases it shall be lawful for the
Lessor or any person or persons duly authorised by him in that behalf at any
time thereafter to re-enter into and upon the said demised premises and the
structures constructed or to be constructed thereon or any part thereof in the
same of the whole and the same to have, possess and enjoy and thereupon this
demises and all rights of the Lessees therein shall absolutely determine but
without prejudice to the right or action of the Lessor in respect of any breach of
the covenants by the Lessees herein contained PROVIDED ALWAYS that no re-
entry shall be made under the foregoing power for breach of the covenants,
stipulations herein contained and on the part of the Lessees to be observed and
performed unless and until the Lessor shall have given to the Lessees a notice in
writing specifying the covenants and conditions or stipulations which required
to be complied with or carried out and the Lessees shall have failed to comply
with or carry out the same within three months from the date of the receipt of
such notice.
4. IT IS HEREBY EXPRESSLY AGREED AND DECLARED that during the
subsistence of the term hereby created the building or buildings put up by the
Lessees on the demised land shall always belong to the Lessees and on the
determination of the term hereby created all the building or buildings and
structures standing on the said demised premises shall automatically vest in the
Lessor without payment of any compensation by the Lessor to the Lessees.
20) Thus, what is executed between Plaintiff’s father and the
developer was not a simple lease, but it was more in the nature of
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participation by the lessor in the process of construction of building on
the leased land. Under clause 2(c), the Lessor determined the period
during which the construction of the building was to be completed. Under
clause 2(d) (ii) and (iii), the Lessor had the authority to determine use of
material for construction and in the event of deviation from the plans and
specifications sanctioned by the planning authority, the Lessor was
empowered to direct the developer to substitute improper material and
correct deviation from the plans and specifications. Under clause 2(l),
insurance of the plot was to be bought in the joint names of Lessor and
Lessee. In the event of failure on the part of the Lessee to insure the
building, Lessor himself was to insure the same at the cost of the Lessee.
Under clause 2(n), after expiry of the lease or its earlier determination,
the Lessee was to deliver land alongwith building to the Lessor. Under
clause (3), Lessor was entitled to enter upon and to take possession of the
buildings constructed by the Lessees in the event of breach of conditions
of lease or non-payment of rent. Under clause (4), the constructed
buildings were to vest automatically onto the Lessor though during
subsistence of the lease, buildings were to be owned by the Lessee.
21) Thus, in the present case, the Lessor has fully participated in
cause of construction of the building on the demised land. He decided the
period of construction, material to be used for construction, he had
authority to verify whether construction was done in accordance with
sanctioned plans or not, etc. The insurance for the building was to be in
the joint names of Lessor and Lessee. Lessor had authority to himself to
insure the building and most importantly, upon expiry or earlier
determination of the lease, Lessor was to become owner of the building.
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Considering the above contractual clauses, it can easily be discerned that
Lessor had fully participated in construction of the building and therefore
he would definitely fit into definition of the term ‘promoter’ under
Section 2(c) of the MOFA.
22) In Haroon Hussain Khatri (supra), this Court has dealt with a
clause in Lease Deed which made Lessor the owner of the building upon
expiry of terms of lease. This Court held that the Lessor therefore would
fit into the shoes of the promoter within the meaning of Section 2(c) of
the MOFA. This Court held in paragraphs 10,11 and 12 of the judgment as
under:
10) Under Clause 14 of the Indenture, it was agreed that upon expiry of term of
97 years or on determination of lease earlier, the lessee was under obligation to
handover peaceful possession not only of the demised land, but also of the
building. Clause 14 of the Indenture of Lease reads thus:
On the expiration of the said term of ninety seven years or the sooner
determination thereof to hand over peaceful possession of the demised land and
the Buildings and fixtures then standing thereon in good and tenantable repair.
11) Thus, the building in the present case is not constructed by the lessee for his
own benefit alone. The construction is actually caused by the landowner
through the lessees. At the end of tenure of lease, lessor/landowner was to
become owner of even the building. In these circumstances, the landowner
would no longer remain in the capacity of mere lessor in respect of the land and
would fit into the shoes of the Promoter within the meaning of Section 2 (c) of
MOFA. Under Section 2 (c), the term Promoter is defined as under:
xxx
12) Thus, every person who causes construction also becomes Promoter for the
purpose of fulfillment of statutory obligations under MOFA. By having caused
construction of the building, the lessor-Suleman Haji Khatri became Promoter
in respect of the Project in question. Once the landowner assumed the
characteristic of a Promoter, the statutory obligation under Section 11 to
convey his right, title and interest in the land and the building applies to him.
Thus, what needs to be conveyed in the present case by the land owner is his
right, title and interest in the land, as well as his ownership in the building in
accordance with Section 11(1) of MOFA.
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23) The lease in the present case indicates much clear
participation by the Lessor in the building than in Haroon Hussain
Khatri. Therefore, the Lessor would fit into the definition of the term
‘promoter’ in the present case.
24) Once Petitioners fit into the definition of the term
‘promoter’, obligations under Section 11 of MOFA gets attached to them.
Under Section 11(1), there is a statutory obligation on the promoter to
perfect his title and transfer his right, title and interest in the land and
building to the organisation of flat purchasers within the prescribed
period. Section 11 of MOFA provides thus:
11. Promoter to convey title, etc., and execute documents, according to
agreement.—
(1) A promoter shall take all necessary steps to complete his title and convey to
the organisation of persons, who take flats, which is registered either as a co-
operative society or as a company as aforesaid or to an association of flat takers
5 [or apartment owners], his right, title and interest in the land and building,
and execute all relevant documents therefor in accordance with the agreement
executed under section 4 and if no period for the execution of the conveyance is
agreed upon, he shall execute the conveyance within the prescribed period and
also deliver all documents of title relating to the property which may be in his
possession or power.
(2) It shall be the duty of the promoter to file with the Competent Authority,
within the prescribed period, a copy of the conveyance executed by him under
sub-section (1).
(3) If the promoter fails to execute the conveyance in favour of the Co-operative
society formed under section 10 or, as the case may be, the Company or the
association of apartment owners, as provided by sub-section (1), within the
prescribed period, the members of such Co-operative society or, as the case may
be, the Company or the association of apartment owners may, make an
application, in writing, to the concerned Competent Authority accompanied by
the true copies of the registered agreements for sale, executed with the
promoter by each individual member of the society or the Company or the
association, who have purchased the flats and all other relevant documents
(including the occupation certificate, if any), for issuing a certificate that such
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society, or as the case may be, Company or association, is entitled to have an
unilateral deemed conveyance, executed in their favour and to have it
registered.
(4) The Competent Authority, on receiving such application, within reasonable
time and in any case not later than six months, after making such enquiry as
deemed necessary and after verifying the authenticity of the documents
submitted and after giving the promoter a reasonable opportunity of being
heard, on being satisfied that it is a fit case for issuing such certificate, shall
issue a certificate to the Sub-Registrar or any other appropriate Registration
Officer under the Registration Act, 1908 (16 of 1908), certifying that it is a fit
case for enforcing unilateral execution, of conveyance deed conveying the right,
title and interest of the promoter in the land and building in favour of the
applicant, as deemed conveyance.
(5) On submission by such society or as the case may be, the Company or the
association of apartment owners, to the Sub-Registrar or the concerned
appropriate Registration Officer appointed under the Registration Act, 1908 (16
of 1908), the certificate issued by the Competent Authority alongwith the
unilateral instrument of conveyance, the Sub-Registrar or the concerned
appropriate registration Officer shall, notwithstanding anything contained in
the Registration Act, 1908 (16 of 1908), issue summons to the promoter to show
cause why, such unilateral instrument should not be registered as ‘deemed
conveyance’ and after giving the promoter and the applicants a reasonable
opportunity of being heard, may on being satisfied that it was fit case for
unilateral conveyance, register that instrument as, ‘deemed conveyance’.
25) Relying on use of the expression ‘his right, title and interest in
the land and the building’, Mr. Tamboly contends that since the developer
possesses only leasehold rights, Respondent No.3-Society can secure only
leasehold rights in the land. What is sought to be contended by Mr.
Tamboly is in accordance with the ratio of the judgment of this Court in
A.H. Wadia Trust and Others V/s. State of Maharashtra and Ors. 9 in
which it is held as under:
A. The position in law is well settled i.e., the society/flat purchasers in
an Application for Unilateral Deemed Conveyance are only entitled
to whatever right, title and interest the Promoter has in the said
land. In the facts of the present case it is not in dispute that the
Petitioners have only granted a Lease in respect of the said land to
9
2023 OnLine Bom 14413
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the Lessee. The Lessee in turn has assigned all it's right, title and
interest in the said land to the Promoters/Developers. Thus, even
assuming that such assignment was valid, all that Respondent No. 3
could have sought for in the Application for Deemed Conveyance
was for a Lease of the said land and not a Conveyance. Respondent
No. 3 however, whether consciously or then ill-advisedly in the
Application for Deemed Conveyance sought a Conveyance of the said
land in its favour and not a Lease. The submission of learned Amicus
Curiae that the impugned order is vulnerable on this ground alone is
therefore one which is not without merit, and I am in full Agreement
with the same. The impugned order in my view deserves to be set
aside on this ground alone since the effect of impugned order
is firstly, to convey to Respondent No. 3 right, title and interest in
the said land which the Lessee and/or the Promoter/Developer
themselves did not have and secondly to divest the Petitioners of
divested its right, title and interest in the said land, without so much
as affording the Petitioners an opportunity of a hearing.
26) However, as observed above, the Petitioners in the present
case no longer remained in restrictive role as landowners and have
actively participated in construction of the building. Therefore, they are
also promoters within the meaning of Section 2(c) of the MOFA. In that
sense, statutory obligation under Section 11(1) of MOFA is applicable to
the Petitioners as well.
27) Even if the Petitioners were not to be held as promoters, still,
conveyance of ownership rights in the building in favour of third
Respondent-Society does not appear to be contrary to the scheme of
Section 11 of MOFA. Under Section 11(1), promoter first needs to take all
necessary steps to complete his title in the land and then to convey the
same to the organisation of flat purchasers. In the present case, there was
a deal between the Lessor and the Lessees, under which Lessor had agreed
to sell the right of reversion in the land after accepting the agreed
premium from flat purchasers. Arrangement is noted in paragraph 40 of
Agreement for Sale executed with flat purchasers, which reads thus:
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40. The tenure of the plot at present is leasehold, and the lease money payable
by the Purchasers works out at 9 paise per square foot. The vendors have
however negotiated with the Lessor of the said land for the purchase of the right
of inversion of the said land. The purchaser’s contribution for the said purchase
would work out as Rs. 10/- per square foot of the saleable built up area of their
flats. The purchaser agrees to contribute his/her/their proportionate share for
purchasing the right of reversion of the said leasehold land at the of Rs. 10/- per
square feet of saleable built up area of the flats. Till the said purchase is
finalised the said amount shall be deposited with the vendors who in turn shall
deposit the same with a bank for and on behalf of the flat holders. After the
formation of the society by the flatholders the said deposit shall be transferred
to the name of the society formed by the flatholders. The said deposit shall earn
interest equivalent to the lease money payable in respect of the said plot. The
said deposit amount shall be contributed by the purchaser at the time of taking
possession of flats or shops to effect offset the payment of the lease money.
This contribution shall be in addition to the purchase price mentioned in clause
3 above.
If for any reason the said sale is not finalised or negotiations fail the said
deposit amount shall be invested by the society, formed by the flat holders on
interest with any Bank or a Public Body and income derived therefrom shall be
sufficient for the payment of lease money.
28) Thus, the developers collected amount of Rs.10 per sq.ft. of
saleable built-up area from the flat purchasers for the purpose of
purchasing the right of reversion in the land. Thus, a specific
representation was made by the developers to the flat purchasers that
ownership rights in the land would be perfected by paying over to the
landowners the amount collected from the flat purchasers and that the
organisation of flat purchasers would ultimately acquire ownership rights
in the land. Thus, the concept of perfection of title by the Developer from
the landowner was specifically reflected in Agreement for Sale executed
with the flat purchasers.
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29) In any case, the arrangement under Clause 40 is taken into
consideration only as a fallback situation and the main right of the
Society to secure conveyance of ownership rights in the land flows
through capacity of the Petitioners as promoters. By subjecting the land
to housing scheme and by actively participating in construction of the
building, Petitioners/their father assumed on to themselves the
obligations of a promoter. If the intention of the Petitioners/their father
was to simply grant lease of vacant land with permission to construct a
building, they may not have been treated as promoters. However, on
account of active participation in construction activity as well as
contractual stipulations for acquiring ownership of the building,
Petitioners clearly stepped into the shoes of promoters within the
meaning of Section 2(c) of the MOFA.
30) The right of securing ownership of the building upon expiry
or early determination of lease is an important factor for determining role
of Lessor as promoter. In a case where lessee constructs the building and
defaults in payment of rent or commits breach of lease terms, the Lessor
acquires ownership of the building. In such case, from whom the
organisation of flat purchasers would acquire ownership of that building
becomes questionable. Obviously, the Lessor who is entitled to acquire
ownership of the building comes under the statutory obligation to convey
his ownership. In that sense, Lessor becomes the owner of the building.
He is obligated under the MOFA to transfer his ownership of the building
onto organisation of flat purchasers. Therefore, in a case where there is an
arrangement for acquiring ownership in the constructed structure by the
Lessor, such Lessor is required to be treated as promoter within the
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meaning of Section 2(c) of the MOFA. Otherwise, the organisation of flat
purchasers would never acquire ownership in respect of the building and
the same would always remain with the Lessor. In the present case also,
upon expiry of the Lease in the year 2072, the Petitioners would acquire
ownership of the building. In that sense, if the role of a promoter is
restricted only to a developer/lessee, he not being absolute owner of the
building, would not be able to convey ownership in the building to the
organisation of flat purchasers. Therefore, the ultimate owner of the
building (lessor) needs to be roped into the definition of the term
‘promoter’ for the purpose of ensuring that ownership in the building is
assigned to the society. In view of the above discussion, I am of the view
that Petitioners/their father are required to be treated as promoters on
account of unique arrangement of lease executed with the lessees.
31) Mr. Tamboly relied upon clause 34 of the Agreement for Sale
in support of his contention that the developers of flat purchasers had
agreed to assign only leasehold rights in favour of the Society. Clause 34
of Agreement for Sale reads thus:
34. After the building is complete and ready and fit for occupation and after the
society or Limited Company or an Association of Apartment Owners is
incorporated and registered strictly complying with all the terms and conditions
of their respective Agreements with the builders and only after all the
flats/garages/shops in the said building have been sold and disposed of by the
Builders and after the Builders have received all dues payable to them under the
terms of the Agreement with various purchasers of flats/garages/shops the
Builders shall assign the said building together with their leasehold rights in
favour of such co-operative Housing Society or Private Limited Company or an
Association of Apartment Owners as the case may be.
32) No doubt, the developers had agreed to assign only leasehold
rights in favour of the Society, however, clause 34 has to be read with
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clause 40, which contains arrangement of perfection of ownership rights
by the developer after collection of agreed sum from the flat purchasers.
The case thus involves a unique arrangement under which developers
agreed to assign leasehold rights and also promised to perfect their title
for the purpose of transfer of ownership rights in favour of the Society. It
therefore cannot be contended that Section 4 Agreement executed with
the flat purchasers did not contemplate conveyance of ownership rights
in the land in favour of the Society.
33) In Haresh Vijaysinh Bhatia & Ors. Vs. District Deputy
Registrar & Ors.10, this Court has held that if the promoter is the owner
of the land, he cannot agree to convey only leasehold rights in the land.
This Court held thus:
56. Thus, conjoint reading of provisions of Section 11(1) MOFA, Rule 5
and Clause 13 of Form V agreement under MOFA Rules leaves no
manner of doubt that the promoter is required to transfer and convey in
favour of a society, “his right, title and interest in the land and
building”. Thus, everything that is owned by a promoter must be
transferred and conveyed in favour of a cooperative society or
association formed by flat purchasers. Section 11 MOFA does not permit
a promoter to hold onto himself any part of right in the land and
building. Thus, MOFA contemplates automatic divesting of ownership of
promoter in the land and transfer thereof in favour of society formed by
home buyers. What is performed by the competent authority is to issue a
certificate recognising and certifying such transfer, for the purpose of
registration thereof for mutation of name of society in the revenue
records.
57. Thus, if the promoter is the owner of the land, he has no option but
to transfer and convey his ownership in the land and building in favour
of society. Section 11 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. This principle recognised under Section 11
MOFA is premised on the concept that with sale of each flat in the
building, the title of the promoter in the land gets diluted. Section 4
10
2025 SCC Online Bom 1981
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MOFA seeks to strike at the root of the mischief that was being played by
the promoters in retaining ownership in the land despite sale of all flats
in the building. The promoters/developers were indulging in
malpractices of retaining ownership in the land with the ulterior motive
of carrying out further construction upon increase of FSI or monetising
ownership rights at the time of re-development of the building by
denying transfer of ownership in the land in favour of association
formed by flat purchasers. The promoters/developers were erroneously
representing to the flat purchasers that what is being sold to them is
only the constructed unit, without any title in the land on which
building is constructed. Section 11 MOFA seeks to nip in the bud this
malpractice by promoters and developers in seeking to segregate the
concepts of “ownership in the land” and “ownership of constructed
unit”. The mischief played by promoters/developers in transferring
ownership of only constructed units in favour of flat purchasers was
contrary to the fundamental principle that construction of such sold unit
has a direct nexus with the land. Planning norms permit construction of
units corresponding to the area of land by application of floor space
index (FSI). If permissible FSI is 1.00, construction of built-up area
corresponding to the land area can be undertaken. If permissible FSI is
4.00, units totally admeasuring upto four times of land area can be
constructed. Since flats/units are constructed utilising FSI generated out
of the land and transfer of ownership in constructed units under MOFA
would necessarily dilute ownership right in the land as well. Merely
because construction of multiple flats/units can be undertaken as per
permissible FSI, the promoters/developers were misusing this concept by
representing to the home buyers that sale of constructed flats would not
entail transfer of ownership in the land, which would always be retained
by them.
62. Thus, a statutory right is created in favour of a society or association
of flat purchasers to have in its favour conveyance and transfer of every
right which the promoter possessed in respect of the land on which
building is constructed. If promoter is the owner of land, he must
transfer and convey his ownership right in favour of the Society. If on
the other hand, promoter is a mere lessee, he must transfer his leasehold
rights in the building in favour of the Society. Promoter cannot provide
for demise of only leasehold rights if he is the owner of the land.
65. The expression “in accordance with the agreement executed under
Section 4” cannot be read in isolation in such a manner that the other
words used in the same sub-section are rendered superfluous. If
agreement provides for non-conveyance of land in favour of society and
application for deemed conveyance is to be decided strictly in
accordance with the covenants of that agreement, the words “and
convey … his right, title and interest in the land and building” used in
Section 11(1) would be rendered otiose. In my view therefore, the
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expression “in accordance with the agreement executed under Section 4”
needs to be harmoniously constructed with the words “and convey … his
right, title and interest in the land and building”. Thus while conveyance
can be granted in accordance with MOFA Agreement, regard must be had
to the provision which mandates conveyance of the whole of promoter's
right, title and interest in the land and building. In that sense, the
expression “in accordance with the agreement executed under Section 4”
is controlled and guided by the words “and convey … his right, title and
interest in the land and building” used in the same sub-section.
Therefore, while granting conveyance in accordance with the MOFA
Agreement, the competent authority must convey promoter's entire title
in the land and building. In other words, 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.
67. If above interpretation is not made, the same would result in
incongruity and absurdity as statutory right of association of flat
purchasers to have conveyance of promoter's title in entirety would get
defeated by contractual covenant in MOFA Agreement. As observed
above, Section 11 creates a statutory right in favour of societies to have
conveyed to themselves promoter's “right, title and interest in the land
and building” which would then get defeated by a contractual covenant
in the agreement providing for demise of lease or non-conveyance of any
portion of land. It is well-settled principle of law that any interpretation
which leads to confusion or absurdity must necessarily be avoided.
72. In my view therefore, 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, which does not provide for conveyance of
land on ownership basis or grant of mere lease thereof.
Thus, in Haresh Vijaysinh Bhatia (supra), this Court has held that the
Competent Authority possesses the necessary jurisdiction to direct
conveyance of the land and building(s) on ownership basis where the
promoter is the owner of the land by ignoring covenant in the agreement,
which does not provide for conveyance of land on ownership basis but
grant of mere lease thereof.
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34) Mr. Tamboly’s next objection to the impugned order of the
Competent Authority is that the Authority did not have jurisdiction to try
and entertain application for deemed conveyance since assignment of
lease is already executed in favour of third Respondent-Society. No doubt,
occurrence of ‘failure’ under Section 11(3) of MOFA becomes a
jurisdictional fact for the Competent Authority to exercise jurisdiction.
When there is no failure, Competent Authority cannot exercise
jurisdiction under Sections 11 (3) and (4) of MOFA. In the present case,
the act of execution of assignment of lease is performed by the
developer/lessees and only part of obligations under Section 11(1) is
fulfilled. It is not that in every case, there can be only single promoter and
there can be multiple promoters in the facts of given case. In the present
case, since construction is jointly caused by Lessor and the Lessees, both
would be ‘promoters’ within the meaning of Section 2(c) of MOFA. What
is executed through Indenture of Assignment is only partial fulfillment of
obligation under Section 11 of MOFA by one of the promoters. The other
promoter i.e. Petitioners, are yet to fulfill their obligation under Section
11(1) of MOFA and therefore, qua the Petitioners, there was a failure for
the purpose of Competent Authority to exercise jurisdiction under
Section 11(3) of MOFA. In my view therefore, mere execution of
Indenture of Assignment dated 17 March 1978 would not result in
absence of jurisdiction for the Competent Authority to decide the
application for deemed conveyance filed by third Respondent-Society.
35) Respondent No.3-Society is entitled to convey in its favour
right, title and interest on each of the promoters. Since the Petitioners
had failed to convey their right, title and interest in the land, and were
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illegally retaining the same, the Competent Authority has rightly stepped
in and exercised jurisdiction under Section 11(3) of MOFA.
36) Mr. Tamboly has raised argument of estoppel against
Respondent No.3-Society on the strength of it executing the Indenture of
Assignment dated 17 March 1978. However, it is well settled position that
there can be no estoppel against statute in relation to MOFA obligations.
This Court has held in Prestige Garden A-1 CHSL vs. State of
Maharashtra and Ors.11 that there can be no estoppel against a statutory
right. This Court held as under:-
38. The Unilateral Deed of Conveyance was registered conveying land
admeasuring 3461.43 square meters. Thereafter subsequent to the objection
raised by Respondent No. 10, the communication dated 10th June, 2021 was
addressed to the Petitioner-Society directing it to register the Deed of
Rectification which was done on 4th August, 2021. As discussed above, the
statutory provisions entitle the Petitioner to the Promoter's right, title and
interest in the land and building and by the impugned order the Competent
Authority has conveyed only the constructed structure which was in clear
violation of the mandate of MOFA. The submission on principles of estoppel
and approbation and reprobation is premised on the reasoning that the
Petitioner-Society has obtained a benefit under the impugned order and having
obtained benefit and acted upon the order, cannot now turn back and assail the
said order. The submission overlooks the position that under the statutory
provisions, the Petitioner-Society was entitled to the conveyance of the land as
well as the building. It is settled position in law that there cannot be any
estoppel against statute. In view of the provisions of MOFA it cannot be said
that the Petitioner Society has received any benefit under the impugned order
which but for the impugned order the Petitioner was not entitled to and thus
having accepted the benefit now cannot turn back and challenge the order. The
Petitioner in the present case has been denied what is rightfully due to them
under MOFA, i.e. conveyance of the land and the building. It cannot be said that
the Petitioner-Society with full knowledge of its legal rights had accepted the
impugned order. In my view, interest of justice demands that the Petition is not
thrown out on procedural law of principle of estoppel or acquiescence. Weighed
against the substantial justice, in my opinion, the submission on the aspect of
estoppel and approbation and reprobation is liable to be rejected.
11
2024 SCC OnLine Bom 5625
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Therefore, mere execution of Assignment of Lease with the developers
would not estop the Respondent No. 3 Society from filing application
under Section 11(3) of MOFA.
37) The objection of violation of principles of natural justice
raised on behalf of the Petitioners also does not appeal to this Court. The
Petitioners have admitted that they received notices issued in the name
of their father. They in fact wrote to the Competent Authority after
receipt of the notice. They ought to have appeared before the Competent
Authority and opposed the Applications. However, they took a calculated
chance. Now they cannot turn around and complain of violation of
principles of natural justice.
38) In any case, order passed by the Competent Authority
granting deemed conveyance under Section 11 of MOFA is not final
determinative of rights and entitlement of the parties qua the conveyed
land as held by the Apex Court in Arunkumar H. Shah HUF V/s. Avon
Arcade Premises Co-operative Society Limited and Ors. 12 Therefore, the
remedy of the Petitioners to file suit challenging the conveyance is not
barred.
39) As of now, the order of deemed conveyance granted in favour
of Respondent No.3-Society appears to be just and fair. Reliance by Mr.
Khandeparkar on judgment of this Court in Sushanku Builders Ltd.
(supra) in this regard is apposite. The impugned order results in a
situation where Respondent No.3-Society has acquired title in respect of
the land admeasuring 3901.70 sq.m. on which its building is constructed.
12
2025 SCC OnLine SC 828
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Neeta Sawant WP 5991 of 2026
The order of deemed conveyance would assist the Petitioners in going for
redevelopment of its building without cause of any hindrance by the
Petitioners. In peculiar facts of the present case, if contention of the
Petitioners is accepted, they would acquire ownership even in the
redeveloped building upon expiry of Lease Deed on 14 October 2072. The
order appears to this Court to be just and proper, which results in
fulfillment of objectives for which MOFA has been enacted.
40) In view of the above discussion, I find no reason to interfere
in the impugned order. Writ Petition is accordingly dismissed. There
shall be no order as to costs.
[SANDEEP V. MARNE, J.]
Digitally
signed by
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2026.09.08
18:37:14
+0530
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