Insights
Deemed conveyance: Ensuring compliance and buyer protection
December 3, 2024In a writ petition filed before the Bombay High Court by Blue Haven Co-op Housing Society Ltd. (Petitioner) versus Punit Construction Company Private Limited and 11 Others (Respondents), the Court highlights the distinction between land conveyance and title disputes, ensuring procedural accuracy and upholding buyer interests.
Introduction
This case revolves around a prolonged legal dispute concerning the transfer of land rights in a residential development initially leased by CIDCO to Ambo Gadge and Shripat Patil. In 2003, the development rights were assigned to Respondent No. 1, who commenced construction and flat sales in 2004. Disagreements over the validity of agreements, the society’s registration, and the building’s legal status led to the demolition of the property. Despite several court interventions, the Competent Authority under The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) rejected the Society’s applications for deemed conveyance in 2019 and 2023. This case analyses the Society’s ability to assert conveyance rights under MOFA amongst unresolved disputes and non-compliance with legal documents.
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Background of the Dispute
CIDCO leased a plot to Ambo Gadge and Shripat Patil, allowing joint leasing within four years. In 2003, Ambo Gadge and Shripat Patil transferred development rights to Respondent No. 1, who began flat sales by 2004. CIDCO approved the lease transfer in 2006 after an occupancy certificate was issued.
In 2010, some residents sought to form a cooperative housing society to secure ownership. The Consumer Forum in 2016 directed Respondent No. 1 to transfer ownership, which was not executed, leading to further legal disputes. The Society was registered in 2018. In 2018, the Consumer Forum instructed Respondent No. 1 to collaborate on rebuilding plans due to the building’s condition and bear relocation costs.
Subsequently, the Society applied for deemed conveyance in 2018, citing MOFA violations. The Competent Authority dismissed this application in 2019, prompting appeals and court reviews. After granting deemed conveyance in 2021, the Competent Authority reversed its decision in 2023 following legal challenges.
During this period, Panvel Municipal Corporation demolished the building (July–December 2022) due to structural instability.
Legal Issues Raised
Respondents Nos. 2-4 contended the petition was invalid, arguing that a civil suit was an adequate remedy and deemed conveyance does not confer ownership. The Petitioner countered that prior rulings clarified the Competent Authority’s jurisdiction, which excludes ownership disputes.
Respondents Nos. 5-8 emphasized deficiencies in the application, the absence of crucial documents, and the invalidity of a land-only conveyance post-demolition.
CIDCO argued that the Society sought leasehold rights rather than full ownership and that dual ownership was not a concern. Respondent No. 1 maintained that the building’s demolition did not negate the Society’s occupancy rights or the Promoter’s statutory obligations under MOFA.
Key Legal Arguments
The Competent Authority rejected the Society’s application on the grounds that:
- Invalid Agreement: The 2003 Assignment and Sale Agreement was unregistered, unstamped, and notarized, failing CIDCO’s criteria.
- Authorization Doubts: The resolution authorizing Jimmy Patel’s application was passed post-submission, undermining its validity.
- Conflict of Interest: Patel’s dual roles as developer and Society chairman raised concerns.
- Owner Consent: Certificates were in the names of the original owners, with no consent for agreements by Respondent No. 1.
- Suspect Sales: Alleged underreporting of flat prices indicated irregularities.
- Building Demolition: The Society failed to disclose the building’s demolition during the application process.
- Defective Application: Missing documents rendered the application non-compliant with MOFA.
- Tripartite Agreement: The absence of an agreement among CIDCO, the original owners, and flat purchasers resulted in undefined property rights.
Statutory Framework of MOFA
- Promoter Obligations: Section 11 mandates title transfer to a registered society.
- Application Rules: Rule 13 ensures applications are complete, authorizing corrections and opposing party responses.
- Promoter Role: The owners, listed in permits, acted as promoters under Section 2(c) and are bound to transfer rights to purchasers.
- Purchaser Agreements: Agreements referenced CIDCO lease and developer permissions, emphasising the owners’ inherent roles.
- Deemed Conveyance Limits: Case law confirms deemed conveyance does not establish ownership, which must be pursued by instituting civil suits.
Court’s Order
The Court clarified that the Competent Authority under MOFA is confined to processing deemed conveyance applications and cannot address ownership disputes. It ruled that the rejection order was beyond the Competent Authority’s jurisdiction, quashed it, and directed the granting of leasehold rights to the Society. A six-week stay was allowed for appeal.
Conclusion
This judgment reinforces the importance of adherence to MOFA provisions for securing conveyance rights. By limiting the Competent Authority’s scope to statutory compliance, the Court highlights the separation of jurisdiction between real estate conveyance and title disputes, promoting procedural precision and guarding buyer interests.
This article was originally published in Mondaq on 3 December 2024 Written by: Ashoo Gupta, Partner. Click here for original article
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Disclaimer
This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
