The Bombay High Court recently decided a dispute concerning deemed conveyance under the Maharashtra Ownership Flats (Regulation of the Promotion of Constructions, Sale, Management and Transfer) Act, 1963 (“MOFA”). M/s. S & M Enterprises, the promoter of a housing project in Pune (“Promoter”), filed a writ petition No. 12297 of 2022 (“Writ Petition”) challenging the District Deputy Registrar’s order that granted deemed conveyance of the entire land in favour of The Palazzo Building No. 1 Co-operative Housing Society Limited (“Society”). The Court affirmed that deemed conveyance in phased development protects purchasers but cannot unjustly restrain promoters’ development rights.
Deemed Conveyance under MOFA: Rights in Balance
MOFA was enacted to safeguard flat purchasers by regulating the relationship between promoters and buyers. Section 11 imposes a statutory duty on promoters to convey the land and building to a co-operative society of flat purchasers within a prescribed period. If promoters’ default, societies may invoke a summary procedure before the District Deputy Registrar (“DDR”) to obtain a deemed conveyance that serves as a protective measure for flat purchasers.
However, in phased development projects, disputes often arise when societies representing completed buildings demand conveyance of the entire land, which risks extinguishing the promoters’ residual rights to use Floor Space Index (“FSI”), Transferable Development Rights (“TDR”), or other future development potential. Courts have consistently held that MOFA seeks to maintain a balance between purchasers’ entitlement to secure title and promoters’ entitlement to continue lawful development.
Extent of Conveyance in Phased Projects
The core issue before the Bombay High Court was whether the Society formed by purchasers of a completed building could claim conveyance of the entire land, despite the Promoter having obtained sanction and commenced construction of another building under phased development.
Phased Development and Society’s Claim to Entire Land
The Promoter undertook phased development on land bearing CTS No. 1707(P) of CS No. 1, Pune. On 23 May 2013, the Pune Municipal Corporation (“PMC”) issued a commencement certificate for a residential building of stilt plus nine floors, admeasuring 3,170 square metres. Non-agricultural permission followed in November 2013. Portions of the land were surrendered for a mass transit route, a development plan road, and a water body, for which compensatory FSI was granted.
In January 2016, PMC approved revised plans expanding 1st building to stilt plus 11 floors with 55 flats and a built-up area of 3,648.23 square metres. Agreements under Section 4 of MOFA were executed with purchasers in August 2016, and in July 2017, a part occupation certificate was issued for the building No. 1, named as The Palazzo.
Pursuant to the phased scheme, the Promoter sought sanction in November 2019 for additional building comprising ground plus eighteen storeys. PMC sanctioned the commencement certificate in 2021. Meanwhile, purchasers of flats in building No. 1 formed a co-operative society on 26 June 2020.
On 31 August 2021, the Society demanded conveyance of the land below the building along with superstructure and building with proportionate rights in the common areas, amenities, facilities and open spaces etc. On 12 November 2021, PMC issued the revised commencement certificate for the additional building based on residual FSI and TDR. On the same day, the Society filed an application before the DDR seeking deemed conveyance of 3,422 square metres of land with Building No. 1.
By reply dated 24 December 2021, the Promoter expressed readiness to execute conveyance after completion of the additional building on the land, in accordance with contractual provisions and the Government Resolution dated 22 June 2018. Despite this, the DDR, by order dated 17 June 2022, (“Order”) granted deemed conveyance of 3,422 square metres of land with Building No. 1. Pursuant to the Order, a deemed conveyance of 3,422 square metres of land with Building No. 1 was executed and registered on 1 July 2022 in favour of the Society. Aggrieved, the Promoter challenged the Order before the Bombay High Court by way of a Writ Petition.
Arguments Before the Court
Petitioner–Promoter’s Submissions
The Promoter argued that the DDR’s order was inconsistent with the statutory and contractual framework. The registered agreements with flat purchasers stipulated that conveyance would be executed only after completion of all proposed buildings, making the grant of deemed conveyance premature. The Government Resolution dated 22 June 2018 also clarified that in phased projects, conveyance should extend only to the proportionate share of land appurtenant to the completed building.
By conveying 3,422 square metres of land, the Competent Authority had effectively extinguished the Promoter’s residual FSI and jeopardised the sanctioned development of the additional building. The process was defective, as the mandatory notice under Section 11(5) of MOFA had not been issued before registration of the unilateral conveyance deed. Judicial precedents, including Kashish Park Realty, Prestige Garden, and Runwal Paradise, were relied upon to argue that conveyance must not defeat lawful phased development.
Respondent–Society’s Submissions
The Society maintained that proceedings under Section 11 are summary in nature and do not conclusively determine title, as affirmed in Arun Kumar Shah v. Avon Arcade. If aggrieved, the Promoter could pursue civil remedies, which it had already initiated through Regular Civil Suit No. 1715 of 2022.
It was contended that the agreements with flat purchasers did not disclose any additional building, and therefore purchasers had no notice of further phases. A promotional brochure, the Society argued, could not substitute for statutory consent under Section 7 of MOFA. Therefore, the Society argued that the Promoter had no residual rights, since the 2018 Government Resolution applied only to projects where phased development was expressly disclosed at the outset, which was never part of the initial disclosures Reliance was placed on Noopur Developers, Dosti Corporation, and Madhuvihar CHS, which restrict undeclared development schemes.
Regarding alleged procedural lapses under Section 11(5), the Society argued that such defects were immaterial since the Registrar had no appellate jurisdiction to reopen the DDR’s order.
Court’s Analysis
Phased Development Established
The Court observed that phased development was clearly borne out by the record. In 2013, a commencement certificate had been issued for nine floors (Phase I). In 2016, a revised certificate allowed expansion to eleven floors and fifty-five flats (Phase II). In 2019, the Promoter applied for sanction of a second building, which PMC approved in 2021 with a revised commencement certificate dated 12 November 2021 (Phase III). The Society’s claim that no second building was contemplated was therefore untenable.
Scope of Deemed Conveyance
The Court held that the Competent Authority erred in directing conveyance of 3,422 square metres. At this stage, the Society could only claim conveyance of Building No. 1, with a built-up area of 3,648.19 square metres, together with proportionate rights in the common areas. By granting deemed conveyance of the entire land, the authority had extinguished the Promoter’s residual FSI despite a valid commencement certificate for the second building.
Contractual Rights of the Promoter
The Court analysed Recital 7 and Clause 5 of the agreements, which expressly reserved the Promoter’s right to use residual FSI and TDR until execution of conveyance, granting “unfettered and unrestricted” rights to consume development potential. Clause 28 recorded the purchasers’ consent to easements and rights of way benefiting adjoining properties, recognising the Promoter’s continuing development rights. These provisions demonstrated that phased development was contractually acknowledged.
Grievances of the Society
The Court acknowledged the Society’s grievances concerning parking, amenities, and alleged misuse of FSI. However, it held that such issues must be pursued under consumer or civil law and cannot justify enlarging deemed conveyance beyond statutory limits.
Balancing of Rights
Reiterating MOFA’s objectives, the Court emphasised that deemed conveyance must balance the right of purchasers to secure title with the Promoter’s legitimate residual rights. Granting the Society’s claim in its entirety would unjustly extinguish the Promoter’s lawful development rights and undermine statutory sanctions granted by the planning authority.
Decision and Directions
The Court quashed both the DDR’s order of 17 June 2022 and the registered deed of 1 July 2022. It directed the Competent Authority to issue a fresh order restricting conveyance to Building No. 1, comprising 3,648.19 square metres of constructed area, along with proportionate rights in the common areas. The Promoter was directed to execute conveyance accordingly. Upon completion of Building No. 2 and registration of its society, the Promoter must execute conveyance within one month, either jointly or separately.
The writ petition was allowed. However, at the Society’s request, the Court stayed the operation of its judgment for six weeks to enable filing of an appeal.
Conclusion
The ruling reaffirms a core principle under MOFA: flat purchasers’ right to conveyance is protected, it cannot override a Promoter’s legitimate rights in phased developments. Deemed conveyance applies only to the completed buildings and proportionate share of land, consistent with sanctioned plans and contractual provisions.
The Court further clarified that deemed conveyance proceeding is legally tenable and cannot be countenanced to resolve disputes over amenities or parking, which must be pursued independently. Significantly, it underlines that transparency at the time of agreement is crucial: promoters must explicitly disclose phased development, while societies must recognise that their entitlement to conveyance is limited to their own building and proportionate land until all phases conclude.
Through this ruling, the Bombay High Court has reinforced the balance MOFA strikes between protecting flat purchasers and preserving promoters’ residual development rights.
(Ashoo Gupta, Partner Shardul Amarchand Mangaldas & Co. Views expressed are personal)
