Bombay High Court
Ravi Jaggnath Agarwal vs Prince Tower Co- Op. Housing Society Ltd on 8 April, 2024
Author: Sandeep V. Marne
Bench: Sandeep V. Marne
2024:BHC-OS:5895
Neeta Sawant WPL-8735-2024-JR-FC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 8735 OF 2024
Ravi Jagganath Agarwal } ...Petitioner
V/s.
Prince Tower Co-operative }
Housing Society Limited and Others. } ...Respondents
_________________________________________________
Mr. Bhavek Manek with Mr. Chetan Jaiswal & Mr. Vinay D. Taliwal, for the
Petitioner.
Mr. Girish Godbole, Senior Advocate with Ms. Sheetal Shah i/b Mehta &
Girdharlal, for Respondent No.1.
Mr. Manish Upadhye AGP for State, Respondent No. 3.
Mr. Sagar Patil, for MCGM, Respondent No.4.
Ms. Nupur Desai i/b Markhand Gandhi &Co., for Respondent No.6.
________________________________________________
CORAM : SANDEEP V. MARNE, J.
Reserved On : 26 March 2024.
Pronounced On : 8 April 2024.
JUDGMENT:
1. By this petition, Petitioner challenges Order dated 15 February 2024 passed by the Competent Authority and District Deputy Registrar, Co-operative Societies-(2), East Suburban, Mumbai (Competent Authority) granting unilateral deemed conveyance of land in favour of Respondent No.1-Society. Petitioner is an auction purchaser, who has purchased the land alongwith the building in the auction Page No. 1 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC conducted by Municipal Corporation for Greater Mumbai (MCGM) on account of failure on the part of the original landowners to pay property taxes. According to Petitioner, the land purchased by him through public auction cannot be conveyed to the Society, as the same would render the transaction of purchase futile. Petitioner's further contention is that Respondent-Society has already instituted a Civil Suit seeking declaration that the auction sale is void and during pendency of that suit, Order of deemed conveyance could not have been passed as the same tantamount to decree of the suit. The next objection of the Petitioner is that he has filed suit against the flat occupiers for their eviction under the provisions of the Maharashtra Rent Control Act, 1999, which would be rendered infructuous on account of the order of deemed conveyance.
2. Facts of the case, in brief, are that a tenanted structure stood on a plot of land, which was earlier owned by Mr. Manilal Maneklal Parekh, who transferred the plot in favour of M/s. Chandrakant & Co. By Agreement dated 24 January 1985, said M/s. Chandrakant & Co. agreed to sell the plot to M/s. Prince Enterprises. Said M/s. Prince Enterprises entered into agreements with the tenants for redevelopment of the building and for providing them alternate accommodation in the newly constructed buildings. One such agreement entered into the erstwhile tenant on 4 February 1986 is placed on record at Exhibit-F to the petition. It appears that separate agreements were executed with persons who agreed to purchase flats available for sale in open market and one such agreement executed on 7 June 1990 is placed on record at Exhibit-G to the petition. This is how development on the plot was completed and erstwhile tenants, (who then became owners of flats) as well as new flat Page No. 2 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC purchasers started occupying flats in the building in pursuance of Occupancy Certificate issued by the Municipal Corporation on 30 June 1998 (part Occupancy Certificate) and 26 March 2002 (full Occupancy Certificate).
3. It appears that there were property tax dues in respect of the land in question and the structure standing thereon and MCGM decided to auction land and building. According to the Petitioner, the Notification for conduct of public auction was notified vide Notification issued on 3 January 2000. Accordingly, advertisements were issued in the local newspapers for auction of the land and the building for recovery of tax arrears. Petitioner participated in the public auction and was declared as highest bidder in the auction sale which was held on 9 March 2004. Petitioner paid purchase price of Rs.6,82,500/- to the Municipal Corporation and accordingly letter dated 27 May 2004 was issued to Petitioner by MCGM confirming the sale and recognizing the right of the Petitioner to possess as well as to collect rent in respect of the purchased property. Similarly, communication was issued to the occupiers of the building on 27 May 2004 by the Municipal Corporation calling them upon to pay the dues of the premises in occupation of each occupier to the Petitioner from 8 April 2004 onwards. A Certificate of Sale came to be executed and registered in the name of the Petitioner on 21 January 2006. Petitioner's name was also entered into the property card in respect of the concerned land. Respondent No.5-M/s. Aniraj Enterprises who was claiming development rights in respect of the land had filed Writ Petition No. 2276 of 2004 challenging the auction, which came to be dismissed as withdrawn on 14 October 2004. The occupiers of the newly constructed Page No. 3 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC building "Prince Towers" filed Long Cause Suit No. 5035 of 2004 before the City Civil Court seeking a declaration that the auction held in favour of the Petitioner was not binding on those occupiers. They also sought an alternate prayer in the plaint that in the event of the Petitioner being declared owner of the land, he be directed to register a Co-operative Society and to convey the land in Society's favour. According to the Petitioner, M.C.G.M. filed written statement in Long Cause Suit No. 5035 of 2004 supporting the auction executed in Petitioner's favour.
4. On 6 December 2013, the occupiers of flats in the building "Prince Tower" filed an application for registration of Co-operative Society. According to the Petitioner, the factum of purchase of the land by the Petitioner was suppressed in that application. By order dated 12 June 2014, the Registrar registered the Co-operative Society in the name "Prince Towers Co-op. Hsg. Society Ltd." The Petitioner filed Appeal before the Divisional Joint Registrar challenging the registration granted in favour of the Society on 12 June 2014. The Appeal came to be rejected by the Divisional Joint Registrar by Order dated 15 June 2018 against which the Petitioner filed Revision Application before the Learned Minister- Revenue. The Revision was also rejected by the learned Minister by Order dated 18 February 2019. The Petitioner has filed Writ Petition No. 2262 of 2019 challenging Society's registration which is pending.
5. In the pending suit bearing L. C. Suit No. 5035 of 2004 filed by the Society, the Petitioner filed Notice of Motion No. 1624 of 2020 seeking injunction against the members of Respondent No.1-Society from transferring, alienating or creating third party rights in respect of their Page No. 4 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC respective flats. Order dated 22 April 2022 came to be passed by the City Civil Court granting the injunction as sought for by the Petitioner.
6. In May 2021, Petitioner filed suit against the flat occupiers/ members of Respondent No.1-Society seeking eviction under Section 16 of the Maharashtra Rent Control Act, 1999.
7. In the above backdrop, Respondent No.1-Society filed application before the Competent Authority under Section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) seeking deemed conveyance of land admeasuring 577.50 sq.mtrs together with road setback area as well as building standing thereon. Petitioner filed Interim Application (Lodg.) No. 30445 of 2023 in pending Writ Petition No. 2262 of 2019 to bring to the notice of this Court, the factum of filing of application for deemed conveyance by the Society. This Court, by Order dated 8 December 2023, directed that all steps taken by the Competent Authority in respect of the issue pertaining to registration of the society shall be subject to the outcome of the petition.
8. In the above backdrop, the application filed under Section 11 of MOFA for grant of certificate of unilateral deemed conveyance was contested by Petitioner by filing his written statement opposing grant of deemed conveyance. The Competent Authority passed Order dated 15 February 2024 allowing the application filed by the Society and has granted unilateral deemed conveyance of land admeasuring 577.36 sq.mtrs. together with the benefit of road setback area admeasuring 75.59 sq.mtrs (aggregating to 652.95 sq.mtrs) alongwith common open space of larger Page No. 5 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC property as well as building standing on the land. Petitioner is aggrieved by the Order as well as certificate of unilateral deemed conveyance dated 15 February 2024 and has filed the present petition.
9. Mr. Manek, the learned counsel appearing for Petitioner would submit that the impugned order of deemed conveyance granted by the Competent Authority sufers from manifest error where the Competent Authority has proceeded to adjudicate the very same issue which is pending before the City Civil Court in Long Cause Suit No. 5035 of 2004 filed by the Society. That the Society cannot be permitted to initiate two simultaneous proceedings for same cause of action. That the Society has challenged Certificate of Sale issued by M.C.G.M. in favour of the Petitioner in its Suit before the City Civil Court and has thereby questioned Petitioner's ownership in respect of the land and therefore in such circumstances, the Society cannot seek deemed conveyance from Petitioner, whose title in the land is questioned. Mr. Manek would submit that members of the Society are not owners of flats but are merely tenants and unless this issue is determined, the application for unilateral deemed conveyance could not have been entertained. Inviting my attention to the correspondence made by MCGM both with Petitioner as well as the premise occupiers, Mr. Manek would submit that the status of members of the Respondent-Society is clearly that of tenants. That Petitioner has accordingly filed suits seeking eviction of those occupiers before the Small Causes Court and the same would be rendered infructuous on account of the impugned order passed by the Competent Authority.
10. Mr. Manek, would further submit that none of the members of Respondent No.1-Society have registered agreements in their favour. That Page No. 6 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC in absence of registration of agreements, they cannot be treated as flat purchasers and in absence of such agreements executed under Section 4 of the MOFA, application for grant of unilateral deemed conveyance under Section 11 could not have been entertained. That Section 11 cannot be a short cut method for conferment of title on the Society, when the suit filed by it for the very same purpose is pending since the year 2004. Thus, what could not be achieved in the pending suit is sought to be secured by the Society in indirect manner by taking route under Section 11 of MOFA. The issue of validity of certificate executed in favour of the Petitioner as well as the status of occupants as tenants or owners are issues which fall squarely outside the jurisdiction of the Competent Authority. He would therefore pray for setting aside the order passed by the Competent Authority. In the alternate, Mr. Manek would submit that since most of the issues sought to be raised by Petitioner are not considered or decided by the Competent Authority, the application filed by Society be remanded for fresh hearing by setting aside the impugned order.
11. Per contra, Mr. Godbole the learned senior advocate appearing for Respondent No.1-Society would oppose the petition and support the order passed by the Competent Authority. Mr. Godbole would contend that non-registration of agreements executed with flat purchasers under Section 4 of the MOFA cannot be a ground for denial of certificate of unilateral deemed conveyance. That Section 4A has been introduced in MOFA to take care of situation where agreements executed under Section 4 with flat purchasers are not registered. Under Section 4A, such agreements can be received as evidence for specific performance of the contract. Mr. Godbole would take me through various clauses of MOFA Page No. 7 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC agreements to demonstrate as to how the Promoter agreed for conveyance of title in Society's name. He would further submit that application under Section 11 of MOFA is to compel Promoters to specifically perform his obligation under the Agreement and for deciding such application, even an unregistered agreement can be received as evidence as provided under Section 4A of the MOFA.
12. So far as the Certificate of Sale executed by MCGM in favour of the Petitioners is concerned, Mr. Godbole would submit that in the advertisement issued on 2 June 2003, it was specifically made clear that a building was standing on the land which was sought to be sold. That the flat purchase agreements were executed during the years 1986 with the erstwhile tenants and in the year 1990 with fresh purchasers. That therefore it was incumbent upon the Petitioner to make enquiries about purchase transactions of flats situated in the building before taking a decision to purchase the land and the building. He would submit that under the auction, the land and the building is sold by explaining details thereof to the bidders. The Petitioner was thus well aware of the fact that there was obligation on the part of the Promoter to convey the land and the building in favour of the Society. That the Petitioner has merely stepped into the shoes of the Promoter and that the purchase transaction by Petitioner does not afect the right of the Society to seek unilateral deemed conveyance of the land and the building. Mr. Godbole would seek dismissal of the petition.
13. Rival contentions of the parties now fall for my consideration.
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14. In the present case, the land alongwith the tenanted structures standing thereon was initially owned by Manilal Maneklal Parekh and other family members. M/s. Prince Enterprises agreed to purchase the land and to construct a new building by demolishing the old tenanted structures. Accordingly, M/s. Prince Enterprises executed agreements with the erstwhile tenants, under which it was agreed to grant residential and commercial units in the newly constructed building on ownership basis. I have gone through the sample agreement executed with one of the erstwhile tenants on 4 February 1986, under which M/s. Prince Enterprises agreed to grant shop admeasuring 200 sq.ft and residential room admeasuring 90 sq.ft at the rear side of the shop in the new building on ownership basis. After adjusting all the tenants in the newly constructed building, M/s. Prince Enterprises sold the balance flats/shops to outsiders. A sample agreement executed with one such flat purchaser on 7 June 1990 is placed on record under which the said purchaser acquired Flat No.402 on 4th floor of the building admeasuring 850 sq. ft. built up area for consideration of Rs.4,16,500/-.
15. After construction of the building, part Occupancy Certificate for Phase-I was issued by M.C.G.M. on 30 June 1998. Later, full Occupancy Certificate in respect of the building was issued on 26 March 2002. It appears that either the erstwhile owners or the promoter had defaulted on payment of property taxes to MCGM to the tune of Rs.1,63,308/-, on account of which MCGM had issued warrant of attachment on 4 December 2002. In pursuance of the said attachment, MCGM decided to auction the land and the building. Before advertising the property for auction a final notice dated 22 January 2003 was issued by the Legal Page No. 9 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC Advisor of MCGM to the erstwhile owners. Since the property tax dues were not paid by the erstwhile owners, the Municipal Corporation published advertisement in newspapers on 2 June 2003 proposing to conduct auction sale in respect of the land together with building standing thereon. It must be noted here that by the time auction notice was published, the full occupancy certificate dated 26 March 2002 was issued in respect of the new building by MCGM. The auction notice clearly indicated presence of building on the land. Thus, the prospective purchasers were fully made aware that a building with OC occupied by flat purchasers was standing on the land, both of which were proposed to be sold.
16. It appears that the auction was conducted on 9 March 2004, in which the Petitioner was declared as the highest bidder for Rs.6,82,000/-. He deposited 25% of the bid amount of Rs.1,75,000/- in cash on 9 March 2004. MCGM issued notice dated 27 May 2004 to the occupiers of the building informing that Petitioner had become owner of the land and the building and requesting the occupiers to pay the dues of premises in their occupation to Petitioner from 8 April 2004. Petitioner was informed by MCGM's separate letter dated 27 May 2004 that he had become entitled to possession as well as to collect rent and profits in respect of the structures located on the land after 8 April 2004. The Certificate of Sale came to be registered in favour of the Petitioner on 21 January 2006. A further rectification deed was executed in favour of MCGM on 11 August 2006, under which land admeasuring 630 sq.mtrs together with building standing thereon was shown to have been sold to him.
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17. This is how Petitioner has acquired ownership in respect of the land and the building and contends that the Competent Authority could not have granted unilateral deemed conveyance of the property purchased by him in auction from MCGM.
18. The first contention of the Petitioner is that the Society's suit challenging the auction sale in his favour is pending before the City Civil Court. In this connection, prayers made by the Society in Long Cause Suit No. 5035 of 2004 need to be taken into consideration. The prayers read thus:
(a) That it be declared by this Hon'ble Court that a public auction held on 9th March, 2004 in respect of a plot of land admeasuring 870.16 sq.mts.
bearing C.T.S. No. 1491 (Part) corresponding to Survey No.41 (Part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed of Municipal Property Taxed under No. N-7021 (3) situated at Village: Kirol, L.B.S. Marg, Ghatkopar (W), Mumbai 400 086 is not binding upon or enforceable against the Plaintifs and other unit Purchasers/allottees of said building known as Prince Tower;
(b) That it be declared by this Hon'ble Court that no rights, title or interest of any nature are created in favour of the Defendants No.3 in the units purchased by /allotted to the Plaintifs and other units Purchasers/allotted of suit building by virtue of an Auction Asale Certificate dated 27th May, 2004 issued by the Defendants No.4 in pursuance of public Auction held on 9th March, 2004 in respect of the suit property being plot of land admeasuring 870.16 sq.mts. bearing C.T.S. No.1491 (Part) corresponding to Survey No.41(part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed to Municipal property taxes under No. N-7021 (3) situated at Village: Kirol, L.B.S.Marg, Ghatkopar (w), Mumbai - 400 086;
(c) That by mandatory order and directions of this Hon'ble Court, the Defendants No.1 and 2 be directed to deposit with the Defendants No.4 the municipal property tax dues till 9th March, 2004 in respect of the suit Municipal property being plot of land admeasuring 870.16 sq.mtrs.bearing C.T.S.No.1491 (Part) corresponding to Survey No.41 (part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed to Municipal Property Taxes under No.N-7021(3) situated at Village: Kirol,, L.B.S. Marg, Ghatkopar (W), Mumbai - 400086;
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(d) That the Defendants No.3 his agents, servants and persons claiming through him be permanently restrained byan order of injunction of this Hon'ble Court from recovering any rent or other dues from the plaintifs andother unit Purchasers/ allottes of the suit property being plot of land admeasuring 870.16 sq.mts. bearing C.T.S. No.1491 (part) corresponding to Survey No.41 (part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed to Property Taxes under No.N-7021(3) situated at Village: Kirol, L.B.S.Marg, Ghatkopar (W), Mumbai-400 086 on account of auction purchase on 9th March, 2004 and/ or under Auction Sale Certificate dated 27th May, 2004 issued the Defendants No.4 to the Defendants No.3;
(e) That pending the hearing and final disposal of the suit, the Defendants No.4 be ordered and directed to accept from the Plaintifs and unit purchases/allottes of the suit property being plot of land admeasuring 870.16 sq.mts. bearing C.T.S. No. 1491 (part) corresponding to Survey No. 41 (part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed to Municipal Property Taxes under No. N-7021(3) situated at Village: Kirol, L.B.S. Marg, Ghatkopar (W), Mumbai
- 400 086, the Municipal property tax dues from March, 2004 till the disposal of the present suit;
(f) That pending the hearing and final disposal of the suit, the Defendant No.3, his agents, servants and persons claiming through him be temporarily restrained by an order of injunction of this Hon'ble Court from recovering the rent or property tax dues from the Plaintifs or other Unit Purchasers/allottes of the suits property being plot of land admeasuring 670.16 sq.mts. bearing C.T. S.No.1491 (part) corresponding to Survey No.41(part) together with a building known s Prince Tower consisting ground and upper floors assessed to Municipal Property Taxes under No.N-7021(3) situated at Village: Kirol, L.B.S. Marg, Ghatkopar (W), Mumbai - 400 086;
(g) In the alternate, the Defendants No.3 claiming to have acquired the rights, title and interests of the Defendants No,1 and 2 in suit property being Auction Purchaser of the suit property being plot of land admeasuring 870.16 sq.mts.bearing C.T. S.No. 1491 (part) corresponding to Survey No.41 (part) together with a building known as Tower consisting of ground and 4 upper floors assessed to Municipal Property Taxes under No.N-7021 (3) situated at Village Kirol, L.B.S. Marg, Ghatkopar (W), Mumbai 400 086 be ordered and directed by this Hon'ble Court to register a Co-Operative Housing Society under the provisions of Maharashtra Co- Operative Housing Society under the provisions of Maharashtra Co- Operative Societies Act, 1960 of the Flat Purchasers, and the unit owners in the suit property being plot of land admeasuring 870.16 sq.mts.bearing C.T. S.No. 1491 (part) corresponding to Survey No, 41 (part) together with a building known as Prince Tower consisting of ground and 4 upper floors assessed to Municipal Property Taxes under No. N-7021 (3) situated at Page No. 12 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC Village:Kirol, L.B.S.Marg, Ghatkopar (W), Mumbai- 400 086 thereupon and to execute a Deed of conveyance of the suit property in favour of such registered Co-Operative Housing Society;
(h) For ad-interim reliefs in terms of prayer (e) and (f) above;
(i) For costs of the suit,
(j) For such other and further reliefs as this Hon'ble Court may grant in the circumstances of the case;
19. Thus, in its suit filed before the City Civil Court, Respondent- Society has sought a declaration that the auction held in Petitioner's favour by MCGM is not binding on the Society. Alternatively, it sought registration of a Co-operative Housing Society and for execution of Deed of Conveyance by Petitioner in favour of the Society. Section 11 of MOFA came to be amended w.e.f. 25 February 2008 and Sub-Sections (2) to (5) were inserted therein. Under sub-section (3) of Section 11 of MOFA, a right was conferred on a co-operative society, company or association of an apartment of owners to make an application to the Competent Authority to seek unilateral deemed conveyance in the land and the building in the event of failure of the Promoter to fulfill his obligation under Section 11(1). Thus, though an alternate prayer is made in the suit filed by flat purchasers before the City Civil Court, a right got subsequently created in their favour to seek unilateral deemed conveyance from Competent Authority after amendment of Section 11 of MOFA on 25 February 2008.
20. Though the Society initially questioned the title of the Petitioner in respect of the land and the building, it decided to apply for issuance of Certificate of unilateral deemed conveyance under Section 11(3) of MOFA. In that application, the Society impleaded the original owner, the Page No. 13 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC erstwhile Promoter as well as the subsequent purchaser (Petitioner) as Respondents. The Society thus sought unilateral deemed conveyance from every person who claimed right, title or interest in the building.
21. The statutory scheme of MOFA is such that a promoter is under obligation under Section 11 to convey his right, title and interest in the land and the building in accordance with the agreement executed under Section 4 of the MOFA. I have gone through both the types of agreements viz. (i) agreement executed with erstwhile tenants for grant of units to them on ownership basis and (ii) agreements executed with new flat purchasers. In both the agreements, there are covenants, under which the promoter undertook to convey his right, title and interest in the land and the building in favour of the co-operative society registered by flat purchasers. Clauses-9 and 10 of the Agreement dated 4 February 1986 executed with one of the erstwhile tenants reads thus:
9. Nothing contained in this agreement shall be construed to confer upon the Purchaser/Tenant any right, title or interest of any kind whatsoever into or over the sold land or building or any part thereof such conforment to take place only upon the execution of the Conveyance and/or such other document as is necessary to a Limited Company or a Co-operative Society or incorporated body to be formed of the Purchasers of various flats in the sold building as hereinafter stated.
10. The Purchaser/ Tenant shall have no claim over and except in respect of a particular shop and a residential room hereby agreed to be acquired by him and that all open spaces, lobbies, staircases, terraces, etc. will remain the property of the Builders until the whole property is to be transferred to the proposed Limited Company or a Co-operative Society or an Incorporated Body hereinafter mentioned, but subject to the rights of the Builders as hereinstated.
22. Similarly, in agreements executed with new flat purchasers dated 7 June 1990, clause-44 specifically provided that the agreement was subject to the provisions of MOFA and the Promoter agreed to execute Deed of Page No. 14 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC Conveyance in favour of the Society. In this regard, clauses-39 and 44 of the Agreement dated 7 June 1990 read thus:
39. Subject to the provisions contained herein, after the building is completed and ready and fit for occupation and after the Society or limited company or Association is incorporated and all flats, garages, parking space, bank premises, stall, Open Terace and shops and all other premises in the said building shall have been sold and disposed of by the Builders and after the Builders have received all dues payable to them by the purchasers of all the flats, garages, parking space, holders, etc., the Builders shall execute or cause to be execute a proper deed of conveyance/s or any other suitable document of transfer in favour of such Society or Limited Company or Association as herein provided of the said plot more particularly described in the first Schedule hereunder written and transfer the building erected thereon.
44. This agreement shall always be subject to the provisions contained in the Maharashtra Flats Ownership Act, 1963 and Maharashtra Flats Ownership Rules, 1964 or any modification, amendment or re-enactment thereof for the time being in force or any other provisions of law applicable thereto.
23. Thus, under both the types of agreements, the promoter undertook to convey the land and the building to the Co-operative Society formed by the flat purchasers.
24. When Petitioner decided to purchase the land and the building put up for auction by MCGM, he ought to have verified whether the promoter was under obligation to convey his right, title and interest in the land and the building in favour of the Society. Petitioner purchased something which was already promoter's liability under Section 11 of MOFA to be transferred in favour of the Society. The Petitioner however took a calculated chance and purchased promoter's right, title and interest in the land and the building for sum of Rs.6,82,500/-. If this purchase price paid by Petitioner to MCGM is compared with the consideration paid by one of the flat purchasers for Flat No.402 under Agreement dated 7 June 1990, it is seen that one flat in the building admeasuring 850 sq.ft built up area had Page No. 15 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC costed Rs.4,15,500/- in the year 1990, whereas the Petitioner purchased the entire land and the building for a paltry consideration of Rs.6,82,500/-. Be that as it may. It is not necessary to undertake an enquiry into the price at which the land and the building was auctioned.
Suffice it to state that the land and the building was purchased by Petitioner at insignificant consideration of Rs.6,82,500/- possibly after noticing that he would be entitled to enjoy title in respect thereof only till the same was conveyed to the Society. Alternatively, the Petitioner was apparently advised that the occupiers of the flats were merely tenants and that he can seek possession of such flats from those occupiers by seeking their eviction. Accordingly, Petitioner has filed evictions suits seeking recovery of possession from the occupiers. I do not wish to delve deeper into correctness of Petitioner's assertion that the flat occupiers are mere tenants or whether the flats are sold/allotted to them on ownership basis, since the issue would be decided by the Small Causes Court. For the purpose of present petition, all that needs to be considered is whether Petitioner's purchase of the land and the building in auction sale conducted by MCGM would afect the right of the flat purchasers to seek certificate of unilateral deemed conveyance. The answer, to my mind, appears to be in the negative.
25. As observed above, the promoter who constructed the building was under statutory obligation under Section 11 to convey his right, title and interest in the land and the building in favour of the Society. The Promoter, however failed to discharge his obligation under Section 11(1) of the Act. Thus, after purchase of the land by the Petitioner, he undertook upon himself promoter's liability under Section 11(1) of MOFA. Mere Page No. 16 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC purchase transaction by the Petitioner does not mean that the statutory rights created in favour of flat purchasers under Section 11(1) of MOFA get extinguished. This can be better explained by way of following illustration. In a given case, a Promoter/owner may construct a building on a plot of land and sell flats therein by executing agreements under Section 4 of MOFA. However, he does not fulfill his statutory obligation under Section 11(1) by not transferring his right, title and interest in the land and the building in favour of the Society formed by the flat purchasers. During the time gap between the date of issuance of Occupancy Certificate and the date of filing of application under Section 11(3) for issuance of Certificate of unilateral deemed conveyance, the Promoter sells his right, title and interest in the land and the building in favour of a third party. Would such sale frustrate or extinguish the right created in favour of a flat purchasers under Section 11 of MOFA ? The answer to the question would obviously be in the negative. The Promoter, cannot by his unilateral act, frustrate the statutory right of flat purchasers under Section 11 by entering into transaction of sale with a third party before the land could be conveyed to the Society.
26. The only diference between the illustration cited above and the present case is with regard to the nature of sale transaction. In the present case, instead of promoter himself alienating the land and the building in favour of the Petitioner, the sale is through auction conducted by MCGM. To my mind, such diference in the nature of sale transaction would again not have any impact on the right of the flat purchasers to seek unilateral deemed conveyance of the land and the building under Section 11 of MOFA.
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27. The statutory scheme of MOFA is such that once the developer constructs a building and sells flats to purchasers under MOFA, he dilutes his right, title and interest in the land and the building with each transaction of sale. Once all the flats in the building are sold, promoter's right, title and interest in the land and the building is actually divested. The promoter is under statutory obligation under Section 11(1) to execute formal document conveying his right, title and interest in the land and the building in Society's favour. If he fails to do so, the Competent Authority can do what Promoter has failed to do by entertaining application under Section 11(3), by conducting enquiry under Section 11(4) and by issuing a certificate of unilateral deemed conveyance, which can then be registered under Section 11(5) of the MOFA so as to constitute a document of title in favour of the Society.
28. In my view, therefore what is purchased by the Petitioner in the present case is not just right, title and interest in the land and the building but also an obligation under Section 11(1) of MOFA. Petitioner has taken a risk of purchasing the land and the building in MCGM's conducted auction sale possibly under a hope that he can recover possession from occupiers by treating them as tenants or he can enjoy his rights in respect of any excess land remaining unconveyed to the Society. While his first attempt of getting eviction orders against the flat occupiers is still pending before the Small Causes Court, no land is left to be enjoyed by the Petitioner as the Competent Authority has thought it appropriate to convey the entire land admeasuring 577.36 sq.mtrs together with road setback area of 75.59 sq.mtrs (aggregating to 652.95 sq. mtrs) alongwith common open space of larger property. If the Deed of Rectification dated 11 August 2006 executed by MCGM is perused, it is seen that the Page No. 18 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC Petitioner purchased land admeasuring 630 sq.mtrs whereas what is conveyed to the Society appears to be in excess of 630 sq.mtrs. Thus, no land is left to be enjoyed by the Petitioner after issuance of certificate of unilateral deemed conveyance.
29. Another objection raised by Mr. Manek is about non-registration of agreements executed with flat purchasers. The Competent Authority has directed that all the flat purchasers must pay stamp duty arising out of their agreements. This takes care of deficit stamp duty, if any, in respect of those agreements. What is left is the aspect of registration. Due to non- availability of original promoter, who did not appear before the Competent Authority, it appears that registration of those agreements or even deeds confirming those agreements may not be possible at this juncture. To take care of this situation, Section 4A has been inserted in MOFA by amendment of 1984 which reads thus:
4A. Efeet of non-registration of agreement required to be registered under Seetion 4.
Where an agreement for sale entered into under sub-section (1) of section 4, whether entered into before or after the commencement of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) (Amendment and Validating Provisions) Act,1983, remains unregistered for any reason, then notwithstanding anything contained in any law for the time being in force, or in any judgement, decree or order of any Court, it may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1963, or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be efected by registered instrument.
30. Thus, Section 4A of MOFA carves out an exception to the provisions of Registration Act and provides that even an unregistered Agreement under Section 4(1) of MOFA can be received as evidence of a contract in a suit for specific performance. Application filed before the Page No. 19 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC Competent Authority under Section 11(3) of MOFA is akin to seeking specific performance of obligations of the promoter in agreements executed under Section 4. Therefore as per Section 4A of MOFA, non- registration of flat purchase agreement executed under Section 4 would not be a bar from entertaining Society's obligation under Section 11 for grant of unilateral deemed conveyance of land and building. It would also be relevant to take note of the Government Resolution dated 22 June 2018 by which comprehensive guidelines are issued for deciding the applications for unilateral deemed conveyance. GR does contemplate a situation where stamp duty is not paid on the agreements of flat purchase and provides for recovery of the same by undertaking the exercise of adjudication, at the time when the Deed of Deemed Conveyance is presented for registration. The relevant clauses of the GR read thus:
(D) Proeedure to be followed regarding adjudieation on the level of Colleetor of Stamps :-
The procedure to adjudicate on the Deemed Conveyance Draft Documents with the details of the Stamp Duty paid by all flat owners on the level of Joint District Registrar and Collector of Stamps should be as follows:-
1) In the cases of Deemed Conveyance of the Co-operative Societies, -
i) Where, if there is specifically mentioned in the Deemed Conveyance documents that no F.S.I. is balance, and the current date Architect's Certificate in that regard is attached with it; and
ii) If the agreements in benefit of present tenement holders of all flats/tenements which is a subject matter of Deemed Conveyance are duly registered with proper stamp duty according to concerned rate in the current Article 25 at the time of execution date then the society can submit the said deemed conveyance deed to the concerned Sub Registrar directly for registration after paying stamp duty at the rate of number of flats Xs Rs. 100/- or as prescribed by the Government from time to time.
To make adjudication of the said document is not necessary.
If the concerned Sub Registrar is ensured about condition no. (i) and (ii) then he will complete the registration of the said deed. After completion the process accordingly the Sub-Registrar shall forward the document to the Collector of Stamp of the District for checking immediately and in the checking if found that less stamp duty is Page No. 20 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC paid to the said documents, then the liability to paid the said stamp duty and the penalty on it to be charged according to Stamp Act shall be lay on the concerned society.
2) Regarding the matters whieh not falls in above 1 :-
i) If society has submitted a copy of the proposal for pre verification with the Collector of Stamps according to above A(2), the Collector of Stamp shall verify that documents and if required some more documents shall inform the society by letter in writing. The Collector of Stamp shall complete all necessary proceedings in respect of fixing the valuation and stamp duty on the basis of the papers submitted by the society, and thereafter the society, after completion process in the office of the Competent Authority, shall submit the application duly for adjudication as mentioned in 2(ii) above before Collector of Stamps. At that time, Collector of Stamps shall include the papers in the pre-verification case in the said adjudication case and shall pass order by considering facts in the included draft deemed conveyance deed and communicate to the society in that regard.
ii) Documents to be submitted for Adjudication :-
Cases in which adjudication is necessary, the society should have to submit following documents to the office of the Collector of Stamps for making adjudication incidental to paying the Stamp Duty.
i) Application in prescribed form with Rs.10/- Court fee stamp affixed on the application.
ii) Code number received by making data entry on the www.igrmaharashtra.gov.in website of Registrar and Stamp Duty Department online services>Adjudication>process
iii) Purchase Deed Draft (in two copies).
iv) A copy of Deemed Conveyance Order and Certificate issued under Section 11(3) of the Maharashtra Ownership Flats Act 1963.
v) Proof of making payment of Stamp Duty on the Agreement of Flats (if agreement is registered then Index No.2, otherwise original agreements) III) After receiving the Deemed Conveyance Certificate, if the society has made application with complete documents to the Collector of Stamps for adjudication, The Collector of Stamp give final decision of the adjudication within 30 days from the receipt of the said application. However, the period from the written letter given the society by the Collector of Stamps for fulfilling the necessary documents and till the period that society fulfilling all that documents shall not be counted in this 30 days period.
IV) Those members whose proof of making payment of Stamp Duty on the Agreement of the flat is not available, then it shall be necessary to pay the stamp duty fixed for those flats only by the concerned flat owners.
V) If some members evading to pay Stamp Duty due according to above 2(IV), then society either recover the said amount from the flat owner and deposited it with the Government or society by depositing the said amount with the Government and thereafter recovered it from the flat owner.Page No. 21 of 24
8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC E) Registration of documents by the Sub-Registrar :-
According to the final adjudication order issued by the Collector of Stamps, by depositing Stamp Duty with the Collector of Stamps and after he has given such certificate on documents, the said documents after the signature of the concerned, the society shall submit the said documents to the Sub-Registrar in the jurisdiction of the society.
It is necessary to attach true copies of the identity card of the parties in the deed, and similarly proof for making payment of registration fee through GRAS system (E- challan) .
The concerned Sub-Registrar should complete the registration of above documents within 1 day time limit as stipulated under Maharashtra Lok Seva Hakk Notification- 2015.
F) To make an entry in the record on the basis of Deemed Conveyance Documents -
According to the registered deemed conveyance documents with Sub- Registrar, the concerned society should make an application to the City Survey Officer or Talathi/Circle Officer connected with the jurisdiction of the society for entering the name of concerned society in the occupant column on the property card or 7/12 extract within prescribed period according to the procedure in the Maharashtra Land Revenue Code, 1966 and the rules made there under.
31. Thus there is a procedure prescribed for recovery of deficit stamp duty in respect of flat purchase agreements at the time of registration of certificate of deemed conveyance. The agreements, on which no stamp duty is paid or nominal stamp duty is paid, are bound to be unregistered. This means that under the GR, mere non-registration of flat purchase agreements is not an impediment for entertaining application for deemed conveyance. The defect of non-payment of stamp duty and non- registration are curable for the purpose of passing of order and registration of deed of unilateral deemed conveyance. The objection raised by Mr. Manek in this regard is therefore required to be rejected.
32. Mr. Manek has strenuously urged before me that in the light of suit filed by the Society before the City Civil Court, the Competent Authority Page No. 22 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC could not have entertained Society's application for deemed conveyance. He would rely upon judgment of this Court in Mazda Construction Company and others V/s. Sultanabaad Darshan Co-operative Housing Society1. However, in the peculiar facts and circumstances of the case, the Society seems to have been aggrieved by issuance of Certificate of Sale in favour of the Petitioner. However, the suit itself contains alternate prayer that in the event of Petitioner being treated as owner of the suit property, he be directed to register a Co-operative Society and to convey the land and building in such Society. The suit appears to have been filed by the flat purchasers under the apprehension that they would not get ownership in respect of the land and the building through their collective body from their promoter on account of assertion of rights by Petitioner. However, they were also advised that such purchase transaction by Petitioner cannot afect their right to form Society or to seek conveyance of land and building even from the Petitioner. The suit was required to be filed in the year 2004 seeking a decree for conveyance possibly on account of absence of provisions for Competent Authority granting unilateral deemed conveyance, which came to be inserted only in the year 2008. The suit filed by the flat purchasers is now virtually rendered infructuous since the Society is conveyed the entire land and the building by the Competent Authority. Therefore, the dispute, whether the original promoter or Petitioner is under obligation to convey land and building to the Society under Section 11(1), is now rendered academic. The validity of Certificate of Sale executed in favour of the Petitioner was relevant only for the issue of deciding as to who was under obligation to convey the land and building in Society's favour - promoter or Petitioner?. In my view, initially the promoter was under obligation to convey land and building in Society's 1 2012 SCC OnLine Bom 1266 Page No. 23 of 24 8 April 2024 ::: Uploaded on - 08/04/2024 ::: Downloaded on - 09/04/2024 19:08:54 ::: Neeta Sawant WPL-8735-2024-JR-FC favour, which obligation is taken over on to himself by Petitioner after purchase of land and building in auction sale. Therefore, considering the peculiar facts and circumstances of the present case, the Society need not be directed to prosecute its suit by setting aside the order passed by the Competent Authority granting unilateral deemed conveyance of the land and the building. There are no disputes or complicated questions involved relating to the title or area of land to be conveyed. A small twist is added on account of Petitioner's purchase transaction, which in my view, does not afect the right of the Society to seek conveyance under Section 11(1) of MOFA. Considering the broad objective behind amended provisions of MOFA, setting aside the order of deemed conveyance and relegating the flat purchasers to pursue their pending suit before the City Civil Court would infact be contradictory to the objective behind inserting the provision for unilateral deemed conveyance in MOFA.
33. After considering the overall conspectus of the case, I do not find any patent error in the order passed by the Competent Authority granting unilateral deemed conveyance of the land and the building in Society's favour. The petition filed by the Petitioner is clearly misconceived and the same deserves to be dismissed. All rights and contentions of parties in pending suits are kept open, which shall be decided uninfluenced by the observations made in the judgment. The Writ Petition is accordingly dismissed without any orders as to costs.
SANDEEP V. MARNE, J.
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