- Case
- LOK HOUSING and CONSTRUCTION LTD. v. STATE OF MAHARASHTRA and ORS. (Bombay High Court, 26-03-2025)
- Law
- Companies Act, Constitution of India, Maharashtra Co-operative Societies Act, Maharashtra Ownership Flats (Regulation of the promotion of Construction Sale Management and transfer) Act.
Facts: Lok Housing & Construction Ltd., a developer, challenged an order by the District Deputy Registrar, Cooperative Societies, Mumbai, which granted deemed conveyance to Lok Everest Cooperative Housing Society Ltd. The developer argued that the project was incomplete, and conveyance should only occur after the entire scheme is finished, as per contractual clauses. The Society argued that the developer failed to execute the conveyance deed despite registration in 2006, violating MOFA's statutory obligations.
Procedural Posture: The developer filed a writ petition under Article 226 of the Constitution of India in the High Court of Judicature at Bombay, challenging the legality and validity of the District Deputy Registrar's order granting deemed conveyance.
Issue: Is the order passed by the Competent Authority granting deemed conveyance in favor of the cooperative housing society legally sustainable, considering the developer's claim of an incomplete project and contractual clauses stipulating conveyance only upon completion of the entire development scheme? Does Rule 9 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Rules, 1964 mandate conveyance within a specific timeframe, overriding contractual stipulations?
Holding: No, the High Court found no merit in the writ petition and upheld the order granting deemed conveyance. The Court held that the developer's statutory obligation to convey title within a reasonable time from the society's registration, as mandated by MOFA and its rules, cannot be overridden by contractual clauses stipulating completion of the entire development as a prerequisite.
Reasoning: The Court reasoned that MOFA is a social welfare legislation designed to protect flat purchasers' interests. Rule 9 of the MOFA Rules prescribes a time frame for conveyance, which cannot be indefinitely deferred by contractual stipulations. The term "period" in Rule 9 signifies a fixed and determinable time, not a contingent future event like project completion. The Court emphasized that developers cannot use incomplete construction or contractual clauses to avoid their statutory duty to convey title, especially when the society has been registered for a considerable period. The Court also noted that the developer had already consumed the permissible FSI, negating the claim of incomplete construction as a valid ground for withholding conveyance. The Court further clarified that the right to conveyance under Section 11 of MOFA is a statutory right that cannot be defeated by technical non-compliance of procedural requirements.
