M/s. ACME Enterprises v. Deputy Registrar, Co-operative Societies

11. Mr. Dighe would urge that, by a catena of decisions, it is now fairly well recognized that the determination by the competent authority does not preclude a party to institute the proceedings before the Civil Court for adjudication of disputed questions of title and rights as to development. Thus, the challenge in the instant petition does not deserve to be entertained and the remedy of the petitioners, if aggrieved, is to approach the Civil Court, submitted Mr. Dighe.

12. Mr. Khandeparkar, the learned Counsel for respondent No.2, supplemented the submissions of Mr. Dighe. It was urged with tenacity that the consideration in the impugned order addresses the core issues which the competent authority was called upon to decide. Thus, according to Mr. Khandeparkar, the challenge to the impugned order on account of inadequate consideration of the grounds urged on behalf of the petitioners does not merit acceptance.

13. Mr. Khandeparkar would submit that the competent authority found that there were agreements for sale of the units for the building by the petitioners/developers, those agreements described the property which was to be conveyed, with sufficient clarity, and there was breach on the part of the petitioners to execute the conveyance within the stipulated period of the formation of the Society. Therefore, the competent authority was well within its right in ordering the execution of unilateral deemed conveyance.

14. Mr. Khandeparkar submitted that even if the case of the petitioners is taken at par and construed rather generously, with reference to the recitles in the MOFA Agreement, it becomes explicitly clear that the petitioners had agreed to convey entire Plot “D” admeasuring 18,602.20 sq. mtrs. of land. At best, it would be a case of the petitioners having failed to construct a building on a portion of Plot “D” and that, according to Mr. Khandeparkar, even if taken at par, does not furnish a ground to defer the execution of conveyance. Mr. Khandeparkar further submitted that the entire endeavour on the part of the petitioners has been to obtain undue advantage of the change in Development Control Regulations and derive benefit of the enhanced development rights to the detriment of respondent No.2 and its members. Such benefits, on account of change in law, accrue to the Society and not the developer, submitted Mr. Khandeparkar. To lend support to this submission Mr. Khandeparkar placed reliance on the decisions of this Court in the cases of Ravindra Mutenja and others vs. Bhavan Corporation and others[3] and Vidhi Builders Pvt. Ltd. vs..

15. Mr. Khandeparkar further submitted that this Court has repeatedly enunciated in no uncertain terms that an order granting deemed conveyance does not conclude the issue of right, title and interest in the property in respect of which deemed conveyance has been ordered and the aggrieved parties are entitled to institute a suit before the Civil Court to substantiate their claim. In the case at hand, the petitioners under the garb of assailing the order passed by the competent authority seek a determination as to tile to the property which 3 2003(3) Mh.L.J. 23.

16. Mr. Khandeparkar placed reliance on the decision of this Court in the case of Mazda Construction (supra), and a judgment in Writ Petition No.4373/2017 in Angeline Randolph Pereira & ors. vs. Suyog Industrial Estate Premises & Ors., a Division Bench judgment in the case of Zainul Abedin Yusufali Massawawala and others vs. Competent Authority, District Deputy Registrar of Co-operative Housing Societies, Mumbai and Others[5], another Division Bench judgment in the case of M/s. Shree Chintamani Builders vs. State of Maharashtra and others.[6] an order in Writ Petition (ST) No.31966 of 2018 in the matter of M/s. Mahanagar Housing Partnership Firm and others vs. District Deputy Registrar Co-operative Society, dated 6th December, 2018, an order dated 9th March, 2021 in Writ Petition (L) No.2164 of 2021 in the case of Mangala Madhusudan Sathaye and ors. vs. M/s. E-Square Premises Cooperative Housing Society Ltd. and ors. and a judgment in the case of PR Enterprises and others vs. Competent Authority under the Maharashra Ownerhsip Flat Act and others.[7]

17. Mr. Kamat joined the issue by canvassing a submission that it is not an immutable rule of law that the petitioners must approach the Civil Court. Where it could be shown that the statutory authority has acted in breach of the statutory provision and the determination by the statutory authority suffers from the vice of non-consideration of the relevant material, such determination can be a subject matter of writ jurisdiction. Reliance was placed on the observations of the Supreme Court in the case of the The D.F.O. South Kheri and others vs. Ram Sanehi Singh,[8] wherein it was enunciated that the Court was unable to hold that merely because source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of writ.

18. I have given anxious consideration to the submissions canvassed across the bar. As is evident, the remit of the authority exercised by the competent authority under Section 11 of MOFA, 1963 is at the heart of the controversy. The petitioners urge that the competent authority is enjoined to consider all the relevant material and apply its mind and 8 1971(3) SCC 864. thereafter pass an order under Section 11. The determination of the competent authority has the trappings of a quasi judicial power. In contrast, the respondents urge that the factors which are required to be taken into account by the competent authority are spelled out by the provisions of the MOFA, 1963, and determination of title, or for that matter the complicated questions of facts, are not within the province of the authority of the Deputy Registrar.

19. A brief recourse to the provisions contained in the MOFA, 1963 and the MOFA Rules, 1964 would be in order. The MOFA, 1963 came to be enacted with the avowed object of regulation of the promotion of the construction, sale and management and transfer of flats taken on ownership basis as it was found that consequent to actuate shortage of housing in the several areas of the State sundry abuses and malpractices were being indulged in and difficulties were faced in sale, management and transfer of flats taken on ownership basis. Under Section 4 of the MOFA, 1963 an obligation is cast on the promoter to enter into a written agreement for sale with each of the persons who are to take the flats in the building to be constructed by the promoter, in the prescribed format. Sub-section (1)(a) of Section 4 provides that such agreement shall contain the particulars as specified in Clause (a) and to such agreement copies of the documents specified in Clause (b) shall be attached. Such an agreement is required to be registered under the provisions of Registration Act, 1908. Section 4(a) primarily insulates the purchasers from the consequences which entail the nonregistration of an agreement under the Registration Act, 1908. Section 10 enjoins the promoter to take steps for registration of the organization of the persons who take flats as a cooperative society, or as the case may be, as a company. However, it does not affect the right of the promoter to dispose of the remaining flats in accordance with the provisions of the said Act.

20. Then comes Section 11. It mandates that the promoter shall take all necessary steps to complete his title and convey to the such organization his right, title and interest in the land and the building, and execute all relevant documents therefor in accordance with the agreement executed under Section 4. If there is no agreement as to the period within which the conveyance is to be executed, the promoter shall execute the conveyance within the prescribed period. Under sub-section (3) of Section 11, if the promoter fails to execute the conveyance in favour of such organization, within the prescribed period, the members of such organization may make an application in writing to the competent authority constituted under Section 5A, accompanied by true copies of the registered Agreement for Sale and all other relevant documents, for issuing a certificate that such organization is entitled to have an unilateral deemed conveyance executed in its favour and to have it registered. Under sub-section (4) of Section 11 the competent authority after making such inquiry as it deems necessary and after verifying authenticity of the documents submitted and after giving the promoter a reasonable opportunity of being heard, if satisfied that it is a fit case for issue of such certificate, shall issue a certificate to the Registrar of Assurances certifying that it is a fit case for enforcing unilateral execution of conveyance conveying thereby right, title and interest of the promoter in the land and building in favour of such organization, as deemed conveyance.

21. Under Rule 9 of the Rules, 1964 if no period for conveying title of the promoter to such organization is agreed upon, the promoter shall, subject to his right to dispose of remaining flats, if any, execute the conveyance within four months from the date on which co-operative society or the company is registered, or as the case may be, the association of flat takers is duly constituted.

22. Under the scheme of the Act and the Rules, it becomes evident, the promoter is enjoined to first enter into an agreement for sale of the flats in a building, register it and then take steps to form an organization of the flat purchasers and after completion of development and within the time stipulated in agreement between the parties or if no time is stipulated within four months of the organization having been registered or constituted, execute an instrument conveying the right, title and interest in the land and the building in accordance with the agreement executed with the flat purchasers.

23. The general reluctance, refusal or neglect on the part of the promoters to discharge the obligation to execute the conveyance, made the legislature to step in and enforce the obligation by empowering the competent authority to certify the justifiability of the deemed conveyance. The competent authority is thus entrusted with the responsibility to enforce the obligation of the promoter. From this standpoint, only the agency which executes the conveyance, in favour of the organization of purchasers, to which they are legitimately entitled to, stands substituted as the promoter disables himself from discharging the obligation, either by refusal or neglect.

24. The competent authority is, however, required to follow fundamental principles of judicial process. Upon verification of the authenticity of the documents and after furnishing a reasonable opportunity of hearing to the promoter it must arrive at a satisfaction that a case for execution and registration of deemed conveyance is made out.

25. As noted above, the starting point of submissions, on both the sides, was the decision of this Court in the case of Mazda Construction (supra). In the said case, after an elaborate analysis of the provisions contained in the MOFA, 1963 and the legislative object behind insertion of Section 5A and Section 11 of the MOFA, 1963, a learned Single Judge of this Court enunciated the nature of the jurisdiction exercised by the competent authority as under: “20. To my mind, reading of Sections 10 and 11 together with Section 5A would make it amply clear that what is to be performed by the Competent Authority is a duty and obligation which the promoter is to perform in law. That is to convey the title and execute the documents according to the agreement. If that is the duty which is to be performed by the promoter, but which he fails to perform, then, the Competent Authority steps in to fulfill it. That is a duty towards the flat purchasers and which duty cannot be avoided except at the cost and pains of legal proceedings including a criminal prosecution. In these circumstances and when sections 10 and 11 are read together and harmoniously with the preceding sections including those which contain the particulars of the agreement, then, it becomes absolutely clear that what has to be conveyed even by a deemed conveyance, which is an unilateral act and which enables the flat purchasers to acquire the Promoter's right, title and interest in the land and the building. Therefore, it cannot be said that an unilateral deemed conveyance conveys something more than what belongs to the Promoter. Section 11(1) provides for conveyance of Promoter's right, title and interest in the land and building as is clear from the words 'his right, title and interest....' appearing therein. I am not in agreement with Mr.Samdani that there are no guidelines guiding and enabling the Competent Authority to grant a deemed conveyance and therefore, the powers are likely to be abused or exercised arbitrarily in every such case. There are inbuilt checks and safeguards inasmuch as what is to be issued is a certificate entitling a unilateral deemed conveyance. It is not a document which stands alone or is a distinct transaction. It is a grant or conveyance in terms of what the agreement between parties stipulates and provides for being conveyed to the flat purchasers. Therefore, the Applicant is permitted to apply to the Competent Authority u/s 11(3) and such application is to be accompanied by true copies of the registered agreements for sale executed by the Promoter with each individual member/ flat purchaser and other relevant documents. It is to further that and to insist on the promoters fulfilling their obligations within the prescribed period, but noticing that their failure has resulted in hardship to flat purchasers, that the Legislature has stepped in. To my mind, this is not a power which can be exercised by the Competent Authority in ignorance of or by brushing aside the earlier provisions and contents of the agreement with the flat purchasers. Equally, the Competent Authority has to take into consideration the contents of other relevant documents.” (emphasis supplied)

26. Alluding to the apprehension, expressed in the said case, that the powers conferred by the provisions of MOFA, 1963 especially Section 11, are likely to be misused or abused, the learned Single Judge dispelled the same observing, as under: “26. The apprehension of Mr.Samdani, which he states, is not confined to the facts of this case alone, is that the powers conferred by this amendment in terms of sub-sections 3, 4 and 5 of Section 11 are likely to be misused or abused by both, the authorities, as also, by the parties. That apprehension can be taken care of if one carefully peruses these provisions and read them in their entirety. All that they indicate is that if an application is made in terms of subsection (3) of Section 11 which prays to issue a certificate to the society, company or apartment, then, on issuance of the certificate, it is entitled to have an unilateral deemed conveyance executed in their favour and to have it registered. Therefore, the application that is contemplated by subsection (3) itself is to seek a certificate to have an unilateral deemed conveyance executed in their favour and to have it registered. By sub-section (4) of Section 11, the powers of the Competent Authority have been enumerated and they are that on receipt of the application, within a reasonable time and in any case not later than six months, the Competent Authority after making such inquirty as deemed necessary and after verifying the authenticity of the documents submitted and after giving the promoter a reasonable opportunity of being heard and on being satisfied, issue a certificate to the Sub Registrar under the Registration Act,

1908. Thus, the Competent Authority is not obliged to issue a certificate in each case and as sought by the Appellant/s. What sub-section (4) contemplates is verification of the authenticity of the documents submitted and a reasonable opportunity of being heard to the promoter. Importantly satisfaction of the Competent Authority that it is a fit case for issuing such certificate is a mandatory requirement. Therefore, it is not as if an application being presented that issuance of certificate must follow.”

27. It would be contextually relevant to immediately notice that the import of the aforesaid judgment was clarified by the Division Bench in the case of M/s. Shree Chintamani Builders (supra). It was observed that an order granting deemed conveyance would not conclude issue of right, title and interest in the immovable property. It was not as if such an order was passed that the petitioners had no remedy to question the act of the Society on the strength of such deemed conveyance. The petitioners could still bring a substantiate suit on title and point out therein that as far as CTS No.2193/2 was concerned the reservation was shifted. Referring to the aforesaid factual background, in the case of M/s. Shree Chintamani (supra) this Court observed that the Court cannot examine in writ jurisdiction and in the garb of examining the legality, correctness and validity of deemed conveyance, the issues concerning the right, title or interest in the immovable property. It was reiterated that the order of deemed conveyance would not preclude or prevent the petitioner therein from filing a suit and claiming therein appropriate reliefs.

28. In the case of Zainul Abedin Yusufali (supra) the challenge to the order of deemed conveyance revolved around the claim that the agreement between the purchasers and developers was in respect of consumption of only a certain and specified area and it did not enable the builder and developer to claim the entire land admeasuring 1791.96 sq. mtrs. as described in the schedule to the Development Agreement. In the backdrop of aforesaid nature of the controversy, the Division Bench again clarified the nature of the jurisdiction exercised by the competent authority under Section 11 and the limited import of the said determination, as under: “9. …….. We are of the clear opinion that he society approached the Competent Authority with a limited request, namely, that having formed a legal entity namely the cooperative housing society of the flat purchasers, it is the obligation now of the promoter to convey the right, title and interest in the building and the land beneath, so that the legal entity will be entitled to enjoy the right, title and interest in the property. If while granting the deemed conveyance, the Competent Authority has in any manner, traveled beyond the stipulations in the agreement, and the grievance of the petitioners is that a larger property is allowed to be claimed by the society contrary to the covenant and recitals of the two agreements, then the remedy of the petitioners even in terms of two decisions of this Court in Tushar Jivram Chauhan v. State of Maharashtra (2015) 4 Mah LJ 867 and Mazda Construction Company vs. Sutlanabad Darshan CHS Ltd., 2012 SCC Online Bom 1266 relied upon by Mr. Khandeparkar is not to file a writ petition under Article 226 in this Court, but to approach competent civil court and establish this right, title and interest in relation to the larger property. While establishing and seeking to prove it, the petitioners can also allege that contrary to the Development Agreement and a MOFA Agreement, the society claimed a larger property and relying upon those submissions the Competent Authority has granted the relief in relation thereto. That is the prejudice caused and which the petitioners can seek a redressal thereof by approaching such a court. During the course of such proceedings, the petitioners can highlight the alleged wrongful conduct of the society in firstly bringing a suit and withdrawing it and for the same relief namely for failure to discharge MOFA obligations, then approaching the Competent Authority belatedly and obtaining the Deemed Conveyance in the absence of the petitioners. Therefore, that adjudication, if at all one can term it, and the order therein, would not be binding on the petitioners, ought to be the eventual declaration. That they can claim irrespective of any application under Section 11 of MOFA, which conclusions in the impugned order, we are of the opinion that the jurisdiction of the competent civil court is not barred, despite such document being placed on record and relied upon by respondent no.3. The Civil Court will adjudicate the issue of right, title and interest of the petitioners in the larger property by independently applying its mind on a total appraisal of the oral and documentary evidence before it. Once all such remedies are intact, then, we do not think that in writ jurisdiction we should entertain such a dispute.”

29. The question again arose in the case of Ganga Bhaskar Builders (supra), on which Mr. Kamat placed reliance. A learned Single Judge of this Court after adverting to the previous pronouncements including the judgment in the case of Tushar Jivram Chauhan and anr. vs. State of Maharashtra[9] observed that in the facts of the said case the Society cannot insist for the deemed conveyance and/or certificate of the entire land as was done in that case, based upon the society’s wrong averments that there was no balance FSI available as per the prevailing DC rules and the bye-laws.

30. From the above statutory provisions and enunciation, the position which emerges can be summarized as under. The authority to grant deemed conveyance is conditioned and controlled by the primary obligation of the promoter to convey to the organization of flat purchasers right, title and interest in the land and buildings, in accordance with the agreement executed under Section 4. Competent authority cannot convey more than what the promoter had agreed to convey under the agreement executed under Section 4. What competent authority is thus required to consider is, the extent of the obligation incurred by the promoter, whether the obligation to execute the conveyance became enforceable and whether the promoter committed default in, or otherwise disabled himself from, executing the 9 2015(4) Mh.L.J. 867.

31. The enquiry is thus of limited nature. The competent authority cannot delve into the aspects of title. Nor the finding of the competent authority precludes a party from agitating the grievance as to the entitlement of the organization of purchasers to have the conveyance, before the Civil Court. The remit of enquiry by the competent authority is, thus, whether the conditions stipulated for enforcement of the obligation to execute the conveyance have been satisfied and, if yes, order an unilateral deemed conveyance.

32. In the light of the aforesaid nature of the jurisdiction to be exercised by the competent authority, reverting to the facts of the case, reference to the Agreement for Sale executed by the petitioners in favour of the flat purchasers become indispensable. Copy of an agreement executed by and between the petitioners and Mr. Vipin Punatar is annexed to the petition. Under the said agreement the petitioners agreed to allot Flat No.604 on the sixth floor of Building No.11 Wing “D” of Layout II Plot “D” more particularly described in the Second Schedule. The Second Schedule, reads as under: “ALL THAT place of parcel of land or ground admeasuring 18,602.[2] sq. mtrs. or thereabouts bearing C.T.S. No.43, 44, 45/4 situate lying and being at Mulund (E), Taluka Kurla, Bombay Suburban and bounded on or towards the East partly by 60’ wide Service Road and partly by the land reserved for Welfare Centre cum Dispensary on or towards the West by Nalla on or towards the North by the land reserved for Welfare Centre cum Dispensary and 60’ wide D.P. Road and on or towards the Sourth by Nalla.”

33. Under Clause 39 of the said Agreement the promoters agreed to execute the conveyance after the said building was completely ready and fit for occupation and after the organization was registered or formed and only after all the premises in the said building have been sold and disposed of.

34. Mr. Kamat would urge that the area of 18,602.20 sq. mtrs. of Plot “D” of Layout II, shown in the Second Schedule, is not decisive. Taking the Court through the recitals especially Recital Nos.[9] to 15 and 17 Mr. Kamat would urge that the purchasers acknowledged that they had perused and approved the plan which included the construction of building No.1. Therefore, the petitioners cannot be said to have agreed to convey the entire area admeasuring 18,602.20 sq. mtrs. In other words, the entitlement of respondent No.2 Society to have conveyance was subject to the right of the petitioners to develop Building No.1 and utilize the FSI which would become admissible.

35. The aforesaid submission is ex facie in teeth of the express terms of the agreement. The petitioners cannot be permitted to draw mileage from the fact that the recitals 9 to 15 and 17 contain reference to the plans. It was the statutory obligation of the promoter under Section 4 of the MOFA, 1963 to disclose the particulars as to the sanctioned plan, in accordance with which the buildings were to be constructed. Disclosure of plans, therefore, can neither bolster up the case of the promoter nor detract materially from the case of the organization to have a conveyance of the property shown in the agreement.

36. Moreover, there are attendant circumstances which, prima facie, appear to be inconsistent with the case now sought to be put-forth on behalf of the petitioners that Plot “D1”, carved out of Plot “D”, post sub-division with the approval of the BMC, was not agreed to be conveyed to respondent No.2. In a communication addressed to the Tahsildar on 1st Mach, 2013 while disputing the liability of the petitioners to pay the nonagricultural tax, it was, inter alia, intimated that in respect of building No.11, standing on Plot “D” admeasuring 18,602.20 sq. mtrs., a society had already been formed long back and all the maintenance of the building was being done by the individual societies. The authorities were thus requested to issue notice to individual buildings and recover NA tax.

37. The question as to whether, after respondent No.2 Society came to be formed on 6th November, 2012, post issue of the occupation certificate by the planning authority, Plot “D” could have been further subdivided, could not have been legitimately enquired into by the competent authority. The thrust of the submission on behalf of the petitioners that at the highest the competent authority could have granted conveyance in respect of an area proportionate to the FSI consumed in the construction of the buildings of which respondent no.2 Society has been formed (15,400 sq. mtrs. approximately) takes the matter in the arena of disputed questions as to the title to the suit premises. The competent authority was neither competent nor equipped to adjudicate the said issue.

38. I, therefore, find substance in the submission of Mr. Khandeparkar that the resistance sought to be put-forth on behalf of the petitioners to the execution of conveyance in favour of petitioner No.2 Society is in the realm of dispute as to title and can legitimately form a subject matter of a substantive suit. In a long line of decisions, adverted to above, right from Mazda Construction (supra) it has been reiterated that in exercise of writ jurisdiction and under the garb of examining the legality, validity and correctness of an order of deemed conveyance this Court cannot examine issues which essentially partake the character of title dispute and complicated question as to entitlement to have further development rights. The proper remedy for the aggrieved party is to institute a substantive suit before the competent Civil Court. In my view, the facts of the instant case do not warrant a different approach. The petition thus deserves to be dismissed.

39. Hence, the following order:: O R D E R:

(i) The petition stands dismissed.

(ii) The petitioners shall, however, have the liberty to institute a substantive suit, if not already instituted, to agitate their claim of title to allegedly carved out Plot “D1” and consequently assail the entitlement of respondent No.2 to have conveyance of the entire Plot “D” admeasuring 18,602.20 sq. mtrs.

(iii) In the event such a suit is instituted or has already been instituted, the same shall be decided on its own merits and in accordance with law without being influenced by any of the observations made hereinabove, which are confined to test the legality, propriety and correctness of the impugned order.

(iv) Subject to the aforesaid clarification, rule stands discharged.

(v) In the circumstances, there shall be no order as to costs.

In view of disposal of the petition, interim application does not survive and stands disposed. [N. J. JAMADAR, J.] The learned Counsel for the petitioners seeks continuation of the ad-interim order dated 15th October, 2020, whereby the Court had directed that no coercive steps should be taken on the basis of the order passed by the Competent Authority. The learned Counsel for respondent No.2 resisted the prayer on the ground that, in the intervening period, the petitioners have started development on the portion of the subject property in respect of which also, the competent authority has ordered execution of an unilateral deemed The learned Counsel for the petitioners submits that he has no instructions to make a statement as to whether the petitioner would refrain from carrying out further construction. In view of this statement, the petitioners do not deserve any indulgence. Hence, the oral application for stay stands rejected. [N. J. JAMADAR, J.]