The Bombay High Court has held that withdrawal of an appeal arising from a civil suit for conveyance, with the intention of seeking deemed conveyance, does not bar the Competent Authority from exercising jurisdiction under Section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) on a joint application by societies who were not all parties to the earlier suit, particularly where the prayer for conveyance is materially different and arises in a changed factual background.
The Court further held that once the developer has delayed performance of its statutory obligation to convey and no subsisting development potential exists in the land sought to be conveyed, the developer cannot postpone conveyance on the basis of speculative future FSI, TDR, or compensation arising from acquisition of separately reserved lands. A developer cannot claim a right to continuously exploit the building potential of the land for eternity without conveying the property to the societies. Accordingly, the set aside the order dated May 15, 2017 passed by the Competent Authority and the certificate of unilateral deemed conveyance issued pursuant thereto, not because the Competent Authority lacked jurisdiction, but for the limited reason that the entire land of 21,736 sq. mtrs. ought not to have been conveyed.
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A Single Judge Bench of Justice Sandeep V. Marne observed that the decree dated November 07, 1997 did not come in the way of the Competent Authority deciding a joint application for deemed conveyance by Respondent Nos. 1 to 3 societies. The Bench observed that the earlier suit had been filed in a different factual background, when only Buildings A to H, J and K were in existence and Respondent No. 1 was opposing further construction. By the time the appeal was withdrawn, Buildings L and M had already been constructed, Respondent Nos. 2 and 3 societies had been formed, and a joint claim for conveyance by all three societies had become appropriate.
The Bench further observed that it was always open to a society to withdraw a suit or appeal and seek the quicker and swifter remedy of deemed conveyance under amended Section 11 of MOFA, and therefore the objection founded on the civil court decree or res judicata was misplaced.
The Bench also observed that the Competent Authority had erred in directing conveyance of the entire land admeasuring 21,736 sq. mtrs., because certain portions had already been surrendered for D.P. road, were reserved for municipal market and primary school, had been taken over for road widening, or were encumbered by slum and not in physical possession of the societies. Respondent Nos. 1 to 3 fairly restricted their claim to 16,584.55 sq. mtrs.
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Rejecting the Petitioner’s contention that conveyance should be delayed until possible future construction of Buildings N and P, the Bench observed that construction of Buildings N and P had become impossible because the actual land surrendered for D.P. road was only 1,859 sq. mtrs. and MCGM had, by letter dated April 23, 1991, stated that there was no balance FSI in lieu of D.P. road and that construction of Building Nos. N and P was not possible. The Bench described the Petitioner’s attempt to link possible future TDR or compensation from acquisition of reserved lands with the right to postpone conveyance as “preposterous to the core,” and held that compensation receivable either in monetary terms or in the form of TDR cannot be treated as development potential for land to be conveyed to the societies.
The Bench also reiterated that a developer cannot continuously exploit building potential for eternity without conveying the land in favour of the society, and that mere possibility of additional FSI becoming available in future cannot justify withholding conveyance once the statutory obligation to convey has arisen under Section 11 of MOFA.
Briefly, the Petitioner-Developer challenged the order dated May 15, 2017 passed by the District Deputy Registrar and Competent Authority under Section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, granting unilateral deemed conveyance of land admeasuring 21,736 sq. mtrs. together with buildings standing thereon in favour of Respondent Nos. 1 to 3 societies.
The Petitioner had developed Buildings A to H, J and K on the subject land, and thereafter constructed Buildings L and M after claiming extra FSI on surrender of land required for a 44 feet D.P. road. The Petitioner had also proposed Buildings N and P, but contended that due to dispute regarding the exact area surrendered for the D.P. road, those buildings could not be constructed. Respondent No. 1 society, originally formed by purchasers of Buildings A to H, J and K, had earlier filed a civil suit seeking conveyance of the entire land, but the City Civil Court by decree dated November 07, 1997 directed conveyance only of the land appurtenant to Buildings A to H, J and K.
That appeal was later withdrawn on September 16, 2016 with liberty to seek deemed conveyance, after which Respondent Nos. 1 to 3 jointly applied under Section 11(3) of MOFA for deemed conveyance of the entire land. The Competent Authority allowed that application.
