The Bombay High Court ruled that declaring a registered Development Agreement as cancelled based solely on an advocate’s notice is not permitted, and therefore, restored the Special Recovery Officer’s order, holding that a registered and acted-upon Development Agreement cannot be annulled unilaterally without a civil court’s declaration.
The Court accordingly quashed the order passed by the Divisional Joint Registrar, Cooperative Societies, Mumbai, which had set aside the attachment order issued by the Special Recovery Officer under Rule 107(19) of the Maharashtra Cooperative Societies Rules, 1961 (MCS Rules).
A Single Judge Bench of Justice Amit Borkar observed that a registered instrument creating an interest in immovable property cannot be cancelled by a unilateral notice, and such rights subsist until lawfully extinguished by mutual consent or judicial declaration. The Bench thus asserted that the Authority had no jurisdiction to declare unilateral cancellation through advocate’s notice, as valid, while exercising revisional powers under Section 154 of the Maharashtra Cooperative Societies Act.
The Single Judge added that a mere notice through an advocate has no legal force to nullify a registered instrument. Unless confirmed by a competent court, the document continues to hold its binding effect. Since the developer’s rights were active on the date of attachment, the Special Recovery Officer rightly proceeded against those rights.
The Bench also emphasized that a Development Agreement, once registered, creates an enforceable interest in immovable property when it grants the developer authority to construct, sell, and receive consideration. Such rights are beneficial and transferable, and not revocable unilaterally.
Briefly, the dispute arose from a Development Agreement executed between the landowners and a developer firm for consideration of Rs. 1.13 crores, whereby the developer was granted the right to construct, sell, and dispose of units in the redevelopment project and to retain the sale proceeds as its own. Since the credit facilities extended to the developer were defaulted, the same led to recovery proceedings under Section 101 of the Maharashtra Cooperative Societies Act, 1960.
The Registrar issued a Recovery Certificate followed by an attachment order of the developer’s rights in the property. The landowners filed objections claiming ownership and stating that the Development Agreement had been cancelled via a notice by an advocate. The Special Recovery Officer rejected the objection as non-maintainable, but the Revisional Authority held the attachment as illegal, stating that the development rights were terminated.
Appearances:
Senior Advocate Atul Damle and Advocate Omkar Warange, for the Petitioner
Senior Advocate Girish S. Godbole, along with Advocates Savina Crasto, Sachin J. Kadam, Siddharth R. Khedekar, Aseem Naphade, Lubna Shaikh, and Utkarsh Pawar, for the Respondent
