In a landmark judgment, the Bombay High Court has ruled that developers cannot use contractual clauses to indefinitely delay the execution of conveyance deeds to housing societies and flat purchasers. Justice Amit Borkar, presiding over the case, emphasized that such delays violate the Maharashtra Ownership of Flats Act (MOFA), 1963, which mandates a strict timeline of four months for the execution of these deeds.
The court’s decision came in response to a petition by Lok Housing and Construction Limited, which was challenging an order by the District Deputy Registrar, Cooperative Societies. This 2017 order had granted unilateral deemed conveyance to Lok Everest Co-operative Housing Society (CHS) in Mulund, covering substantial building and land areas along with common spaces.
Lok Housing argued that since other buildings in the same layout were pending development, it was impractical to separate the plot for conveyance to individual societies. They cited a government resolution and provisions in their sales agreements that conveyance would only occur after the completion of the entire development.
However, Justice Borkar noted that over three decades had passed since the initial agreements without conveyance being executed, a delay he deemed unjustifiable and detrimental to the rights of flat purchasers. He pointed out that statutory rules under MOFA and the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Rules, 1964, clearly stipulate the timeframe and conditions for such conveyances, overriding any contrary private agreements.
The court observed that Lok Everest CHS, registered in 2006 and having begun selling flats in 1995, had not seen any progress toward conveyance from the developer until the unilateral deemed conveyance was issued in 2017. This lack of action highlighted the developer’s neglect of statutory duties, influenced by an erroneous reliance on contractual terms that aimed to postpone these obligations indefinitely.
Justice Borkar firmly stated that the delay in conveyance could not be justified by such contractual clauses. He reaffirmed that Section 11 of MOFA is a crucial provision intended to transfer title ownership to housing societies once flats are allotted, effectively ending the developer’s control over the property.
