'Developers Cannot Delay Conveyance For Eternity And Milk Additional FSI Benefits': Bombay High Court Upholds Societies' Deemed Conveyance

"If any additional FSI advantage is available in respect of the land which is supposed to be conveyed to the two Respondent-Societies, that advantage belongs to those societies." Bombay High Court, in a significant ruling, dismissed petitions filed by a developer, upholding orders passed by the District Deputy Registrar, Co-operative Societies, granting unilateral deemed conveyance certificates in favour of two cooperative housing societies.

A bench of Justice Sandeep V. Marne firmly observed that developers cannot indefinitely delay conveyance to exploit additional FSI benefits from unconveyed land.

The dispute arose from a layout development by the Petitioner-developer, Nitin Nagarji Mehta, involving amalgamated land parcels. He constructed three buildings, Shree Siddhi CHSL, Shree Jupiter CHSL, and Mercury CHSL. Two societies, Shree Jupiter CHSL and Shree Siddhi CHSL, sought deemed conveyance of their proportionate land and buildings after the developer allegedly failed to convey the same as per the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA).

The primary question before the court was whether the Competent Authority, while granting deemed conveyance, can convey land in excess of what was stipulated in the Section 4 agreements under MOFA, especially when the developer subsequently amalgamated land and obtained revised layout plans utilizing greater FSI. The court was also called upon to determine if the Competent Authority could use a subsequent plan for proportionate land division and if the orders violated existing consent terms.

Initial Agreements vs. Amalgamated Development

The court noted that while original Section 4 agreements with flat purchasers of Shree Siddhi CHSL indicated a land area of 822 sq.mtrs and for Shree Jupiter CHSL 1416.50 sq.mtrs, the Petitioner later amalgamated adjacent lands. This amalgamation led to a common layout plan sanctioned on 21 March 1997 for an amalgamated plot of 4590 sq.mtrs.

Utilisation of Larger FSI

This revised plan, approved on 21 March 1997, became the basis for constructing Building Nos. 1 (Shree Siddhi CHSL) and 2 (Shree Jupiter CHSL), utilizing FSI arising from the larger amalgamated land. The court highlighted a "unique situation" where the land specified in the Section 4 agreements was significantly less than the land required for the sustenance of the buildings as constructed under the layout plan. "Thus, a unique situation is created in the present case where the land indicated in Section 4 Agreements executed with the flat purchasers is lesser than the land required for sustenance of buildings of both the Respondent-Societies."

Competent Authority's Jurisdiction Beyond Section 4 Agreements

While the Competent Authority must generally adhere to Section 4 agreements under MOFA Section 11(3), the court emphasized that Section 11(4) also requires consideration of "all other relevant documents," including development permissions and sanctioned plans. Furthermore, Section 16 of MOFA expressly states that its provisions override any contrary contractual stipulations. "Also to curb the tendencies on the part of the developers in providing for contractual stipulations in Section 4 Agreements for conveyance of land contrary to the statutory scheme of MOFA, Section 16 provides that the provisions of MOFA would override the contrary stipulations of a contract."

Proportionate Land Division Affirmed

The court held that when a developer amalgamates land and carries out layout development utilizing FSI from a larger plot, conveyance cannot be restricted solely to the lands indicated in the initial Section 4 agreements. It becomes essential to divide the land proportionately based on the Built-Up Area (BUA) utilized for each building, a principle supported by the Government Resolution dated 22 June 2018.

Rejection of Developer's Revised Plan for More FSI

The Petitioner contended that land division should be based on a later plan dated 1 August 2007, which proposed a 400% increase in BUA for Building No.3 (Mercury) by loading additional FSI/TDR. The court, however, emphatically rejected this, stating that the buildings of the respondent societies were not constructed in accordance with this later plan. "It is impermissible to take into consideration subsequently sanctioned layout plan of 1 August 2007 since the buildings of the two Respondent-Societies are not constructed in accordance with that plan."

Developer Cannot Benefit from Delayed Conveyance

The court strongly condemned the developer's attempt to derive benefits from delaying the statutory conveyance. It noted that the developer had failed to convey the land within four months of the societies' formation, as mandated by Section 11(1) of MOFA read with Rule 9 of MOFA Rules, and instead applied for revised permissions to construct additional wings. "Thus what Petitioner is attempting to do in the present case is to derive benefits flowing out of land meant to be conveyed to the two societies and use the same for his own profiteering. This cannot be countenanced within the statutory framework of MOFA."

Consent Terms Not Violated The developer also argued that the deemed conveyance orders violated consent terms executed with Mercury-A CHSL in a separate suit. The court dismissed this, noting that the respondent societies were not parties to that suit and the consent terms primarily dealt with the completion and possession of flats, not the division of the entire land in a manner that would prejudice the other societies.

The Competent Authority’s exercise of proportionately dividing the plot area, recreational ground (RG) area, and road setback area based on the BUA utilized by each society was found to be sound and unexceptionable by the High Court.

The Bombay High Court dismissed the developer's petitions, affirming the Competent Authority's orders for deemed conveyance. The ruling reinforces that developers cannot use delays in statutory conveyance obligations or subsequent plans to unilaterally claim additional FSI benefits from land that should have been conveyed to cooperative housing societies, thereby upholding the legislative objective of MOFA.

Date of Decision: 28 July 2026