Promoter Cannot Retain Ownership By Merely Using The Word ‘Lease’: Bombay High Court Upholds Ownership Deemed Conveyance Under MOFA

“The Promoter Must Convey His Entire ‘Right, Title and Interest’ — Nothing Can Be Retained Behind”, In a powerful reaffirmation of the consumer-protective character of the Maharashtra Ownership Flats Act, 1963, the Bombay High Court on 24 February 2026 delivered a reportable judgment, dismissing a batch of writ petitions challenging unilateral deemed conveyance granted to cooperative housing societies.

Justice Amit Borkar, speaking for the Court, held that Section 11 of MOFA obligates the promoter to transfer the entirety of his estate in the land and building, and that “private arrangements cannot nullify the mandate of Section 11.” The Court upheld the orders of the Competent Authority granting ownership deemed conveyance to the flat purchasers’ societies.

The ruling squarely addressed the recurring controversy in Maharashtra real estate litigation — whether societies are entitled to full ownership or only leasehold rights when development documents repeatedly refer to a proposed lease.

A Lease That Never Came Into Existence

The larger property at Dahisar was originally owned by private landowners. Pursuant to consent terms in civil suits of 1979, Ratan Co-operative Housing Society Limited stepped into the shoes of the original owners and became vested with right, title and interest in the land.

The property was subdivided into approximately 31 plots. Allotment letters issued in 1980 contemplated that a lease would be executed in favour of the allottees or their nominee cooperative housing society. Development agreements were thereafter executed, construction was undertaken, and flats were sold on ownership basis.

The flat agreements repeatedly stated that the land would be obtained on lease and that the word “conveyance” should be read as “lease.” However, no registered lease deed was ever executed.

After formation of the flat purchasers’ societies and continued failure to execute conveyance, applications were made under Section 11(3) of MOFA for unilateral deemed conveyance. The Competent Authority granted ownership conveyance in favour of the societies. Developers and the land-owning society approached the High Court.

“The Statutory Framework Must Govern the Dispute” — MOFA Overrides Drafting Devices

At the outset, the Court emphasized that the controversy could not be resolved by isolating clauses from private agreements.

“The dispute cannot be resolved by picking isolated clauses from private agreements and treating them as final. Private contracts operate within the limits fixed by statute.”

The Court revisited the legislative intent behind MOFA, noting that the Act was enacted to address a historical imbalance where flat purchasers paid full consideration but were left without title, while promoters indefinitely retained control over land.

“The entire scheme of the statute must therefore be read as consumer protective legislation meant to ensure that purchasers ultimately receive collective ownership through their society.”

“Promoter” Includes the Owner Who Causes Construction — Substance Over Form

A central issue was whether the land-owning society could escape statutory obligations by arguing that development was carried out through a developer.

Interpreting Section 2(c), the Court highlighted the breadth of the definition of “promoter,” which includes any person who “constructs or causes to be constructed” a building for sale of flats.

“If the owner obtains permissions and causes construction through a developer, he cannot escape by saying that he did not personally lay bricks.”

The Court made it clear that splitting roles between owner and developer cannot dilute statutory duties. The law looks at the substance of the transaction and not its nomenclature.

“His Right, Title and Interest” Means the Whole Estate — No Fragmentation Permitted

The heart of the judgment lies in the interpretation of Section 11(1), which obligates the promoter to convey “his right, title and interest in the land and building” to the society.

The Court gave full effect to this expression:

“The phrase ‘his right, title and interest’ signify the totality of ownership… The expression does not refer merely to the constructed portion. It expressly speaks of the land and the building.”

The Court laid down the governing principle in clear terms:

“If the promoter is a freehold owner of the land… the entire ownership must pass to the society. He cannot say that he will keep ownership but give only a lease.”

Conversely, where a promoter genuinely holds leasehold rights from a superior owner, the society would receive the entire leasehold interest. What the statute prohibits is partial retention.

“The statute does not permit such splitting of rights… Ownership once held by the promoter must move fully to the society.”

“An Intention to Grant a Lease Does Not Create a Leasehold Estate”

The petitioners’ principal argument was that the entire transaction structure contemplated leasehold rights. They relied upon allotment letters, development agreements, and flat agreements which repeatedly referred to a proposed lease.

However, the Court examined the factual matrix closely. The Municipal Corporation’s letter dated 26 February 1980 imposed a Public Housing reservation and specifically prohibited leasing or resale for ten years.

In that backdrop, the Court held:

“A transaction cannot be presumed to have created leasehold rights when the regulatory framework itself prevented execution of a lease.”

Crucially, the Court recorded that no registered lease deed was ever executed.

“An intention to grant a lease in future does not create present leasehold rights. Rights in immovable property arise only when a proper instrument is executed and registered.”

The so-called lease structure, therefore, remained a proposed arrangement which never matured into a legally enforceable estate.

“Internal Arrangements Cannot Nullify the Mandate of Section 11”

The petitioners argued that the societies were bound by the contractual chain and could not claim a better title than their predecessors. They also relied on a prior matter concerning Mahavir CHS where only assignment of lease was granted.

Rejecting these contentions, the Court held:

“Internal arrangements cannot nullify the mandate of Section 11.”

Deemed conveyance proceedings are fact specific. The decisive inquiry is always: what interest does the promoter presently hold?

“The statutory test under Section 11 remains constant. The society is entitled to receive the entire right, title and interest held by the promoter.”

Similarity of land layout or historical transactions does not automatically lead to identical outcomes. Each case depends on the actual title position.

Ownership Must Be Conveyed Where No Lease Exists

After analysing the statutory framework, documentary record and municipal conditions, the Court concluded that:

“The land continues to be owned by Respondent No. 3. No lease has been executed. Construction has been completed. Flats have been sold. Society has been formed. The statutory stage for conveyance has arrived.”

The Court firmly rejected the argument that the society could be confined to leasehold rights:

“The claim of the petitioners to restrict the society to a lesser estate is therefore unsustainable.”

Holding that no jurisdictional error or perversity was shown, the Court dismissed all writ petitions and upheld the orders granting unilateral deemed conveyance.

As the Court effectively made clear, a contemplated lease cannot be used as a device to indefinitely retain control over land after selling flats on ownership basis.

Date of Decision: 24 February 2026