Bombay High Court Upholds Deemed Conveyance Despite Consent Decree; Holds Developer’s Failure to Execute Conveyance Triggers Section 11 MOFA.
Facts
The petition was filed by Nahar Builders Ltd. and members of various Sheth family HUFs challenging an order of unilateral deemed conveyance passed by the Competent Authority under Section 11(3) of the Maharashtra Ownership Flats Act, 1963 (MOFA) in favour of Orchid Enclave Co-operative Housing Society Ltd. The dispute arose from a large layout development at Chandivali, Mumbai. The society had earlier instituted a civil suit seeking conveyance of the land and an injunction against construction of an additional building (“Blue Bell”). The suit was compromised through consent terms dated 25 September 2013, under which the developer agreed to convey approximately 13,629.84 sq. m. of land to the society. In return, the society agreed to withdraw its objections to construction of the additional building, accepted ₹5 crore towards society funds along with repairs and painting commitments, and agreed to execute a 99-year lease in favour of the developer’s group entity over 3,546.31 sq. m. comprising the club house, swimming pool, tennis court and other common amenities.
Although the developer benefited from the settlement by constructing and selling the additional “Blue Bell” building, it failed to execute the promised conveyance for nearly twelve years. Consequently, the society invoked the statutory remedy under Section 11(3) of MOFA and sought unilateral deemed conveyance. The Competent Authority granted conveyance of 13,578.293 sq. m., calculated proportionately in accordance with the Government Resolution dated 22 June 2018. The developer challenged that order, contending that once a consent decree existed, the society ought to have sought execution of the decree instead of invoking the deemed conveyance mechanism.
Issues
- Whether a prior consent decree bars the Competent Authority from exercising powers under Section 11(3) of MOFA.
- Whether failure to execute a registered conveyance despite consent terms constitutes “failure” under Section 11(3).
- Whether the society was required to pursue execution proceedings instead of seeking deemed conveyance.
- Whether the Competent Authority ought to have protected the developer’s claimed lease rights while granting deemed conveyance.
Petitioners’ Arguments
The developers argued that the Competent Authority lacked jurisdiction because the parties had already settled the dispute through a consent decree passed by the City Civil Court. According to them, the decree had conclusively determined the parties’ rights regarding conveyance, and therefore the society’s only remedy was to execute that decree. A second proceeding under Section 11(3) of MOFA was said to be barred by res judicata and principles of estoppel arising from the compromise decree. The developers relied upon decisions including Ajanta LLP, Sanu Enterprises, S. Malla Reddy, and Nahar Seth & Jogani Developers Pvt. Ltd. to contend that compromise decrees bind the parties and preclude subsequent proceedings concerning the same subject matter.
The petitioners further contended that the deemed conveyance order ignored an essential component of the consent terms, namely the society’s obligation to grant a 99-year lease over 3,546.31 sq. m. of land containing the club house, swimming pool and other common amenities. By conveying the entire land without reserving lease rights, the Competent Authority had allegedly nullified the consent decree and deprived the developers of contractual rights.
Respondents’ Arguments
The society contended that mere execution of consent terms did not satisfy the statutory obligation under Section 11 of MOFA because no registered conveyance had ever been executed. The developer had enjoyed the benefits of the settlement—including construction of the additional Blue Bell building—but had neglected its corresponding obligation to convey the land for more than twelve years. Since the promoter had failed to execute the conveyance, the jurisdictional condition for invoking Section 11(3) clearly stood satisfied. The society argued that MOFA provides an independent statutory remedy intended to avoid prolonged civil litigation and therefore it was not obliged to institute execution proceedings.
The society also relied upon Section 16 of MOFA, which gives overriding effect to the Act over contractual arrangements. It submitted that the Competent Authority’s jurisdiction is confined to deciding whether deemed conveyance should be granted and does not extend to adjudicating contractual claims regarding lease arrangements between the parties. Since the land conveyed was actually less than what had been agreed under the consent terms, the impugned order did not violate the settlement.
Analysis of the Law
Justice Sandeep V. Marne examined the legislative scheme of Sections 11 and 16 of MOFA. The Court observed that unilateral deemed conveyance was introduced to overcome the recurring problem of promoters delaying execution of conveyances and compelling societies to engage in prolonged civil litigation. The statutory remedy was therefore intended to be a speedier and summary mechanism independent of ordinary execution proceedings. A promoter’s “failure” under Section 11(3) occurs whenever a valid conveyance is not actually executed and registered within the prescribed period. Mere consent, agreement, or even a consent decree does not complete the statutory obligation because title does not pass until execution and registration of the conveyance deed.
The Court further held that Section 16 MOFA expressly overrides contractual provisions inconsistent with the statutory rights of flat purchasers. Developers cannot contractually postpone, dilute or qualify the statutory obligation to convey title. Although consent terms remain enforceable between the parties, they cannot deprive a society of its statutory entitlement to seek deemed conveyance. The Court also reaffirmed that the Competent Authority’s jurisdiction under Section 11 is limited to determining whether conveyance should be granted and does not extend to adjudicating private contractual disputes such as a developer’s claim for a future lease over portions of the conveyed property.
Precedent Analysis
- Nahar Seth & Jogani Developers Pvt. Ltd. v. Deputy Registrar (2024 SCC OnLine Bom 1662) – Distinguished. The earlier decision required the Competent Authority to consider consent terms but did not hold that a consent decree ousts jurisdiction under Section 11 MOFA.
- Paramanand Builders LLP v. Competent Authority (2026 SCC OnLine Bom 1522) – Relied upon to reiterate that consent arrangements cannot override statutory obligations under MOFA.
- Prestige Garden A-1 CHSL v. State of Maharashtra (2024 SCC OnLine Bom 5625) – Applied regarding the limited applicability of estoppel against statutory rights under MOFA.
- Nahalchand Laloochand Pvt. Ltd. v. Shri Panchamrut CHSL (2025 SCC OnLine Bom 341) – Reaffirmed the limited scope of inquiry before the Competent Authority while granting deemed conveyance.
- Ajanta LLP v. Casio Keisanki Kabushiki Kaisha (2022) 5 SCC 449 and S. Malla Reddy v. Future Builders Cooperative Housing Society – Cited by the developers on res judicata and consent decrees but found inapplicable to the statutory scheme of MOFA.
Court’s Reasoning
The Court held that the jurisdictional requirement under Section 11(3) had unquestionably arisen because the developer had failed to execute and register the conveyance despite expressly agreeing to do so under the consent terms. The statutory obligation under Section 11 is fulfilled only upon execution and registration of the conveyance deed, not merely by agreeing to convey. Since the conveyance had remained unexecuted for twelve years, the Competent Authority rightly assumed jurisdiction.
The Court emphasised that compelling societies to pursue execution proceedings would frustrate the very legislative purpose behind introducing deemed conveyance. MOFA was amended precisely to provide a quicker and more effective remedy without forcing flat purchasers into protracted litigation. It also noted that the Competent Authority had conveyed 13,578.293 sq. m., which was slightly less than the 13,629.84 sq. m. contemplated under the consent terms. Accordingly, the order did not violate the settlement. The developer’s grievance regarding the proposed 99-year lease concerned a separate contractual right that could be pursued independently through appropriate proceedings. The Competent Authority had no jurisdiction to adjudicate or enforce such contractual claims while exercising powers under Section 11. Consequently, the absence of any direction regarding lease rights did not invalidate the deemed conveyance order.
Conclusion
The Bombay High Court dismissed the writ petition and upheld the order granting unilateral deemed conveyance. It held that a consent decree does not extinguish the statutory remedy available under Section 11(3) of MOFA where the promoter has failed to execute a registered conveyance. The Court clarified that contractual disputes concerning lease rights over portions of the conveyed property may be pursued independently but cannot prevent or delay statutory conveyance in favour of a co-operative housing society.
Case Details
- Case: Nahar Builders Ltd. & Ors. v. Orchid Enclave Co-operative Housing Society Ltd. & Ors.
- Court: Bombay High Court
- Case Number: Writ Petition No. 6063 of 2026
- Judge: Justice Sandeep V. Marne
- Judgment Reserved: 21 July 2026
- Judgment Pronounced: 28 July 2026
- Result: Writ Petition dismissed; deemed conveyance order upheld.
