Bombay High Court: Promoters Cannot Use Absence of Occupation Certificate to Deny Deemed Conveyance Under MOFA – “Societies Can Apply for Deemed Conveyance Without an Occupation Certificate, Provided They File a Self-Declaration to Obtain It Later”

Court’s Decision

The Bombay High Court overturned the Competent Authority’s decision that denied a deemed conveyance certificate to a cooperative housing society under the Maharashtra Ownership of Flats Act (MOFA). The court held that:

1. The absence of an occupation certificate, a statutory obligation of the promoter, does not bar the issuance of deemed conveyance.
2. The Competent Authority is directed to issue the certificate for deemed conveyance, enabling the society to acquire ownership rights and proceed with redevelopment or regularization.

Facts

1. Land Ownership and Development:
   • The land in question was owned by the legal heirs of a deceased individual and was later transferred to a developer for residential construction.
   • Agreements for sale were executed under MOFA, and flats were sold to various purchasers.
2. Formation of Society:
   • A cooperative housing society was registered in 2004 for the flat purchasers.
   • The building was fully constructed but lacked an occupation certificate, and certain floors were declared unauthorized by the planning authorities.
3. Application for Deemed Conveyance:
   • In 2015, the society applied for a deemed conveyance certificate under Section 11 of MOFA.
   • The application was rejected by the Competent Authority in 2017, citing:
     • Missing sale agreements.
     • Absence of an occupation certificate.
     • Illegality in the construction of certain floors.

Issues

1. Can the absence of an occupation certificate bar a cooperative housing society from obtaining a deemed conveyance under MOFA?
2. Does illegality in the building’s construction justify rejecting a deemed conveyance application?
3. Can the Competent Authority reject an application without giving the society an opportunity to rectify alleged defects?

Petitioner’s Arguments

1. Occupation Certificate Not Mandatory for Deemed Conveyance:
   • The obligation to obtain an occupation certificate lies with the promoter, not the society.
   • The phrase “if any” in Section 11(3) of MOFA indicates that a deemed conveyance application can proceed even without an occupation certificate.
2. Purpose of Deemed Conveyance:
   • Without a deemed conveyance, the society cannot regularize the structure or proceed with redevelopment.
   • The flat purchasers, having paid for their homes, are trapped in a “vicious cycle” due to the promoter’s defaults.
3. Application Completeness:
   • The Competent Authority issued notices to opponents, implying the application was complete. The rejection for alleged defects (missing sale agreements) was, therefore, unsustainable.
4. Government Resolution of 2018:
   • The Government of Maharashtra allowed societies to file a self-declaration and apply for occupation certificates post-deemed conveyance. This should apply retroactively to the society’s application.

Respondent’s Arguments

1. Defective Application:
   • The application was incomplete as it lacked key documents like the sale agreements and the full commencement certificate.
   • The attached Permanent Alternate Accommodation Agreement (PAAA) did not meet the requirements of a MOFA agreement.
2. Illegality of Construction:
   • The construction was unauthorized as the commencement certificate was limited to the plinth area.
   • No deemed conveyance can be granted for an illegal structure.
3. No Automatic Rights:
   • Granting a deemed conveyance certificate would amount to legitimizing unauthorized construction, which is impermissible.

Analysis of the Law

1. Section 11 of MOFA:
   • Sub-section (3): Requires an application for deemed conveyance to include “all relevant documents, including the occupation certificate, if any.”
   • The phrase “if any” indicates that an occupation certificate is not mandatory for deemed conveyance.
   • The Competent Authority must assess the promoter’s statutory obligations and not penalize the society for the promoter’s failures.
2. Obligations of the Promoter:
   • MOFA imposes a duty on the promoter to convey title to the society and secure all necessary approvals, including the occupation certificate.
   • Failure to comply with these obligations does not affect the society’s right to enforce deemed conveyance.
3. Government Resolution of 2018:
   • Clarifies that societies can apply for deemed conveyance without an occupation certificate, provided they file a self-declaration to obtain the certificate later.

Precedent Analysis

1. Samruddhi Co-op Housing Society v. Mumbai Mahalaxmi Construction Pvt. Ltd.:
   • The Supreme Court emphasized that promoters are obligated to secure occupation certificates under MOFA and cannot avoid their statutory duties.
2. Sukhsagar Co-op Housing Society Ltd v. State of Maharashtra:
   • The Bombay High Court held that promoter defaults cannot bar cooperative housing societies from enforcing their statutory rights.
3. Other Observations:
   • Courts have consistently held that deemed conveyance does not legalize unauthorized structures; it merely transfers ownership rights to the society.

Court’s Reasoning

1. Promoter’s Defaults:
   • The promoter’s failure to obtain an occupation certificate or comply with planning laws cannot be used as a defense to deny the society’s rights.
   • The society and flat purchasers cannot be disadvantaged due to the promoter’s non-compliance.
2. Effect of Deemed Conveyance:
   • A deemed conveyance certificate does not legitimize unauthorized construction. It only transfers the promoter’s ownership rights to the society, enabling them to proceed with legal remedies like regularization or redevelopment.
3. Administrative Lapse:
   • The Competent Authority failed to issue a notice to the society to rectify alleged defects in the application. This procedural irregularity made the rejection unsustainable.

Conclusion

1. The court quashed the Competent Authority’s rejection of the deemed conveyance application.
2. It directed the Competent Authority to issue the deemed conveyance certificate, subject to the society filing a self-declaration and addressing redevelopment needs.

Implications

1. For Societies:
   • Societies can seek deemed conveyance without occupation certificates, ensuring their ability to regularize or redevelop properties.
2. For Promoters:
   • Promoters are reminded of their statutory obligations under MOFA and cannot use their non-compliance to avoid granting rights to societies.
3. Municipal Corporations:
   • The decision reaffirms that deemed conveyance does not interfere with municipal authorities’ powers to address unauthorized constructions.
4. Policy Clarity:
   • The judgment highlights the importance of clear administrative processes for deemed conveyance, reducing procedural hurdles for societies.

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