Court Upholds Societies’ Right to Joint Conveyance but Reduces Land Area From 21,736 Sq. Metres to 16,584.55 Sq. Metres After Excluding Reserved, Surrendered and Encroached Portions
The Bombay High Court has held that a developer cannot indefinitely withhold conveyance of land to cooperative housing societies merely because additional Floor Space Index or Transferable Development Rights may become available in the future.
Justice Sandeep V. Marne upheld the entitlement of three cooperative housing societies to obtain joint unilateral deemed conveyance under Section 11 of the Maharashtra Ownership Flats Act, 1963. The Court, however, found that the Competent Authority had wrongly conveyed the entire plot measuring 21,736 square metres without excluding portions already surrendered, reserved, acquired or affected by slum encroachment.
The Court therefore set aside the original deemed conveyance certificate and remanded the matter for the limited purpose of issuing a fresh certificate for 16,584.55 square metres within three months.
Background
Kiran Builders Pvt. Ltd. undertook phased development of a large property at Vile Parle, Mumbai.
It initially constructed Buildings A to H, J and K. Purchasers of flats in those buildings formed Kalpita Enclave Cooperative Housing Society Limited.
The developer later constructed Buildings L and M after obtaining additional development potential arising from land surrendered for a Development Plan road. Separate societies were formed by the occupants of Buildings L and M.
The developer had also proposed Buildings N and P. However, those buildings were never constructed because the development potential available from the DP road surrender was lower than originally anticipated.
The three societies subsequently filed a joint application under Section 11(3) of MOFA seeking unilateral deemed conveyance of the entire land measuring 21,736 square metres.
On 15 May 2017, the Competent Authority allowed the application and granted deemed conveyance of the entire land along with the buildings standing on it.
Kiran Builders challenged that order before the Bombay High Court.
Earlier Civil Court Decree
One of the developer’s principal objections was based on an earlier civil suit filed by the first society.
In 1985, Kalpita Enclave Society had approached the City Civil Court opposing the developer’s proposed construction of Buildings L, M, N and P and seeking conveyance of the entire property.
By a decree dated 7 November 1997, the City Civil Court directed the developer to convey only the land appurtenant to Buildings A to H, J and K, together with common rights of way and use of the recreation ground.
The society challenged the limited nature of that decree through a first appeal before the Bombay High Court. The appeal was eventually withdrawn in September 2016 after the society stated that it intended to apply for deemed conveyance.
The developer argued that withdrawal of the appeal gave finality to the City Civil Court decree. It contended that the Competent Authority could not thereafter grant conveyance of a larger area contrary to the decree.
Earlier Decree Did Not Bar Joint Deemed Conveyance
The High Court rejected the developer’s objection.
It examined the changed circumstances between the filing of the civil suit and the deemed conveyance application.
When the original suit was filed, only Buildings A to H, J and K had been constructed, and the first society alone was claiming rights over the property. During the pendency of the suit, Buildings L and M were completed, occupancy certificates were issued and two additional societies were formed.
The first society thereafter accepted that the societies representing Buildings L and M were also entitled to an interest in the land. The three societies consequently decided to seek joint conveyance rather than litigate over the division of the property among themselves.
The Court held that this was a reasonable and legally permissible course.
The societies representing Buildings L and M had not been parties to the earlier civil suit or appeal. The joint application before the Competent Authority therefore involved a materially different claim by three societies based on circumstances that had evolved after the institution of the suit.
Withdrawal of Suit or Appeal Does Not Prevent Deemed Conveyance
The Court also noted that the statutory remedy of unilateral deemed conveyance was introduced during the pendency of the earlier appeal.
Section 11 of MOFA provides societies with a faster and more effective mechanism to secure conveyance when the promoter fails to perform its statutory obligation.
The Court held that a society which has instituted a civil suit for conveyance is not permanently barred from withdrawing that proceeding and invoking the remedy of deemed conveyance.
Since an appeal is a continuation of the suit, the society could withdraw the appeal and pursue the subsequently available statutory remedy.
The Court consequently rejected the plea of res judicata and held that the Competent Authority had jurisdiction to decide the joint application filed by the three societies.
Competent Authority Could Not Convey the Entire Plot
Although the Court upheld the Competent Authority’s jurisdiction, it found an error in the extent of land conveyed.
The certificate covered the entire area of 21,736 square metres. However, parts of the land could not properly form part of the conveyance because they had been surrendered, acquired, reserved or were not in the societies’ possession.
The societies themselves agreed to exclude the following areas:
- 1,859 square metres surrendered to the municipal corporation for a DP road;
- 158.05 square metres reserved for a municipal market;
- 243.07 square metres reserved for a primary school;
- 123.12 square metres taken over for widening Sahar Road; and
- 2,328.41 square metres situated outside the societies’ compound and encroached by slum dwellers.
The total excluded area was 4,711.65 square metres.
The societies therefore restricted their deemed conveyance claim to 16,584.55 square metres.
The Court described this concession as fair and held that the error in the original certificate could be corrected by directing conveyance only of the revised area.
Developer Relies on Proposed Buildings N and P
Kiran Builders argued that even the reduced area could not be conveyed because it intended to construct Buildings N and P.
The developer claimed that the buildings had formed part of a layout sanctioned in 1983 and that land remained physically available for their construction.
It further contended that development rights might become available in the future when land reserved for a municipal market and primary school was acquired by the municipal corporation.
According to the developer, it could use the resulting TDR for constructing Buildings N and P. It therefore sought to delay conveyance until the entire layout was completed.
No Available FSI for Buildings N and P
The Court rejected this argument.
The proposed construction of Buildings N and P had originally been based on the developer’s assumption that 2,200 square metres would be surrendered for the DP road.
In reality, only 1,859 square metres was surrendered. The corresponding reduction in available development potential meant that Buildings N and P could not be constructed.
The municipal corporation had informed the developer as far back as 23 April 1991 that no balance FSI remained in lieu of the DP road and that construction of Buildings N and P was not possible.
Despite this position, the developer had failed to resolve the issue for approximately 46 years after Buildings L and M received their occupancy certificates.
The Court held that the developer could not continue to obstruct conveyance on the basis of a development possibility that had ceased to exist decades earlier.
Future TDR Is Not Development Potential of the Existing Layout
The Court also rejected the developer’s proposed reliance on TDR that might arise from future acquisition of land reserved for the municipal market and primary school.
It explained that such reserved land may or may not ultimately be acquired. If the reservation lapses, the developer may retain ownership. If the land is acquired, the developer may receive compensation either in money or through TDR.
TDR granted as compensation is freely transferable. It may be sold, retained or used in another project. It is not necessarily required to be loaded on the same property.
Most importantly, compensation or TDR arising from acquisition of separately reserved land cannot be treated as unutilised development potential belonging to the portion of the layout that must be conveyed to the societies.
Once the reserved land is acquired, it becomes separated from the layout. Any compensation flowing from that acquisition belongs to the developer independently and cannot justify continued withholding of the societies’ land.
Developer Cannot Exploit Future FSI Forever
The High Court reiterated that a promoter cannot retain ownership of society land indefinitely merely to exploit additional development potential that may become available in the future.
Once the disclosed development potential has been consumed and the statutory period for conveyance has passed, the developer must transfer its right, title and interest to the society.
Any future increase in FSI or availability of additional TDR cannot be used as a justification for postponing conveyance forever.
The Court observed that the occupancy certificates for the first society’s buildings had been issued in the 1970s, while Buildings L and M received occupancy certificates in November 1990.
The developer had therefore delayed compliance with its statutory obligation under MOFA for several decades.
Final Decision
The Bombay High Court partly allowed the developer’s petition.
It held that:
- the earlier civil decree did not prevent the three societies from jointly seeking deemed conveyance;
- withdrawal of the first appeal for the purpose of pursuing the statutory remedy did not attract res judicata;
- the Competent Authority was justified in exercising jurisdiction under Section 11 of MOFA;
- the developer could not delay conveyance based on the possibility of future FSI or TDR;
- Buildings N and P could not be relied upon to obstruct the societies’ conveyance rights; and
- the original certificate was erroneous only to the extent that it conveyed the entire 21,736 square metres.
The order dated 15 May 2017 and the original certificate were set aside. The application was remanded to the Competent Authority with a direction to issue a fresh unilateral deemed conveyance certificate for 16,584.55 square metres within three months.
Key Legal Principle
A promoter’s statutory obligation to convey land under MOFA cannot be postponed indefinitely on the speculative possibility that additional FSI or TDR may become available in future.
Once the existing development potential has been exhausted, future compensation or TDR arising from separate reserved land cannot be treated as continuing development potential of the society’s property.
A society may also withdraw an earlier civil proceeding and pursue the faster statutory remedy of deemed conveyance, particularly where changed circumstances result in a joint claim by additional societies.
Case: Kiran Builders Pvt. Ltd. v. Kalpita Enclave Cooperative Housing Society Ltd. & Others
Court: Bombay High Court
Case Number: Writ Petition No. 9694 of 2017
Judge: Justice Sandeep V. Marne
Date: 18 June 2026
Result: Petition partly allowed; deemed conveyance restricted to 16,584.55 square metres and fresh certificate directed within three months
