Bombay High Court Delivers Landmark Ruling on Building Conveyance Delays
The Bombay High Court has issued a significant judgment, firmly holding that a promoter cannot indefinitely delay the conveyance of a building by citing future expansion plans or unutilised Floor Space Index (FSI). This ruling reinforces the statutory protections afforded to housing societies under the Maharashtra Ownership Flats Act (MOFA), ensuring that flat purchasers are not left in a state of uncertainty regarding property titles.
Court's Observations on Indefinite Delays
Justice Amit Borkar, presiding over the case, made critical observations regarding the potential for abuse if clauses postponing conveyance were enforced. He stated, “If clauses postponing conveyance were to be enforced, the promoter could indefinitely delay transfer by referring to some future plan, additional FSI, or a proposed phase that may or may not materialise. That would leave the society, once formed, without title, without control over the land, and in a state of uncertainty. The law does not contemplate such a situation.” This underscores the court's commitment to preventing promoters from exploiting contractual loopholes to withhold conveyance.
Background of the Case
The High Court was hearing a petition filed by the Mahalaxmi City (Type D) Cooperative Housing Society in Navi Mumbai. The society challenged a November 2025 order from the deputy registrar of cooperative societies, which had rejected its plea for deemed conveyance under MOFA. The deputy registrar based the rejection on grounds that the project was incomplete, with a balance FSI of 1,226 square metres still available for future development by the promoter.
Society's Arguments and Evidence
The housing society, registered in 2019, presented compelling evidence to support its claim. It relied on the occupancy certificate (OC) to demonstrate that construction of the building had been completed and that flat purchasers had been in possession since 2016. Additionally, the HC noted that a MahaRERA entry recording 100% completion provides strong assurance that the building is complete and “cannot be lightly ignored.” This evidence was pivotal in establishing the society's right to conveyance.
Court's Decision and Directions
Allowing the petition, the High Court directed that unilateral deemed conveyance be granted to the society. The court observed that deemed conveyance is a statutory mechanism designed to transfer title—including land and structures—to a society when a builder delays execution of the conveyance deed after the grant of an occupancy certificate. This decision highlights the court's role in enforcing legal timelines and protecting the interests of flat purchasers.
Builder's Contentions and Court's Rejection
Opposing the plea, the builder argued that conveyance was agreed to be executed only after the expiry of 36 months from the date of occupancy certificates for all buildings in the larger project. The builder further contended that delays were caused because the land falls within the Navi Mumbai Airport Influence Notified Area. However, the HC rejected these arguments, stating that such factors do not “extinguish or suspend the rights which accrued to the society under MOFA upon its registration and expiry of the statutory period.”
Clarification on Balance FSI
The court provided crucial clarification regarding the issue of balance FSI. Justice Borkar observed, “Even if balance FSI exists on paper, it does not by itself negate the completion of the constructed buildings or the society’s right to conveyance. Balance FSI is a measure of potential development. It is not proof that the present construction is incomplete.” This ruling prevents promoters from using theoretical future development as a pretext to delay conveyance.
Statutory Obligations and Legal Framework
The High Court reiterated its stance from recent judgments, emphasizing that contractual promises cannot be treated as a licence to withhold conveyance at will. Once statutory conditions are fulfilled, the right of the society crystallizes, and the promoter must comply. Referring to Rule 9 of the MOFA Rules, the court stated, “It fixes a clear timeline within which the promoter must execute the conveyance in favour of the society. This is not a matter of choice. It is not left to convenience. It is a command of law. Once the society is registered and the statutory period expires, the obligation to convey the property matures. The promoter does not retain discretion to postpone it on grounds of business planning or future intentions.”
Protection of Flat Purchasers
The court underscored that the source of this duty is statutory, flowing from the Act and the Rules framed thereunder. Justice Borkar highlighted, “When the Legislature creates such an obligation, it does so to protect flat purchasers who otherwise stand in a weaker bargaining position. The promoter drafts the agreement. The purchaser merely signs it. If the law were to permit the promoter to rely on contractual clauses to defer conveyance, the very object of the statute would stand defeated. A private agreement cannot override a public law mandate.” This reinforces the principle that statutory protections take precedence over private contractual terms.
Final Ruling on Contractual Clauses
In its concluding remarks, the court made it clear that any clause in an agreement stating that conveyance will be executed only after completion of a larger layout or after exploitation of full FSI runs contrary to the statutory scheme. “The statute does not speak of completion of an entire township or future phases. It speaks of conveyance to the society within a defined period. The focus is on the building and the society formed by the flat purchasers. The law does not permit the promoter to hold back title merely because he proposes further development elsewhere on the layout,” the court said. This ruling sets a precedent for similar cases, ensuring that housing societies can secure their property rights without undue delay.
