REAL ESTATE UPDATE
23rd March 2022
Issue No. 28/21-22
RIGHTS UNDER MAHARASTRA OWNERSHIP FLATS (REGULATION OF THE PROMOTION OF CONSTRUCTION, SALE, MANAGEMENT AND TRANSFER) ACT, 1963 CANNOT BE ENFORCED ON MMRDA LANDS
In a recent matter, a Division bench of the Hon’ble Bombay High Court (“Bombay HC”) in Shahed Kamal & Ors. v. Pagarani Universal Infrastructure Private Limited & Ors.[1] has held that that purchase of flats in buildings constructed on Mumbai Metropolitan Region Development Authority (“MMRDA”) lands does not entitle the purchasers to exercise statutory rights under Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (“MOFA”) such as a conveyance of the underlying land on ownership basis or an entitlement as of right in the form of a sub-lease from the lessee of the MMRDA.
Brief Facts
An appeal was filed by flat owners’ association and its members (“Purchasers”) against the order of the Learned Single Judge of the Bombay HC, which rejected their prayer of restraining Pagarani Universal Infrastructure Private Limited (“Developer”) from putting up additional construction on the plot or creating any third-party rights and to restrain MMRDA from approving any further construction on the land.
In 2014, the possession of the flats was handed over to the Purchaser; however as per the Purchasers, the Developer failed in its duty to form a society or an association as required under section 11 of MOFA.
Thereafter, MMRDA informed the Purchasers in February 2018 that the MOFA provisions are not applicable to the municipality and allowed the Developer to use an additional 1.5 FSI on the plot. The Purchasers filed a suit in the Bombay HC against the Developer and MMRDA seeking injunction on further construction.
A Single Bench of Bombay HC passed an Order on 25th November 2020 rejecting the prayers of the Purchasers. This was challenged by the Purchasers vide an appeal before the Division Bench.
Issues
The following issues came up for consideration before the Division Bench:
- Whether MMRDA excludes applicability of MOFA as a whole?
- Would the enforcement of Section 7 of MOFA, as sought to be invoked by the Purchasers in the present case affect the rights of MMRDA?
- If the applicability of MOFA has been excluded by the MMRDA Act in respect of a project, can the Developer and flat purchasers’ contract to incorporate the provisions of MOFA and would those provisions of MOFA bind the parties inter se?
Findings of the Bombay HC
Upon hearing the submissions of all the parties and after interpreting the various provisions of the MMRDA and MOFA by using the literal rule and purposive rule of interpretation, the Bombay HC observed that the plain meaning of Section 31 read with Schedule II, Clause II of the MMRDA Act expresses the clear intention of the legislature to exclude the operation of MOFA as against MMRDA or to any land or building belonging to or vesting in MMRDA. Further, as land includes FSI, provisions of MOFA cannot be applied while dealing with any dispute in respect of FSI arising out of the land, which belongs to or vests in the MMRDA. The court also emphasized on the fact that there was a clear legislative intent of excluding MMRDA properties from the application of MOFA.
The Bombay HC, while determining the second issue, observed that enforcement of Section 7 of MOFA, as sought to be invoked by the Purchasers in the present case, would cause prejudice to or affect the rights of MMRDA and therefore such enforcement cannot be allowed.
In respect of the third issue, the Bombay HC held that even though the parties are bound by the terms of the agreement, still the terms of the agreement could not be complied with as it was contrary to the provisions of law and statutory requirements.
For the reasons aforesaid, it was held that the since the applicability of MOFA has been excluded by the MMRDA Act, the Developer and Purchasers contract to incorporate the provisions of MOFA cannot bind the parties inter se.
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[1] Appeal (L) No. 8104 of 2020 in Interim Application (L) No. 3986 of 2020 with Notice of Motion No.1358 of 2019 in Suit No. 610 of 2019