Bombay High Court Upholds Homebuyers' Ownership Rights in Promoter Deals

MUMBAI: In a significant ruling for homebuyers, the Bombay High Court on Tuesday said that private commercial arrangements between promoters cannot take away or reduce the legal rights of flat purchasers under the Maharashtra Ownership Flats Act (MOFA).

A single-judge bench of Justice Amit Borkar dismissed three petitions, including one filed by industrialist Nusli Wadia, challenging an order that granted “deemed conveyance” of land to a commercial co-operative society at Raheja Metroplex in Malad West.

Deemed conveyance is the legal process where a housing society obtains ownership title of land and building from a developer/builder who has failed to execute a formal conveyance deed. The dispute concerned 19,702 square metres of land on which the complex stands. In August 2022, the District Deputy Registrar (DDR) had granted deemed conveyance to Imitation Jewellery Market Co-operative Society, transferring ownership of the land to the society. The land includes 16,747.19 sq m of plot area and 2,955.39 sq m reserved as recreation ground.

Wadia, the landowner, along with Ivory Properties and Hotels Ltd (a Raheja Group entity) and Radhakrishna Properties Pvt Ltd, had challenged this order. They argued that their original arrangement was only a lease and that the society could not be granted full ownership rights.

However, the court noted that the flat buyers had signed registered agreements under MOFA which clearly mentioned transfer of title in the land. Importantly, 12% of the flat price was collected specifically as land cost, and Wadia himself had signed these agreements and accepted the amount.

Justice Borkar said that once such statutory agreements are signed and land consideration is accepted, promoters cannot rely on internal business arrangements to deny ownership rights to buyers. “The rights of flat purchasers arise from the registered MOFA agreements and the statute itself,” the court said, adding that private agreements between promoters cannot override these statutory rights.

Upholding the DDR’s decision, the court ruled that the society was legally entitled to ownership of the land. This ruling is a significant victory for homebuyers, reinforcing their legal protections against developers who might try to circumvent their rights through private deals.