Kiran Raj

The Supreme Court of India’s Division Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan held that the competent authority was justified in granting a deemed conveyance certificate under Section 11(4) of the Maharashtra Ownership Flats Act, 1963. The Court directed that registration of the conveyance shall remain subject to the execution of a permanent lease in favour of the appellant over a specified portion of the land. The Court confirmed that the appellant’s rights as a perpetual lessee under earlier instruments would remain unaffected, stating, “no fault can be found with the order of the competent authority.” The appeal was accordingly dismissed without costs.

The dispute arises over a parcel of land known as Final Plot No. 61 in Town Planning Scheme III, Vile Parle (West), Mumbai, admeasuring approximately 2814.38 square meters. The property was originally owned by Champaben Hiralal Shah. On 1 April 1972, she, along with her three sons—Lalbhai, Ranjit, and Arun—constituted a partnership firm named M/s. CH Shah & Sons, contributing the larger plot as capital.

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Following the death of Champaben, the partnership was reconstituted on 30 June 1983 among the remaining partners. On 13 February 1987, the firm was dissolved by a deed of dissolution. The deed effected a partition of the larger plot between Lalbhai H. Shah, as Karta of Lalbhai Hiralal Shah HUF, and Arun H. Shah, as Karta of Arun Hiralal Shah HUF. The portion verged in blue on the annexed plan was allotted to Lalbhai (the "Lalbhai Plot"), while the remainder—building No. 3 and surrounding land verged in yellow—was allotted to Arun (the "Arun Plot").

The dissolution deed stipulated that construction on each party’s respective parcel would be confined to the development potential of that portion in accordance with prevailing Development Control Regulations. It also provided that if Lalbhai transferred his interest to a flat purchasers’ organisation, a perpetual lease would be executed in favour of Arun or his nominees with respect to the Arun Plot.

On 30 March 1987, a new firm, the 10th Respondent (Avon Enterprises), was formed with Lalbhai and six others as partners. Lalbhai brought in the Lalbhai Plot as his capital contribution. The 10th Respondent constructed a two-wing building on the Lalbhai Plot and began entering into Flat Purchase Agreements (FPAs) with buyers from 1991 onwards. The Municipal Corporation of Greater Mumbai issued an Occupation Certificate for the building on 6 November 1993. The cooperative society representing the flat purchasers, the 1st Respondent, was registered on 15 July 2005.

The 1st Respondent filed a complaint before the Additional Consumer Disputes Redressal Forum seeking conveyance of the Lalbhai Plot, which was allowed on 19 August 2017. Subsequently, on 13 January 2020, the 1st Respondent filed an application under Section 11(3) of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), seeking deemed conveyance of the entire larger plot (2753 sq. mtrs. after accounting for a road setback). This application was made before the District Deputy Registrar, Co-operative Societies, Mumbai City (the 11th Respondent), who is the competent authority under Section 5A of MOFA.

On 18 September 2020, the competent authority granted the application ex parte, issuing a certificate of deemed conveyance in respect of the entire larger plot, conditional upon the 1st Respondent executing a permanent lease in favour of Arun Hiralal Shah HUF or its nominees for the Arun Plot. The appellant challenged this order via writ petition before the Bombay High Court. The High Court upheld the order but granted liberty to the appellant to pursue a civil suit regarding title.

In submissions before the Supreme Court, the appellant contended that the deed of dissolution, dated 13 February 1987, established that the Arun Plot was allotted exclusively to the appellant and was not subject to any flat purchaser agreements. It was submitted that Lalbhai was entitled to the goodwill and trade name of the firm, and Arun had rights over building No. 3, including responsibilities for its outgoings. The deed also allocated the Floor Space Index (FSI), allowing Lalbhai to utilise all FSI except that used for building No. 3, which was reserved for Arun.

Further, the appellant cited that the Arun Plot had been excluded from development and that if Lalbhai conveyed his plot to a cooperative society, the society would be obligated to execute a lease in favour of Arun. The appellant’s position was that the 11th Respondent, as a competent authority under MOFA, lacked jurisdiction over the Arun Plot, as no agreements involving the 10th Respondent covered it. It was argued that the authority could not adjudicate disputes involving third-party rights or title, and that the proper forum for such adjudication was a civil court. Decisions from the Bombay High Court and the Supreme Court, including Mazda Construction Company v. Sultanabad Darshan CHS Ltd. and Abdul Kuddus v. Union of India, were cited in support.

The appellant also argued that the order passed by the competent authority lacked specificity, particularly in relation to lease terms and conditions. Additionally, it was submitted that since the 1st Respondent had already pursued relief through consumer forums, it should not have initiated proceedings under MOFA.

In response, the 1st Respondent asserted that the larger plot was never subdivided in official records. It maintained that no prejudice had been caused to the appellant, who had rights protected under a lease deed executed on 16 July 1991 by the 10th Respondent in his favour. The society highlighted that over 93 flat purchasers had been awaiting conveyance since the early 1990s, and the developer had failed to execute it despite statutory obligations under MOFA. The 1st Respondent contended that the competent authority was empowered to issue the certificate and that the appellant’s interests were adequately protected under the deed of dissolution and lease arrangement.

The factual record included: (i) the 1987 deed of dissolution; (ii) the 1987 partnership deed establishing the 10th Respondent; (iii) the FPAs referring to the division of the plot and existing lease in favour of the appellant; and (iv) the application made by the 1st Respondent under Section 11(3), which referred to the lease deed.

The certificate issued by the competent authority referred to a deemed conveyance of the full plot (Final Plot No. 61), subject to execution of a permanent lease over the Arun Plot (903.06 sq. mtrs.) in favour of the appellant. The lease was to be executed as per the plan annexed to the FPAs and on terms outlined in the deed of dissolution and the 1991 lease deed.

Thus, the proceedings culminated in a certificate of deemed conveyance in favour of the 1st Respondent, conditional on the execution of a lease in favour of the appellant, leading to the current appeal before the Supreme Court.

The Court stated, “Now, we turn to the scope of powers conferred on the competent authority under the MOFA.” It recorded that the developer was a promoter within the meaning of Section 2(c) of the MOFA and that, under Section 4(1), a promoter is required to execute a registered agreement for sale in favour of flat purchasers. It noted that under Section 10, the promoter is obligated to form a cooperative society or company for flat purchasers.

The Court quoted Section 11 of the MOFA in full and stated, “Sub-section (1) of Section 11 contains the obligation of the promoter to convey title in respect of the land and the building developed by him. Sub-section (3) of Section 11 gives a remedy to a cooperative society or a company... to apply to the competent authority... for issuing a certificate that the said society or the company... is entitled to have unilateral deemed conveyance.”

The Court observed, “This provision has been enacted to ensure that a speedy remedy is available to the flat purchasers for enforcing the promoter's obligation under sub-section (1) of Section 11. The MOFA has been enacted with the object of protecting the flat purchasers.”

It stated that, “The procedure for dealing with applications made under sub-section (3) of Section 11 has been laid down in the MOFA Rules.” The Court referred to Rule 13(3) and (5) and noted, “Even cross-examination of any of the parties shall not be permitted.” It stated that the competent authority must comply with the principles of natural justice and added, “While passing orders on the application under Section 11(3), the competent authority must record reasons.”

The Court held, “It is undoubtedly true that quasi-judicial powers have been conferred upon the competent authority while dealing with applications under Section 11(3) of the MOFA. However, proceedings before the competent authority under Section 11(3) are of summary nature, as can be seen from the MOFA Rules.” It further held, “The competent authority, while following the summary procedure, cannot conclusively and finally decide the questions of title.” It concluded, “Notwithstanding the order made under sub-section (4) of section 11, aggrieved parties can always file a civil suit for establishing their rights.”

Regarding the scope of powers of the registration officer under Section 11(5), the Court stated, “After receiving the certificate, the registration officer is required to issue a summons to the promoter to show cause why such a unilateral instrument should not be registered as deemed conveyance.”

The Court clarified, “The power conferred on the registration officer does not enable him to reopen or set aside the findings recorded by the competent authority while passing an order of grant of certificate. The registration officer is neither an appellate authority nor a revisional authority.”

It stated, “There may be a statutory requirement of obtaining prior permission or consent of an authority before the execution and registration of a conveyance. The registering officer cannot register the instrument unless such statutory consent/permission is produced.” It added, “The registering officer must be satisfied that the requirements, such as payment of stamp duty and other procedural requirements under the 1908 Act, are complied with.”

The Court observed, “This is the limited scope of adjudication by the registering officer under sub-section (5) of Section 11.” It concluded, “The registering officer has no power to sit in appeal over the order of the competent authority while exercising the power under Section 11(5).”

On the factual aspects, the Court observed that the deed of dissolution dated 13 February 1987 described the larger plot in the schedule as admeasuring 2726 square meters and excluded the setback area of 131.40 square meters. The Court recorded, “There is a plan annexed to the deed of dissolution marked as Exhibit ‘A’.” It referred to the clauses detailing the allocation of the goodwill, trade name, and business rights to Lalbhai, and that Arun was entitled to reconstruct building No. 3 and consume FSI of 9717 square feet.

The Court recorded that the deed of partnership executed on 30 March 1987 for the 10th respondent firm acknowledged the larger property and specified that the portion of 1823 square meters was brought in by Lalbhai, while the remaining portion belonged to Arun.

It observed, “A prototype flat purchase agreement (FPA) refers to the said property admeasuring 1911.32 square meters and records that the remaining 903.06 square meters on which building No. 3 stands belongs to the appellant.” It quoted clause 36, which stated, “The Developer shall execute a Conveyance in respect of the said Property in favour of such Co-operative Society subject to the said Deed of Lease dated 16th day of July, 1991 in respect of Arun's property in favour of Arun Hiralal Shah H.U.F. and/or his nominee or nominees...”

The Court referred to sub-clause (h) of clause 8 of the deed of dissolution and quoted:
“Lalbhai and/or the Co-operative Society or similar body shall execute a Lease in perpetuity in favour of Arun at the cost of Arun including the cost of stamp and registration charges at the yearly lease rent of Re.1/- in respect of building No.3 together with the land underneath and shown under yellow verged line...”

The Court stated, “There is no dispute about the execution of the deed of dissolution. There is no dispute that the area allotted to Lalbhai for development is separate and distinct from the area allotted to Arun.” It recorded that the 10th respondent had acknowledged in its deed of partnership that the Arun Plot belonged to the appellant and had no claim over it.

The Court noted, “In the FPAs for sale executed by the 10th respondent, there is a recital that a deed of lease dated 16th July 1991 in favour of the present appellant in respect of the Arun Plot was executed.” The Court recorded that even the application under Section 11(3) by the 1st respondent referred to the 1991 lease.

It stated, “By the order dated 18th September 2020 passed by the competent authority, a direction was issued in the exercise of powers under Section 11(3) of MOFA to grant ex parte deemed conveyance in favour of the first respondent society.” The Court recorded, “The certificate records that the deemed conveyance shall be in respect of the entire larger plot... subject to the first respondent executing a permanent lease deed in favour of the present appellant in respect of an area of 903.06 square meters.”

On the appellant’s criticism of the vagueness of the order, the Court stated, “It is obvious that the lease deed to be executed by the first respondent must be in terms of the deed of dissolution and the lease deed dated 16th July 1991.”

The Court held, “The MOFA is a beneficial legislation... The provisions of Section 11 are for the benefit of the flat purchasers. In writ jurisdiction, the Court should not interfere... unless the order is manifestly illegal.”

It concluded, “Substantial justice has been done by protecting the appellant’s rights as a perpetual lessee with a right to develop the Arun plot.”

The Court held, “As held earlier, there is no reason to find fault with the impugned order dated 18th September 2020 of the competent authority and consequently, the impugned order of the High Court.” It directed, “The registration of the certificate issued under the impugned order of the competent authority shall be subject to the condition of the first respondent executing a permanent lease in favour of the appellant, as directed in the certificate appended to the impugned order dated 18th September 2020.”

It further directed, “The lease shall be on the terms and conditions incorporated in the deed of dissolution and the lease deed dated 16th July 1991.” The Court clarified, “Even if such a lease is not executed in favour of the appellant, the rights of the appellant as a perpetual lessee under the deed dated 16th July 1991 and under the deed of dissolution in respect of the Arun plot shall remain unaffected.”

The Court added, “The first respondent cannot dispute the appellant’s rights as a perpetual lessee.”

On the broader legal issues, the Court summarised its conclusions on the interpretation of sub-sections (4) and (5) of Section 11 of the MOFA as follows:

(i) It is no doubt true that quasi-judicial powers have been conferred on the competent authority while dealing with applications under Section 11(3) of the MOFA. However, proceedings before the competent authority under Section 11(3) are of a summary nature, as can be seen from the MOFA Rules. Therefore, the competent authority, while passing the final order, must record reasons;

(ii) The competent authority, while following the summary procedure, cannot conclusively and finally decide the question of title. Therefore, notwithstanding the order under sub-section (4) of Section 11, the aggrieved parties can always maintain a civil suit for establishing their rights;

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(iii) The provisions of Section 11 are for the benefit of the flat purchasers. In writ jurisdiction, the Court should not interfere with the order granting deemed conveyance unless the same is manifestly illegal. The writ court should generally be slow in interfering with such orders. The reason is that, notwithstanding the order under Section 11(4), the remedy of aggrieved parties to file a civil suit remains open; and

(iv) The registering officer has no power to sit in appeal over the order of the competent authority while exercising the power under Section 11(5). He can refuse registration only on the grounds indicated in paragraph 23 above and not beyond. Thus, the scope of the powers conferred on the registering officer is limited.

The Court concluded: “Subject to what is held in this judgment, the appeal is dismissed. There will be no order as to costs.”

Advocates Representing the Parties:

For the Appellants: Mr. Kush Chaturvedi, AOR; Mr. Suraj Iyer, Advocate; Ms. Gauri Joshi, Advocate; Mr. Syed Faraz Alam, Advocate; Mr. Atharva Gaur, Advocate; Mr. Aayushman Aggarwal, Advocate; Mr. Mahesh Agarwal, Advocate; Mr. Ankur Saigal, Advocate; Mr. Victor Das, Advocate; Mr. Shashank Shah, Advocate; Mr. Kaustubh Singh, Advocate; Mr. Rongon Choudhary, Advocate; Mr. Siddhant Sahay, Advocate; Mr. Ashwini Kumar, Advocate; Mr. E. C. Agrawala, AOR

For the Respondents: Mr. Gaurav Goel, AOR; Mr. Yatin R Shah, Advocate; Mrs. Aparna Rohatgi Jain, Advocate; M/s. Karanjawala & Co., AOR; Mr. Sanyat Lodha, AOR; Ms. Jasmine Damkewala, AOR; Mr. Mac Bodhanwalla, Advocate; Mr. Sheroy Bodhanwalla, Advocate; Ms. Vaishali Sharma, Advocate; Mr. Divyam Khera, Advocate; Mr. V. N. Raghupathy, AOR; Mr. Anand Dilip Landge, Advocate; Mr. Siddharth Dharmadhikari, Advocate; Mr. Aaditya Aniruddha Pande, AOR; Mr. Sanjay Kharde, Senior Advocate; Mr. Satyajeet Kharde, Advocate; Mr. Sunny Jadhav, Advocate; Mr. Kailas Bajirao Autade, AOR

Case Title: Arunkumar H Shah HUF vs Avon Arcade Premises Co-operative Society Limited & Ors

Neutral Citation: 2025 INSC 524

Case Number: Civil Appeal No. 5377 of 2025

Bench: Justice Abhay S. Oka, Justice Ujjal Bhuyan

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