2007 (1) TMI 568 - SC - Indian Laws

What are the rights and obligations of a promoter under the provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ( MOFA )?

Summary

Issues Involved:
1. Rights and obligations of a promoter under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA).
2. Interpretation and application of Sections 7 and 7A of MOFA.
3. Obligation of the promoter to convey title to the Co-operative Society.
4. Right of the promoter to construct additional buildings or structures without the consent of flat takers.

Issue-Wise Detailed Analysis:

1. Rights and Obligations of a Promoter under MOFA:
The Supreme Court examined the rights and obligations of a promoter under MOFA, particularly focusing on Sections 7 and 7A. The promoter's obligation to make full and true disclosure of particulars to flat takers was emphasized, including the nature, extent, and description of common areas and facilities. The promoter is also required to enter into agreements in the prescribed form, which includes declaring the Floor Space Index (FSI) available and any utilization of FSI elsewhere.

2. Interpretation and Application of Sections 7 and 7A of MOFA:
The unamended Section 7 required the promoter to obtain consent from flat takers before making any alterations in the structure or constructing additional structures. However, the amended Section 7, along with the insertion of Section 7A, clarified that the promoter could construct additional structures without the consent of flat takers if such construction was part of a scheme or project in the layout plan approved by the competent authority. The amendment aimed to remove the impediment in constructing additional buildings and to exploit the development rights fully, subject to compliance with building rules and regulations.

3. Obligation of the Promoter to Convey Title to the Co-operative Society:
Sections 10 and 11 of MOFA impose an obligation on the promoter to form a cooperative society of flat takers and convey the title to the society within a prescribed period. Rule 8 requires the promoter to submit an application for registration of the society within four months from the date when the minimum number of persons required to form the society have taken flats. Rule 9 mandates the execution of the conveyance within four months from the date of society registration. The promoter's obligation to convey the title remains unfettered even after the inclusion of Section 7A.

4. Right of the Promoter to Construct Additional Buildings or Structures without the Consent of Flat Takers:
The Supreme Court highlighted that while the promoter has the right to construct additional buildings as part of a scheme or project, this right is contingent upon the approval of the layout plan by the competent authority. The High Court failed to examine whether the project undertaken in 1985 consisted of one building with multiple wings or multiple independent buildings. This distinction is crucial in determining the applicability of Section 7(1)(ii) and Section 7A. The promoter's right to construct additional buildings without consent is valid only if the construction is in accordance with the approved layout plan and does not exceed the development potentiality of the plot.

Conclusion:
The Supreme Court set aside the impugned judgment of the Bombay High Court and remitted the matter for reconsideration. The High Court was directed to examine whether the project consisted of one building with multiple wings or multiple independent buildings, and to consider the effect of the judgment in Ravindra Mutneja and Ors. v. Bhavan Corporation and Ors. The appeal was allowed with no order as to costs, and the Court expressed appreciation for the assistance rendered by the learned Solicitor General of India as amicus curiae.