The absence of occupation certificate will not impair the rights of the flat purchasers to obtain certificate of deemed conveyance as the non compliance of the statutory obligations by the Promoter cannot place fetters on the statutory right of the flat purchasers to the conveyance of the Promoter’s right, title and interest in the property
Whether the illegality of the structure would impair the right of the Co-operative Housing Society to seek a certificate for execution of unilateral deemed conveyance of the land and building under Section 11 of Maharashtra Ownership of Flats (Regulation of Promotion of Construction of sale, Management and Transfer) Act, 1963 (MOFA).
In ALJ Residency Co-operative Housing Society Ltd vs The State of Maharashtra, the Bombay High Court held that vaving defaulted in their statutory obligation in obtaining necessary documents and permissions from the Planning Authority, it is now not open for the promoters to then resist the relief of deemed conveyance on the ground that the structures are illegal or no occupation certificate has been granted. The planning regulations permit the owner of the properties to apply for the regularization of the structure and in event the Co-operative Society is granted the deemed conveyance, the same will assist the Society in applying for regularisation of the building, if so permissible in law.
Flat purchasers are caught in a vicious circle due to non compliance of the obligation by the Promoter to obtain the occupation certificate
The Court noted that the flat purchasers are caught in a vicious circle where though they are put in possession of their flats under validly registered MOFA agreements, they are under a disability from applying for regularization by reason of non compliance of the obligation by the Promoter to obtain the occupation certificate.
Deemed conveyance does not regularise the unauthorised structure
The Bombay High Court pointed out that the reluctance of the Competent Authority to issue the certificate for deemed conveyance stems from the fact that the structure is unauthorised. It was held that the grant of deemed conveyance does not have the effect of regularising the unauthorised structure. All that the Competent Authority does is that it steps in the shoes of the Promoter and conveys right, title and interest of the promoters to the flat purchasers. To put it simply, the Owners stand divested of their rights, which right in land and building then vests in the flat purchasers. The grant of deemed conveyance will not bar the planning authorities from taking action against the illegal structure.
It was also held that the issue as to whether the flat purchasers can be deprived of their statutory right to enforce the MOFA obligations against the Promoters on the the ground of illegality of the structure has to be answered in the negative. The default of Promoters in obtaining the necessary permissions and approvals cannot impinge the right of the flat purchasers to seek conveyance of the land and structure, even if the structure is unauthorised.
The Court followed its earlier judgement in SukhSagar Co-operative Housing Society Ltd v. State of Maharashtra 2004(3) Mh.L.J. 1010 in the context of registration of Society on default of the builder. In that case, the occupation certificate was not issued to the Society and the Court still allowed registration.
The Court reiterated that the absence of occupation certificate will not impair the rights of the flat purchasers to obtain certificate of deemed conveyance as the non compliance of the statutory obligations by the Promoter cannot place fetters on the statutory right of the flat purchasers to the conveyance of the Promoter’s right, title and interest in the property