India: Conundrum Of Deemed Conveyance In Case Of Multiple Buildings In A Single Layout

Background

Under the statutory provisions of Real Estate (Regulation and Development) Act, 2016 (RERA) and in Maharashtra, also of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), a developer is required to convey title of the land, building and common areas within a stipulated time period, in favor of a co-operative housing society, a condominium of apartment owners or any other association / organization (Association) of all persons who have purchased flats or apartments in the project.

Despite the existence of sufficient statutory safeguards protecting the interests of Association and mandating the promoter to convey title within a prescribed time, experience has shown that a promoter does not come forward to execute a conveyance deed in favor of the Association. One of the reasons for such delay is the promoter usually tends to retain the right to utilize any balance / additional FSI that may be available, so that the promoter can either construct additional floors in the building, or use the FSI in any of its other existing under construction projects or sell FSI in the open market.

The right of an Association to seek a conveyance of land executed in its favor encourages its autonomy as much as it imbibes a sense of 'ownership' and also entitles the Association to deal with the land in any manner as it may deem fit, without any interference from the promoter. This right to deal with the land also includes the right to utilize and exploit the development potential of the land.

With a view to further safeguard the interest of flat buyers / Association, an amendment to MOFA was introduced in the year 2008. Vide this amendment, members of the Association were conferred with a right to approach an authority known as the 'Competent Authority' established under MOFA, to seek a unilateral 'deemed' conveyance executed in their favor without any involvement of the promoter.

Promoter's duty to convey title within stipulated time period

In Maharashtra, the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of interest and Disclosures of Website) Rules, 2017 (MahaRERA Rules) provide that the time period for execution of conveyance of title by the promoter in favor of the Association shall be as follows:

It is pertinent to note that the time period for execution of a registered conveyance deed as aforesaid, has been held by MahaRERA to be a non-negotiable and mandatory obligation of the promoter.¹ Any deviation by the promoter from this obligation in an agreement for sale signed with a prospective allottee is not binding.

Process for deemed conveyance

In Maharashtra, the procedure relating to applying for and obtaining an order for unilateral deemed conveyance from the Competent Authority is presently governed by Government Resolution dated 22 June 2018 bearing no Sa.Gru.Yo-2017/Pra.Kra.192/14-S (GR for Deemed Conveyance) passed by Government of Maharashtra. The GR for Deemed Conveyance inter alia provides the form in which application should be filed by the Association, the documents to be submitted along with the application, procedure to be followed by the Competent Authority while entertaining an application, procedure to be followed after obtaining an order / certificate for deemed conveyance etc.

The Competent Authority, after giving the Association as also the promoter an opportunity of being heard, may issue a certificate to the Sub-Registrar thereby certifying that it is a fit case for enforcing unilateral execution of conveyance deed in respect of right, title and interest of the promoter in the land and building in favor of the Association, as a deemed conveyance.

Thus, a legal fiction is created, whereby the title to the land and building is conveyed in favor of the Association even in the absence of a promoter himself executing a conveyance deed.

Deemed Conveyance in Single Layout Projects – Issues and Challenges

MAHARERA Rules contemplate that, in the event of there being multiple buildings in a single layout development, each building or wing thereof is entitled for conveyance of title to the building. Further, upon completion of the last of the building or wing in the layout, the promoter should execute the conveyance of the entire undivided or inseparable land underneath all buildings, jointly or otherwise.

Consider a situation where in a large single layout, developers may choose to undertake mixed use development comprising of multiple buildings or wings being constructed in phased manner (Single Layout Project). Various challenges and issues arise in executing a conveyance or unilateral deemed conveyance in cases of Single Layout Project, such as, conveyance of an undivided portion of land in favor of a single Association of one or more constructed buildings, modalities for factoring the FSI to be conveyed, enjoyment of common areas and amenities by the Association in the layout etc.

The GR for Deemed Conveyance passed by Government of Maharashtra inter alia provides the following clarification in relation to deemed conveyance of a building in cases of Single Layout Project:

a) Where the promoter is yet to complete construction of some buildings

In the event that there are multiple buildings on a single plot and separate Associations have been formed for each building, an order for deemed conveyance for a completed building can be passed even if construction of some of the buildings have not been completed. In such an event, the applicant Association will be entitled to conveyance of an undivided right in the land in proportion to the built-up area of the building/s of such Association or to its ground coverage or as per its plinth area. Similarly, the applicant Association will be entitled to a proportionate undivided share in the open space, internal roads and common areas and amenities.

b) Non-cooperation by other Associations

In case there is more than one Association in the Single Layout Project, and other Associations are not co-operating for conducting measurement of the land of the applicant Association, then the District Deputy Registrar, Co-operative Societies, and Competent Authority shall suggest the applicant Association to conduct admeasurement by an architect empaneled with the planning authority to certify the area mentioned in the approved plans.

c) Where FSI / TDR is utilized in the Single Layout Project

An Association is entitled to deemed conveyance even if the developer has not completed the project in expectation of getting additional FSI (floor space index) or TDR (transferable development rights). In such cases, deemed conveyance will be granted if the number of flats proposed as per the approved building plan have all been constructed.

In the event that the promoter has utilized TDR in the Single Layout Project, the proportionate right in the land should be determined as per the plinth and appurtenant area of the building/s.

Recently, a Single Judge of the Hon'ble Bombay High Court dealt with a similar situation in the matter of Akshay Girikunj-3 Co-operative Housing Society Ltd v. State of Maharashtra & Ors,². In this case, the District Deputy Registrar Cooperative Societies rejected an application for deemed conveyance of the petitioner society merely on the ground that the developer is yet to complete construction of certain other buildings in the layout. The order of the Deputy District Registrar was challenged before the Bombay High Court by way of writ proceedings. The Learned Single held that, even if it is assumed that subject building of the petitioner society is located on a layout, there is nothing in law that prevents the Deputy District Registrar from granting unilateral deemed conveyance of the building to the society in a layout. The High Court set aside the order passed by the Deputy District Registrar and remanded the proceedings to the Deputy District Registrar for being decided afresh.

Conclusion

Thus, although in case of a Single Layout Project, there are sufficient legal safeguards provided to an Association under the applicable laws including the GR for Deemed Conveyance and the aforesaid order of High Court, in practice, the intricacies of administering the process of unilateral deemed conveyance in case of a single building situated on an undivided portion of a single layout will always pose a major challenge to the Association and the authorities especially on the determination of quantum of FSI to be reserved for the building and conveyed to the Association, which may have to be dealt with on a case to case basis.

Footnotes

1]/strong> Order no 38/2022 dated 13 December 2022 issued by the Maharashtra Real Estate Regulatory Authority.

2 Unreported judgment dated 24.1.2024 in Writ Petition (L) No 603 of 2023.