The Maharashtra Ownership Flats Act 1963

Notes

v   Agreement under Maharashtra Apartment Ownership Act, 1970---Liability to pay stamp duty---Agreement to sell and agreement of sale---Distinction for purpose of levy of stamp duty---Under the agreement the right, title and interest in the flat stood transferred in favour of purchaser on payment on installment ---Such document would be of sale is dutiable under Act by virtue of Explanation I to Article 25 of Schedule I---Held, stamp duty would be payable on such agreements. (Transfer of Property Act, 1882, Secs. 19, 54&55 (4)(b) --- Indian Registration Act, 1908, Secs. 17(1). The State of Maharashtra and others v/s Mohair latched Rathod and another 1992(2) Bom.C.R. 1; 1994(0) Bom.L.R. 110

v   Agreements---Registration---Requirement---Every agreement under the special Act is required to be registered---Consequences of non- registration provided under section 4A --- this provision is neither opposed to nor inconsistent with section 49 of Indian Registration Act---Held, section 49 cannot be invoked to nullify the mandatory provisions contained in sections 4 & 4A---Section 49 is a discretionary provisions .the stat of Maharashtra and other v/s Mohave Lachine Rathod and another 1992/(2)Bom.C.R 1;1994(0)Bom.L.R110

v   Suit under---Valuation of suit---Builder entering into agreement with flat purchaser containing portions which are to be incorporated as provided under Act---All such agreements must necessarily be special agreements much necessarily be held to be  special agreements which can be enforced by filing suits where valuation under section 6(iv)(i) of Bombay court fees Act---Held, it cannot be side that in such matters suit for specific performers should be valued under section 6(xi) of Bombay court fees Act, 1959.Mara Philomena Pereira v/s Rodriguez  Construction 199o(2)Bom.C.R 77;1991 (0)  AIR(Bom)27.

v   Criminal liability of promoter for want of registered agreements---Agreements not registered under section. 4---It connote be side that such agreements cannot be mindful foundation of criminal liability of promoter ---Held, promoter would be criminally liable even though the agreement was not registered. (1983) overruled: 1981 Bom.C.R 716 distinguished Swore Builders & others v/s Sheikh Mohr. Sangh &others 1987(2)Bom.C.R 731 (2) Mah.L.R 1285

v   Breach of section4---prosecution ---Limitation ---Agreements of seal between promoter and purchaser---Agreements not reduced to writing and registered by promoter ---Purchaser filing complaint after one year from the date of first payment made by him to promoter---period for prosecution under section 468 one year---Held, prosecution of promoter for breach of section 4would be barred by time Abdul Jabber Ibrahim v/s Seiko Builder &others 1985(2) Bom.C.R. 274; 1985 (0) Mah.L.R419;1985(0) Mh.L.J.163

v   Offences under---Criminal prosecution of promoter---Agreement of sale between him and purchaser---Agreement not reduced to writing and registered under section 4---Held, where agreement of sale 4 by promoter and purchaser was not reduced to writing and registered under section 4by promoter, penal liability for brasher of sections 4, 5,7,10 and 11 read with section 13 would flow even in cases where there was on written agreement, if reduced to writing remains unregistered. Abdul Jabber Ibrahim v/s Seiko Builder &other 1958(2) Bom.C.R 274; 1985 (0)Mah.L.R.419;1985(0)Mh.L.J. 163

v   Sale of terrace—of registered society whether permissible---Builder selling flat and also terrace to one the flat owners on the ground that builder had right to sell the remaining flat also percentage of common area facilities under section 10(1) of the Act---Held, none of the provisions of said Act individually or collectively enable the builder to sell the terrace as words ‘common area facilities’ etc. do not include the terraces and it cannot be sold to one the flat owners. Even if document if sale could show intention of builder to do so. it well be effected by absence of legal sanctity and authority of builder to do so. Ramagauri Keshvlal Virani v/s Walkeshwar Triveni Co-operative Housing society Ltd.& other 2000(2)Bom.C.R. 678; 1999 (0) AIR(Bom) 385; 1999 (3) Bom.L.R.164; 1999 (3) Mh.L.J.145.

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Compliments Of The Season

The Maharashtra Ownership Flats Act 1963

 Notes

v   Injunction against further construction---Plaintiff purchasers of flats from developer seeking injunction against developers from making further constructions on the open space on the ground that full F.S.I. has already been utilized by them and that defendants be directed to get the society registered under M.O.F. Act---Held, agreement shows that development has to be done phases. As per figures furnished by developers enough open space more than required to be left has been left out. Plaintiff can only have grouse if there is change in the plans of their buildings. They also cannot insist that society must be registered because as per agreement society will be registered only after full development of land has been completed

v   In the present case it has been stated by the counsel at the bar that the co-operative society has not been formed due to the male fide intention of the defendants. The plaintiffs on their did make an application for forming a co-operative society .But their request was not acceded because all the agreement were not registered. This application has been withdrawn, which the counsel states will be renewed after all the agreement are registered. It has also been submitted that the present suit has been filed to compel the defendants to comply with the provisions of MOFA.Unedr the provisions of this Act, it is necessary for the defendants to execute the conveyance in accordance with the agreement executed under section 4 and if the period for the execution of conveyance is not agreed upon, then the same shall be executed within the prescribed period. The prescribed period according to the counsel is 4 months from the date when the minimum number of 10 have purchased the flat. The defendants have deliberately avoided forming the co-operative society and are also avoiding executing the conveyance. With regard to the report of the commissioner, it is submitted that the report is not in accordance with the sanctioned plan. Thus, it is liable tobe ignored. The report of the commissioner, according to the learned counsel appearing for the plaintiff has used the parking space to release the recreation area. Some of the area used for parking spaces has been shown as the recreation area. After the dismissal of the appeal, the plaintiffs themselves had engaged an Architect who has given his report, the report submitted by the commissioner is not only against the sanctioned pals, but also against the D.C. Regulations. In view of all this, it is submitted that the defendants cannot be permitted to construct and that the other relief’s claimed in the Notice of Motion deserve to be allowed. The leaned Counsel appearing for the defendants has, however, submitted that the rights of the plaintiffs flow from the agreement which have been executed between the parties. According to him, the conveyance is only to be executed on completion of the project. Since initially the project was conceived as phase programme unless all the project is completed, the conveyance cannot be executed. Further more referring to the various clauses of the agreement, counsel submits that there is no need 0f any consent for making any alterations, amendments and modifications in the development of the suit property. Not only under the agreement it is submitted, but also under section 7-A of the MOFA. The defendants are at liberty to make any additions or modifications or to raise any further construction on the suit property. The plaintiffs will have the right to the open spaces and the recreational ground only on the execution of the conveyance after formation of the co-operative society. The very same objections raised by the plaintiffs were also raised before the Division bench. Import of the aforesaid objections, the Division Bench has accepted the report. Merely because the plaintiffs have obtained another report from another Architect would not detract from the authenticity of the report submitted by commissioner. So far as the complaint with regard to the shortage of open space is conceded, it is submitted by counsel for the defendant that the open space is in conformity with the Regulation 23 of the D.C Regulation. In fact what has been provided is in excess of what was required. Under the Regulation, 20%of the area was required to be kept as open space. Even from the report submitted by the Architect of the plaintiff it is obvious that the area kept as open space is more that what is required. The plaintiffs, it is obvious that the area kept as open space is more then what is required. The plaintiffs have sought to builds up a case on the ground that the area occupied by the swimming pool is not the to be included in the recreation area. The plaintiffs have also side that the area required for providing access to the swimming pool ought also not to by included in the recreation area. Referring to Regulation 23(a),(g)(ii)(d), it has been  state that the  recreation area includes the structures such as swimming pool and allied  structures. In any even, it is submitted that the plaintiffs can hardly complain at this stage. Court in agree with the submissions made by the counsel for the defendants. A perusal of the agreement itself would show that the plaintiffs were aware that the plot had to be developed in a phased manner. this is so stated in Clause (1)of the agreement. In Clause (2), the plaintiffs had agreed that the developers shall have absolute discretion from time to time to amend or alter the building plan and to amalgamate the property with any other property and to sub-divide the same. The plaintiffs also irrevocably agreed and give their consent to the developers carrying out amendments, alterations, modifications in respect of the building, and to put up additional structure/ construction thereon. The only eventuality, the defendants have to obtain consent in writing of the flat purchasers was in respect of any variation or modification in the building plans which may adversely affect the premises agreed to be purchased by the purchasers. thus, the restriction on the defendants was only if any alternation was made with regard to any particular flat purchased by a particular person. a perusal of Clause (24) and (26) shows that the conveyance is not to be executed till the whole property is transferred to the co-operative societies. it is also provided that the conveyance shall be executed only after the entire property described in the schedule is fully developed. There is no merit in the submissions of the learned Counsel appearing for the plaintiff that since all the FSI has been utilized, the suit property has to be treated as fully developed. If that is so, there was no question of having an7y apprehension that the defendants would be able to build on the open green space. it is well-know to all the parties that extra FSI will becomes available in the event the area which has been reserved as recreational ground is acquired by the BMC. Unless and until the conveyance is executed in favour of the plaintiffs, they have no right, title or interest in any open space. Harsharansingh Pratapsingh Gujral & others v/s Lokhanadwala Builders Ltd. & other 1998(1) Bom.C.R. 516; 1998(1) All.M.R.560

The Maharashtra Ownership Flats (Regulations of the Promotion of Construction, Sale, Management and Transfer) Act, 1963

NOTES

v   Specific performance  of agreement – Contract of sale of suit premises – Allotment letter issued upon consideration received – Defendants submits, letter not constitute agreement – Plaintiff sued within 3 years after denied – Held, suit is not barred by law of limitation, under MOFA Act. Defendants are liable to be prosecuted for breaches and defaults of statutory provision under MOFA. Defendant shall deposit in Court Rs.1.5 crore. Plaintiff to return original documents. Suit is adjourned for considering plaintiffs oral and further documentary evidence. Sushil Javher Shivdasani v/s Air Inn Pvt. Ltd. 2009(2) Bom.C.R.608

v   Agreement/Conveyance---Distinction---Agreement for sale not providing for when conveyance will be executed, though possession is handed over on execution of agreement---Agreement when presented for registration Registrar impounding it on ground that full stamp duty for conveyance as required to be paid under Explanation to Entry 25 of Schedule I of the Stamp Act --- Held, where agreement does not provided for when conveyance will be done and possession is handed over, case is covered by Explanation to Entry 25 of the Schedule I and High Court view that it is to be termed as conveyance and duty is payable cannot be faulted.

v   The High Court in 1992(2) Bom.C.R. 1 examined the scope of Explanation I to Entry 25 of Schedule I of the Bombay Stamp Act and held that the same was attracted to the case. Under the agreement there is an obligation to hand over the possession even before execution of a conveyance and, therefore, it was a “conveyance” for the purpose of duty payable under the Bombay Stamp Act and there was no obligation in the agreement to enter into a conveyance at a letter stage and clearly it was a case which attracted the said Explanation. Handing over of the possession on the very date of execution was not relevant for determining the nature of the document. On that basis the High Court upheld the stand taken by the State in the matter of levy of duty. The duty in respect of an agreement covered by the Explanation is leviable as if it is a conveyance. The conditions to be fulfilled are if there is an agreement to sell immoveable property and possession of such property is transferred to the purchaser before the execution or at the time of execution or subsequently without executing any conveyance in respect thereof such, an agreement to sell is deemed to be a “conveyance”. In the event a conveyance is executed in pursuance of such agreement subsequently, the stamp duty already paid and recovered on the agreement of sale which is demand to a conveyance shall be adjusted towards the total duty leviable on the conveyance. In the present case, the agreement entered into clearly provides for sale of an immoveable property and there is also a specific time within which possession has to be delivered. Therefore, the document in question clearly falls within the scope of the Explanation I. If the agreement provides that possession will be handed over on the execution of a conveyance as contemplated under section 11 of the MOF Act, then the Explanation shall not be attracted at all. In the present case, it is clear that in the terms of the agreement there is no provision made at all for execution of the conveyance. On the other hand, what is submitted is that the provisions of the MOF Act, could be applied to the agreement and, therefore, a conveyance is to be executed and the subsequently when it is not clear as to when the conveyance is to be handed over. If that is so, it is clear that the document would attract duty as if it is a conveyance as provided in the Explanation. There is no error in the view taken by the High Court. It is not necessary to examine in these appeals as to whether the instruments in question itself conveys a title or not. Therefore, the decision of High Court made in this regards is upheld. The appeals are dismissed. 1992(2) Bom.C.R. 124; 1999 (1) All.M.R. 698; 1999 (1) Bom.L.R.235

The Maharashtra Ownership Flats (Regulations of the Promotion of Construction, Sale, Management and Transfer) Act, 1963

NOTES

v   Specific performance  of agreement – Contract of sale of suit premises – Allotment letter issued upon consideration received – Defendants submits, letter not constitute agreement – Plaintiff sued within 3 years after denied – Held, suit is not barred by law of limitation, under MOFA Act. Defendants are liable to be prosecuted for breaches and defaults of statutory provision under MOFA. Defendant shall deposit in Court Rs.1.5 crore. Plaintiff to return original documents. Suit is adjourned for considering plaintiffs oral and further documentary evidence. Sushil Javher Shivdasani v/s Air Inn Pvt. Ltd. 2009(2) Bom.C.R.608

v   Agreement/Conveyance---Distinction---Agreement for sale not providing for when conveyance will be executed, though possession is handed over on execution of agreement---Agreement when presented for registration Registrar impounding it on ground that full stamp duty for conveyance as required to be paid under Explanation to Entry 25 of Schedule I of the Stamp Act --- Held, where agreement does not provided for when conveyance will be done and possession is handed over, case is covered by Explanation to Entry 25 of the Schedule I and High Court view that it is to be termed as conveyance and duty is payable cannot be faulted.

v   The High Court in 1992(2) Bom.C.R. 1 examined the scope of Explanation I to Entry 25 of Schedule I of the Bombay Stamp Act and held that the same was attracted to the case. Under the agreement there is an obligation to hand over the possession even before execution of a conveyance and, therefore, it was a “conveyance” for the purpose of duty payable under the Bombay Stamp Act and there was no obligation in the agreement to enter into a conveyance at a letter stage and clearly it was a case which attracted the said Explanation. Handing over of the possession on the very date of execution was not relevant for determining the nature of the document. On that basis the High Court upheld the stand taken by the State in the matter of levy of duty. The duty in respect of an agreement covered by the Explanation is leviable as if it is a conveyance. The conditions to be fulfilled are if there is an agreement to sell immoveable property and possession of such property is transferred to the purchaser before the execution or at the time of execution or subsequently without executing any conveyance in respect thereof such, an agreement to sell is deemed to be a “conveyance”. In the event a conveyance is executed in pursuance of such agreement subsequently, the stamp duty already paid and recovered on the agreement of sale which is demand to a conveyance shall be adjusted towards the total duty leviable on the conveyance. In the present case, the agreement entered into clearly provides for sale of an immoveable property and there is also a specific time within which possession has to be delivered. Therefore, the document in question clearly falls within the scope of the Explanation I. If the agreement provides that possession will be handed over on the execution of a conveyance as contemplated under section 11 of the MOF Act, then the Explanation shall not be attracted at all. In the present case, it is clear that in the terms of the agreement there is no provision made at all for execution of the conveyance. On the other hand, what is submitted is that the provisions of the MOF Act, could be applied to the agreement and, therefore, a conveyance is to be executed and the subsequently when it is not clear as to when the conveyance is to be handed over. If that is so, it is clear that the document would attract duty as if it is a conveyance as provided in the Explanation. There is no error in the view taken by the High Court. It is not necessary to examine in these appeals as to whether the instruments in question itself conveys a title or not. Therefore, the decision of High Court made in this regards is upheld. The appeals are dismissed. 1992(2) Bom.C.R. 124; 1999 (1) All.M.R. 698; 1999 (1) Bom.L.R.235

The Maharashtra Ownership Flats (Regulations of the Promotion of Construction, Sale, Management and Transfer) Act, 1963

4. Promoter before accepting advance payment or deposit to enter into agreement and agreement to be registered.-

      1[i] Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats, all or some of which are to be (advance payment or deposit, which shall not be more than 20 per cent. of the sale price enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the 2[ Registration Act, 1908 (XVI of 1908)]; 3[and such agreement shall be in the prescribed form];

            4[(1A) The agreement to be prescribed under sub-section (1) shall contain inter alia the particulars as specified in clause (b)-

(a)                particulars-

(i)                  if the building is to be constructed, the liability of the promoter to construct it according to the plans and specifications approved by the local authority where such approval is required under any law for the time being in force;

(ii)                the date by which the possession of the flat is to be handed over to the purchaser;

(iii)               the extent of the carpet area of the flat including the area of the balconies which should be shown separately;

(iv)              the price of the flat including the proportionate price of the common areas and facilities which should be shown separately, to be paid by the purchaser of flat; and the intervals at which installments thereof may be paid;

(v)                the precise nature of the organization to be constituted of the persons who have taken or are to take the flats;

(vi)              the nature, extent and description of limited common areas and facilities;

(vii)             the nature, extent and description of limited common areas and facilities, if any;

(viii)           percentage of undivided interest in the common areas and facilities appertaining to the flat agreed to be sold;

(b)               copies of documents,-

(i)                  the certificate by an Attorney-at-Law or Advocate under clause (a) of sub-section (2) of section 3;

(ii)                Property Card or extract of village forms VI or VII and XII or any other relevant revenue record showing the nature of the title of the promoter to the land on which the flats are constructed or are to be constructed;

(iii)               The plans and specifications of the flat as approved by the concerned local authority.]

1[(2) Any agreement for sale entered into under sub-section (1) shall be presented, by the promoter or by any other person competent to do so under section 32 of the Registration Act, 1908 (16 of 1908) at the proper registration office for registration, within the time allowed under section 23 to 26 (both inclusive) of the said Act and executing thereof shall be admitted before the registering officer by the person executing the document or his representative, assign or agent as laid down in sections 34 and 35 of the said Act also within the time aforesaid:

            Provided that, where any agreement for sale entered into, or is purported to be entered into, under sub-section (1), at any time before the commencement of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) (Amendment and Validating Provisions) Act, 1983(Mah. V of 1984.), and such agreement was not admitted before the registration officer by the person concerned, before the commencement of the said Act, then such document may be presented at the proper registration office for registration, and its execution may be admitted, by any of the persons concerned referred to above in this subsection, on or before the 31^st December, 1984, and the registering officer shall accept such document for registration, and register it under the registration Act, as if it were presented, and its execution was admitted, within the time laid down in the Registration Act:

            Provided further that, on presenting a document for registration as aforesaid if the person executing such document or his representative, assign or agent does not appear before the registering officer and admit the execution of the document, the registering officer shall cause a summons to be issued under section 36 of the Registration Act requiring the executants to appear at the registration office, either in person or by duly authorised agent, at a time fixed in the summons. If the executants fails to appear in compliance with the summons, the execution of the document shall be deemed to be admitted by him and the registering officer may proceed to registering officer as required by the summons but denies execution of the document, the registering officer shall, after giving him a reasonable opportunity of being heard, if satisfied that the document has been executed by him, proceed to register the document accordingly.]

                                                           

The Maharashtra Ownership Flats (Regulations of the Promotion of Construction, Sale, Management and Transfer) Act, 1963

NOTES

v  Flats on ownership basis when to be constructed makes it obligatory for the promoter to give information to intending owners on matters as set out therein. It is to be noted that non-obstinate clause makes this obligation overriding. Sub-section (2) sets out particular matters required to be informed to the intending owners.

It must also be noted that intending owners were already occupants of premises may also enter into transactions with a person who undertakes to develop the property for constructing flats and/or blocks. Further, intending owners also may want to get title to their properties. It is for this reason that it is obligatory to inform to the intending owners the title, etc. as certified as set out. Revenue record pertaining to the land/building in question have also to be informed as required under sub-section (a). Further, full and true disclosure of all burdens on the land or building shall have to be informed as set out in sub-section (b) to the intending owner.

Details of construction, etc. as set out in sub-sections (c), (d) and (e) require to be furnished to the intending owner.

Intending owners are also required to be informed as to terms and conditions as well as other particulars pertaining to the flat and/or block and the date of possession to be given to the intending owner.

v  Sub-section (h) of section 3 (2) requires a promoter to state the precise nature of the society to be formed and to which the title is to be given as more particularly stated therein. In this, it is pertinent to note that rule 10 of The Co-operative Societies Act requires sub-classification of housing societies which may have relevance for these provisions.

v  Sub-section (i) requires completion certificate under municipal law duly allowing occupants to occupy the premises.

v  Sub-section (j) and (k) requires disclosures of outgoings as also of other documents and other matters as set out therein.

v  Sub-section (l) requires display of the documents, plans, specifications, etc. as set out therein.

v  Sub-section (m) prescribes that when flats are advertised for sale, the extent of the carpet area inclusive of balconies, etc. as set out and the price including the proportions for common areas, etc. and the nature extent and description of the common area and facilities and to common areas.

It has been found that while undertaking development projects, the promoter and/or the builder incur violations of the rules pertaining to development as set out by local authorities. These violations get many a time reflected and are visited upon the intending purchasers after they occupy the premises. Such malpractices at times used to result in shrinking of common facilities as also of usable areas as also of facilities. Further, the conditions imposed by the local authorities, if ignored can also visit consequences on the premises affecting the occupants. With a view to obviate such difficulties, the obligations such as are mentioned in section 3 are enacted. The obligations per se make violations actionable when they affect the occupants. This, therefore, is a deterrent factor which makes it prevalent that violations do not take place.

v  Agreement for sale of flat – payment of earnest money by plaintiff – No payment of installments as documents of title of defendant not shown to plaintiff – Sale of flat to defendant No. 5 – Challenged – objection by defendant that oral agreement regarding production of certificate of title was after thought – Held, evidence of plaintiffs has gone unchallenged. It is but natural for plaintiffs to withhold payment till defendants satisfied him their title to plot and entitlement to make construction on said plot. Showing existence of certificate of title or marketable title in favour of defendants was statutory requirement under provisions of section 3 of Ownership Flats Act. Jeetmal Mangalchand Sakhlecha & others v/s Neelkanth Building Corporation & others 2004(6) Bom.C.R. 303; 2004 (3) All.M.R. 288

v  Charges under---Validity---Promoters of building agreeing to construct building and thereafter hand over flat to petitioner---Wilful refusal to deliver possession of said flat to petitioner---Promoters selling said flat to other party---Agreement not registered---Held, it could not be said promoters could not be prosecuted on ground that agreement was not registered. Promoters could be charged with offences of criminal breach of trust or cheating or any of offences under Ownership Flats Act.

v  Where the promoters of the building who agreed to construct the building and thereafter hand over the flat to ‘A’, had refused to deliver possession of the said flat to ‘A’ and they could not be prosecuted for the offences under sections 406, 409. 420 read with section 34 of I.P.C. and sections, 3,4,5,9, read with sections, 13,14 of Ownership Flats Act on the ground that the agreement between promoters ‘A’ was not registered under  the Registration Act and since the agreement was not registered, the agreement had become void and therefore, no party could claim any right therein. It may be that certain civil rights of the parties under the agreement which has become void may come to an end. The criminal liability of a party, however, will not be extinguished. A from the entire transaction between the parties. The oral representations made by one party to another or written documents besides the Agreement may amount to an offence. In a specific case the charge of cheating may depend upon the transaction apart from the Agreement which remained to be registered. Therefore, it could not be said tat the promoters could not be charged with the offences of criminal breach of trust or cheating or any of the offences under the Ownership Flats Act. Pradeep Bhupatrai Vasa v/s Bombay Builder Pvt. Ltd. & others 1987(1) Bom C.R.327

v  Building permission and sanction plan – Permission granted only for ground floor – Construction carried out upto 7 floor, agreement executed with all flat purchasers and possession handed over – Held, Act enacted for executing an agreement for sale of flat. Law provides inspection of section plan before execution. No leniency required to show to professional builder/appellant who has handedly proceeded with illegal construction of seven floor. Leela Enterprises v/s Bombay Municipal Corporation & others 2006(2) Bom.C.R. 368; 2006 (6) AIR(BomR) 142

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