Tag: #Rose Villa Co-operative Housing Society Limited

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 07.10.2026

Bombay High Court: CIRP No Bar to Deemed Conveyance Under MOFA

In a significant ruling concerning deemed conveyance, developers’ rights over future FSI/TDR and the interplay between MOFA and the Insolvency and Bankruptcy Code, 2016, the Bombay High Court has held that the mere pendency of Corporate Insolvency Resolution Process (“CIRP”) against a developer cannot prevent a housing society from obtaining unilateral deemed conveyance under the Maharashtra Ownership Flats Act, 1963 (“MOFA”).

The Court further rejected the developer’s attempt to retain the benefit of additional development potential arising after flats had been sold and held that blanket consent letters obtained from flat purchasers, without disclosure of concrete plans for additional construction, could not justify refusal of deemed conveyance.

Justice Sandeep V. Marne, by judgment pronounced on 6 October 2026, set aside the District Deputy Registrar’s order rejecting the society’s application and directed issuance of a unilateral deemed conveyance certificate.

The ruling carries considerable significance for cooperative housing societies, developers, insolvency professionals and flat purchasers, particularly in Mumbai where disputes frequently arise over future FSI, TDR, additional floors and delayed conveyance of land.

Background: Rose Villa Redevelopment and Sale of Flats

• The dispute concerned land at Village Ambivali, Taluka Andheri, Mumbai Suburban District, purchased by Can Enterprises Private Limited in December 2009.
• An existing building known as “Rose Villa”, comprising ground plus six upper floors, stood on the property. The developer proposed demolition and reconstruction.
• Plans were initially submitted in December 2013. After subsequent revisions, permission was granted for construction up to the sixth floor. The developer completed the building and obtained a full Occupation Certificate on 7 September 2016.
• Thereafter, the developer began selling flats. The majority were sold during 2016–17, with additional flats sold in 2018 and 2020.
• The developer contended that the Agreements for Sale reserved its right to utilise additional FSI/TDR for vertical expansion. It also relied upon individual NOCs allegedly obtained from flat purchasers for extending the building vertically.
• Subsequently, approvals were obtained for construction of the 7th and 8th floors.

CIRP Against the Developer Complicates the Dispute

• Meanwhile, insolvency proceedings commenced against the developer.
• On 27 January 2020, the NCLT initiated CIRP against Can Enterprises Pvt. Ltd., imposed a moratorium and suspended its Board of Directors. A Resolution Professional was subsequently appointed.
• The Rose Villa Co-operative Housing Society was registered on 10 November 2022.
• The Society thereafter applied on 2 January 2024 for deemed conveyance of the land and building under Section 11(3) of MOFA.
• The Resolution Professional opposed the application, relying, among other things, upon the NOCs obtained from individual purchasers.
• On 29 July 2024, the Competent Authority rejected the Society’s application.
• The two principal reasons were:
• First, CIRP was pending against the developer; and
• second, the developer claimed a continuing right to construct the proposed 7th and 8th floors.
• The Society therefore approached the Bombay High Court.

Two Crucial Questions Before the Bombay High Court

The judgment essentially addressed two important questions:

1. Can the pendency of CIRP and the moratorium under Section 14 of the IBC prevent the Competent Authority from granting deemed conveyance under Section 11 of MOFA?

2. Can a developer resist deemed conveyance by relying upon contractual clauses and blanket NOCs to claim future FSI/TDR and construct additional floors after the completed flats have already been sold?

The Bombay High Court answered both issues substantially in favour of the housing society.

CIRP Does Not Automatically Suspend Deemed Conveyance Proceedings

• On the first issue, the High Court relied substantially upon its earlier decision in Darshan Mandir Co-operative Housing Society Ltd. v. District Deputy Registrar, Co-operative Societies.
• The Court reiterated that deemed conveyance under Section 11 of MOFA is fundamentally different from an ordinary debt-recovery action against a corporate debtor.
• The Competent Authority, while deciding an application for deemed conveyance, performs a statutory function and gives effect to the statutory rights of flat purchasers.
• The process is intended to perfect title in favour of the organisation of purchasers rather than enforce a conventional monetary claim against the developer.
• Accordingly, statutory rights of third parties and statutory duties of authorities can continue notwithstanding insolvency or a moratorium.
• The Court emphasised that a moratorium under Section 14 of the IBC cannot negate or suspend the statutory duty imposed upon the Competent Authority under Section 11(3) and (4) of MOFA.

Why MOFA Introduced Deemed Conveyance

• The judgment contains important observations regarding the legislative purpose behind deemed conveyance.
• The Court noted that Section 11 was amended because developers were frequently failing to transfer title to societies and were deliberately delaying conveyance in order to continue exploiting additional development potential arising from subsequent FSI/TDR benefits.
• The deemed-conveyance mechanism was therefore introduced to provide housing societies with a swift statutory route for securing title to the land and building.
• The Court observed that allowing Section 14 of the IBC to indefinitely suspend this mechanism could defeat the very statutory objective of MOFA.
• This aspect of the ruling is particularly important in Mumbai, where additional development potential can become commercially valuable long after completion of a building.

Developer Cannot Benefit from Its Own Failure to Form the Society

• The developer attempted to distinguish the earlier precedents by arguing that CIRP had commenced in January 2020, whereas the Society itself was registered only in November 2022.
• Accordingly, it was argued that the developer was already under a legal disability before the Society came into existence and could therefore not have conveyed the property.
• The High Court rejected this argument.
• It observed that under Section 10 of MOFA read with Rule 8 of the MOFA Rules, the promoter itself bears the obligation to take steps for formation of the cooperative housing society once the statutory conditions are satisfied.
• Therefore, if non-registration of the society resulted from the developer’s own failure to comply with that obligation, the developer could not take advantage of its own wrong and use the delayed formation of the society as a defence under the IBC.

Section 14 IBC Protects Assets of Corporate Debtor — Not Every Claimed Development Right

• The High Court also considered the Supreme Court’s ruling in A.A. Estates Pvt. Ltd. v. Kher Nagar Sukhsadan Co-operative Housing Society Ltd.
• The Court noted the principle that Section 14 of the IBC protects property or assets forming part of the corporate debtor’s estate as on the insolvency commencement date.
• Mere expectant, contingent or uncrystallised contractual rights do not automatically constitute protected “assets” under the Code.
• Applying that principle to deemed conveyance, the Bombay High Court held that mere initiation of CIRP cannot blindly suspend every proceeding involving the corporate debtor.
• The first question must be whether the property or right concerned is actually an asset of the corporate debtor.
• In the context of the promoter’s statutory obligation to convey land under Section 11 of MOFA, the Court reiterated that mere pendency of CIRP does not prevent the Competent Authority from considering and granting deemed conveyance.

Second Major Issue: Who Gets the Additional FSI/TDR?

• The Court then turned to the developer’s claim that it remained entitled to construct the 7th and 8th floors.
• This part of the judgment is especially important for Mumbai real-estate disputes.
• The original sanctioned plans permitted construction up to the sixth floor, and the completed building had received an Occupation Certificate.
• The total sanctioned built-up area was 1,615.88 sq. metres, and the Court recorded that the entire sanctioned BUA had already been utilised in construction of the stilt-plus-six-floor building.
• After obtaining the Occupation Certificate, the developer sold the flats.
• The developer nevertheless relied upon clauses in the Agreements for Sale reserving rights to utilise additional FSI, fungible FSI and TDR, including benefits that might become available in future.
• The crucial question was whether these contractual provisions and the separate NOCs were sufficient to preserve the developer’s right to exploit future development potential.

Flat Purchasers’ Consent Must Be Real and Informed — Not Merely a Blanket Permission

• The developer relied heavily upon consent letters signed by the flat purchasers.
• Those letters purportedly recorded that purchasers had examined approved plans for vertical extension and had no objection to additional construction.
• But the High Court identified a fundamental problem.
• The Court repeatedly asked the developer to identify the precise “approved plans” that had allegedly been shown to purchasers when their consents were obtained.
• At that stage, however, no MCGM-approved plan for construction of the 7th and 8th floors had been placed before the Court corresponding to the time when those consent letters were executed. The revised permission for those floors came subsequently.
• The Court therefore examined whether the NOCs represented genuine consent to a specifically disclosed construction proposal or merely general permission covering whatever development potential might arise in future.
• It ultimately found the latter.

Bombay HC Treats NOCs as “Mere Blanket Consents”

The High Court held that the consent letters relied upon by the developer could not justify rejection of the Society’s deemed-conveyance application.

It characterised them as:

• “mere blanket consents”
• for putting up additional construction based on FSI that might become available under the DCPR 2034, without disclosure of the actual plans for such construction.
• The Court further held that additional built-up area becoming sanctionable under DCPR 2034 would belong to the Society and not the developer in the circumstances of the case.
• This is one of the most consequential findings in the judgment.

Developer Had Already Exhausted the Available Development Potential

• The Court reasoned that if the developer wished to retain the benefits that would subsequently flow from DCPR 2034, it could have waited before selling the flats, obtained revised plans reflecting the enhanced development potential and then secured purchasers’ consent to the proposed additional construction.
• Instead, the developer chose to sell flats in a completed six-floor building after utilising the entire FSI potential then available.
• Once it did so, the statutory obligations under MOFA concerning formation of the society and conveyance of the property came into operation.
• The Court held that after taking that course, the developer could not rely on broadly worded consents to perpetually retain future development potential.

Bombay HC Criticises the Practice of “Endlessly Milking” Development Potential

• The judgment contains unusually strong observations about the practice of developers withholding conveyance to exploit future FSI/TDR.
• While discussing the statutory object of Section 11 MOFA, the Court referred to developers delaying conveyance in order to continue taking advantage of additional development rights generated over time.
• Later, in addressing the additional FSI issue, the Court stated that it would not permit its extraordinary jurisdiction to be used to facilitate attempts to monetise something belonging to the society.
• It observed that if additional FSI arose under DCPR 2034 in the circumstances before it, the benefit would belong to the Society.
• The Court connected this directly with the legislative purpose of Section 11 of MOFA—to curb the tendency of developers to retain control over land indefinitely in order to exploit future development potential.

Withdrawal of NOCs Did Not Amount to Admission That Valid Consent Once Existed

• Another interesting issue arose because the Society and its members had stated that the earlier NOCs were being “withdrawn”.
• The developer attempted to rely upon this language to suggest that valid consent must necessarily have existed in the first place.
• The High Court rejected that inference.
• It held that the Society had consistently maintained that the documents were only blanket consents, and the use of the word “withdrawn” did not amount to an admission that legally valid consent had been given for construction of the 7th and 8th floors.

Deemed Conveyance Is a Statutory Mechanism to Perfect Purchasers’ Title

• A broader principle running through the judgment concerns the nature of ownership after flats in a completed project are sold.
• The Court reiterated that MOFA imposes a statutory obligation upon the promoter to transfer its right, title and interest in the land and building to the organisation of flat purchasers.
• Where the promoter fails to perform that obligation, the Competent Authority effectively steps in through the mechanism of unilateral deemed conveyance.
• The Court explained that the statutory scheme proceeds on a presumption of loss of the promoter’s title once the relevant MOFA obligations have crystallised, although that presumption remains rebuttable through appropriate civil proceedings.
• It therefore rejected the proposition that the developer could simply continue treating the land as its unrestricted asset merely because formal conveyance had not yet been executed.

Bombay High Court Sets Aside Competent Authority’s Order

Having rejected both grounds on which deemed conveyance had been refused, the Bombay High Court allowed the Society’s petition.

The Court:

1. Set aside the order dated 29 July 2024 passed by the Competent Authority;

2. Remanded Application No. 8 of 2024 to the Competent Authority for the limited purpose of issuing a certificate of unilateral deemed conveyance of the land and building in favour of Rose Villa Co-operative Housing Society Ltd.;

3. Directed the parties to appear before the Competent Authority on 12 October 2026; and

4. Directed the Competent Authority to issue the deemed-conveyance certificate as expeditiously as possible, preferably within three months.

The writ petition was accordingly allowed, with no order as to costs.

Key Legal Principles Emerging from the Judgment

• The ruling establishes or reinforces several important propositions.
• CIRP is not an automatic bar to deemed conveyance. A moratorium under Section 14 IBC cannot mechanically be invoked to prevent the Competent Authority from exercising its statutory jurisdiction under Section 11 MOFA.
• The nature of the right or property matters. Before invoking the IBC moratorium, it must be determined whether the relevant property or development right actually forms part of the corporate debtor’s protected estate.
• Developers cannot profit from their own statutory default. Failure to timely form a cooperative society cannot subsequently be used to argue that conveyance was impossible because the society came into existence only after CIRP began.
• Future FSI does not necessarily remain with the developer forever. Where the developer completed the sanctioned building, exhausted the then-available development potential, sold the flats and triggered its MOFA obligations, subsequently arising development potential may accrue to the society rather than remain perpetually reserved to the developer.
• Blanket consent is not the same as informed consent to a specific additional construction. General NOCs referring broadly to future FSI/TDR cannot necessarily establish consent to additional floors where the actual plans were not properly disclosed.
• Deemed conveyance serves a protective statutory purpose. Section 11 MOFA is designed to prevent promoters from indefinitely withholding title and exploiting future development rights at the expense of flat purchasers.

Why This Judgment Matters for Housing Societies

• For cooperative housing societies, the judgment is particularly significant because it strengthens the statutory route to title even where the original developer subsequently enters insolvency.
• A society facing CIRP of its developer should therefore not automatically assume that it must wait for completion of the insolvency-resolution process before seeking deemed conveyance.
• The critical inquiry will include the nature of the property involved, the developer’s subsisting rights, the status of the project, sale of flats and the statutory obligations that have already arisen under MOFA.
• The ruling is also important for societies confronting claims by former developers over newly generated FSI, fungible FSI or TDR years after completion and sale of the original building.

What Developers Should Take Away

• The judgment does not suggest that developers can never reserve rights over additional development potential.
• Rather, it highlights the importance of specific disclosure, properly sanctioned plans, legally effective purchaser consent and timely compliance with MOFA obligations.
• A generic clause attempting to reserve every possible present and future FSI/TDR benefit indefinitely may face judicial scrutiny where the project as originally sanctioned has been completed, the flats have been sold and statutory conveyance obligations have arisen.
• Developers proposing future phases or vertical additions should therefore ensure that the development scheme is transparently disclosed and that any consent relied upon corresponds to sufficiently identified construction plans rather than merely speculative future development potential.

Conclusion

The Bombay High Court’s judgment in Rose Villa Co-operative Housing Society Limited v. District Deputy Registrar & Ors. is an important development at the intersection of MOFA, deemed conveyance, insolvency law and development rights.

The ruling makes two principles particularly clear.

First, the insolvency of a developer cannot, by itself, freeze the statutory right of flat purchasers to seek deemed conveyance.

Second, a developer that completes a building, utilises the available development potential and sells the flats cannot necessarily preserve an indefinite right to exploit every future increase in FSI/TDR merely through broadly drafted agreements or blanket NOCs.

By directing issuance of deemed conveyance in favour of the Society, the Bombay High Court has reinforced the statutory purpose of MOFA: ensuring that title to the land and building ultimately reaches the organisation of flat purchasers instead of remaining indefinitely with the promoter.

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Source: Bombay High Court

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