No OC - Still you can get Deemed Conveyance - Bombay High Court Ruling

Flat Buyers' Rights Upheld: Key Takeaways from the Bombay HC Ruling

The Bombay High Court recently reaffirmed the rights of flat buyers, emphasizing that they cannot be disadvantaged due to a builder's failure to fulfill statutory obligations. This significant ruling underscores the rights of cooperative housing societies and individual flat purchasers under the Maharashtra Ownership of Flats Act (MOFA).

Background of the Case

A cooperative housing society had petitioned the court after its application for a unilateral deemed conveyance certificate was rejected by the deputy registrar of cooperative societies. The issue revolved around whether irregularities in the building's construction and the absence of an Occupation Certificate (OC) could impair the society’s statutory right to deemed conveyance.

Key Issues Addressed

1. Deemed Conveyance and Unauthorised Structures
   The court clarified that granting deemed conveyance does not legalize unauthorised structures but transfers the rights, title, and obligations of the property from the builder to the society. This empowers the society to seek regularization or pursue redevelopment.

2. Builder’s Default in Providing OC
   The builder’s failure to obtain an OC was a central concern. The court held that this lapse cannot disadvantage flat buyers or restrict their statutory rights. Denying deemed conveyance due to the builder's default would effectively reward the builder’s negligence.

3. Statutory Rights Under MOFA
   MOFA guarantees flat buyers the right to conveyance of the builder's title in the property. The court reiterated that non-compliance with statutory obligations by the promoter does not dilute this right.

Key Observations by the Court

• Flat Purchasers’ Protection: The court emphasized that flat buyers cannot be trapped in a "vicious circle" where they are unable to regularize their property due to the builder’s default.
• Limited Scope of Registrar’s Role: The registrar is not required to examine the legality of the building when considering an application for deemed conveyance.
• No Legalization of Irregularities: Deemed conveyance transfers property rights but does not render the structure lawful.

Outcome of the Case

The court set aside the registrar’s earlier rejection of the society’s application. It directed the issuance of a deemed conveyance certificate for the property, enabling the society to take ownership and proceed with redevelopment plans. This was conditional on a self-declaration by the society that it would address legalities post-conveyance.

Implications for Homebuyers

This ruling reinforces the principle that flat buyers’ rights cannot be subordinated to a builder’s defaults. Key implications include:

• Empowerment of Housing Societies: Societies can secure property ownership and pursue redevelopment or regularization without being hindered by the builder’s lapses.
• Strengthened Buyer Protections: The judgment underscores that statutory rights under MOFA are independent of the builder’s compliance with other regulations.
• Clear Path for Redevelopment: Societies can proceed with redevelopment projects after securing deemed conveyance, even if initial construction approvals were incomplete.

Conclusion

The Bombay High Court’s decision is a landmark for homebuyers, highlighting their legal protections against defaults by developers. It ensures that statutory rights, like deemed conveyance, remain intact despite irregularities or non-compliance by the builder. This ruling sets a precedent for safeguarding homebuyers' interests, promoting transparency, and ensuring accountability in the real estate sector.