Bombay High Court High Court

Madhuvihar Cooperative Housing … vs M/S. Jayantilal Investments on 7 October, 2010

Bombay High Court
Madhuvihar Cooperative Housing … vs M/S. Jayantilal Investments on 7 October, 2010
Bench: B.R. Gavai
                                      (1)




                                                                          
          IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                    CIVIL APPELLATE JURISDICTION




                                                  
                     FIRST APPEAL NO. 786 OF 2004
                                   WITH




                                                 
                     FIRST APPEAL NO. 989 OF 2004

                                 --------------




                                   
    FIRST APPEAL NO. 786 OF 2004
                      
    1. Madhuvihar Cooperative Housing Society,
                     
       having its registered office at
       Madhuvihar, MGX Road 4,
       Kandivali (W), Mumbai - 400 067.
      

    2. Parmanand Natwarlal Parekh,
       Residing at No. 602-A,
   



       Madhuvihar, MGX Road 4,
       Kandivali (W), Mumbai - 400 067.

    3. Himatlal Virchand Sheth,





       Residing at No. 40C-C,
       Madhuvihar, MGX Road 4,
       Kandivali (W), Mumbai - 400 067.

    4. Mr. Ketan Surayakant Trivedi,





       residing at Flat No. 602-A,
       Madhuvihar, MGX Road 4,
       Kandivali (W), Mumbai - 400 067.




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    5. Kirit Ramanlal Dalal,
       residing at Flat No. 303,




                                                                                   
       Madhuvihar, MGX Road 4,
       Kandivali (W), Mumbai - 400 067.




                                                           
    6. Harshad Kantilal Shah,
       residing at Madhuvihar,                                  .. Appellants
       MGX Road 4, Kandivali (W),                                  (Original




                                                          
       Mumbai - 400 067.                                            plaintiffs)


                  versus




                                        
    1. M/s. Jayantilal Investments,
                       
       a Registered partnership
       firm, carrying on business
                      
       at 75, Abdul Rehman Street,
       Mumbai-3, and having branch
       office at 101, Balaji Arcade,
       S.V. Road, Kandivali (W),
       Mumbai - 400 067.
      


    2. The Municipal Corporation of
   



       Greater Bombay, having its
       Office at Mahapalika Bhavan,
       Mahapalika Marg, Mumbai-1.





    3. The Executive Engineer,
       Building Proposal (WS),
       "R" South Ward,
       having its office at Municipal                           .. Respondents





       Market, Near Station,                                       (Original
       Kandivali, Mumbai - 400 067.                                 defendants)


                                 ...........................




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                                               (3)

                 Mr. Mahendra Ghelani, Advocate, with
                 Ms. Veena Advani and Mr. Pratik Shah,
                 Advocates, for the appellants.




                                                                                     
                 Mr. Pradeep Sancheti, Senior Advocate, with




                                                             
                 Mr. Vatsal Shah, Advocate, i/b.
                 Ms. Kumud A Bhatia, Advocate, for respondent
                 no.1.




                                                            
                 Mr. Vinod Mahadik, Advocate, for respondent
                 nos.2 and 3.

                                 ...............................




                                          
                        
    FIRST APPEAL NO. 989 OF 2004
                       
    M/s. Jayantilal Investments,
    a registered partnership firm,
    carrying on business at 75,
    Abdul Rehman Street, Mumbai-3,                                 .. Appellant
      

    and having branch office at                                       (Original defendant
    101, Balaji Arcade, S.V. Road,                                     no.1)
   



    Kandivli (W), Mumbai - 400 067.





                  versus


    1. Madhuvihar Cooperative Housing
       Society, having its registered office





       at Madhuvihar MGX Road 4,
       Kandivli (W), Mumbai-67.




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    2. Mr Parmanand Natwarlal Parekh,
       residing at Flat No. 602-A,




                                                                                     
       Madhuvihar MGX Road 4,
       Kandivli (W), Mumbai-67.




                                                             
    3. Mr. Himatlal Virchand Sheth,
       residing at Flat No. 40C-C,
       Madhuvihar MGX Road 4,




                                                            
       Kandivli (W), Mumbai-67.

    4. Mr. Ketan Suryakant Trivedi,
       residing at Flat No. 602-A,
       Madhuvihar MGX Road 4,




                                        
       Kandivli (W), Mumbai-67.
                       
    5. Mr. Kirit Ramanlal Dalal,
       residing at Flat No. 303,
                      
       Madhuvihar MGX Road 4,
       Kandivli (W), Mumbai-67.

    6. Mr. Harshad Kantilal Shah,
       residing at Madhuvihar,
      


       MGX Road 4, Kandivli (W),
       Mumbai-67.
   



    7. The Municipal Corporation of
       Greater Mumbai,





       having its office at
       Mahapalika Marg, Mumbai-1.

    8. The Executive Engineer,
       Building Proposal (W/S),





       "R" South Ward,
       having its office at                                       .. Respondents
       Municipal Market, near Station,                               (Original
       Kandivli, Mumbai-67.                                           plaintiffs)


                                   .......................




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              Mr. Pradeep Sancheti, Senior Advocate, with
              Mr. Vatsal Shah, Advocate, i/b.




                                              
              Ms. Kumud A Bhatia, Advocate, for the appellant.

              Mr. Mahendra Ghelani, Advocate, with
              Ms. Veena Advani and Mr. Pratik Shah,




                                             
              Advocates, for respondent nos.1 to 6.

              Mr. Vinod Mahadik, Advocate, for respondent
              nos.7 and 8.




                                  
                      ig      **************
                    
                                CORAM : B.R. GAVAI, J.

                                Date of reserving the
                                judgment : 15th September 2010
      


                                Date of pronouncing the
                                judgment : 7th October 2010
   





    JUDGMENT :

1. The present appeals, which have been remanded for
decision afresh, as per the judgment of the Supreme Court, in

Civil Appeal No. 3233 of 2006, challenge the judgment and
decree, dated 31st March 2004, in L.C. Suit No. 4385 of 1997,
passed by the learned Judge of the City Civil Court, Greater
Mumbai.

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2. The facts, in brief, giving rise to the filing of present

appeals, are as under :

(a) On 26-8-1980, an agreement was arrived at between the
vendors and the appellant in Appeal No. 989/2004 (original

defendant no.1 – hereinafter referred to as “promoter”), in respect
of 8559.57 sqm. of land in CTS No. 1068 at village Kandivili,

Tehsil Borivali, Greater Mumbai. Subsequently, under the

Revised Draft Development Plan, a 44 ft. wide road was
indicated and, consequently, the area admeasuring 8559.57 sqm.

stood divided. On account of this division, a plot admeasuring
6071 sqm. emerged as the suit land. On 16-11-1984, the

promoter obtained NOC under Section 21(1) of the Urban Land
Ceiling Act, 1976 (“ULC Act”) permitting it to construct a

building with 7 wings and 137 tenements for weaker section.
The construction was to be made in accordance with the

prevailing Municipal Regulations, Town Planning requirements
and Statutory Regulations. On 21-10-1985, the layout plan was
sanctioned. It indicated 1 building with 7 wings. At that time,

due to existence of a narrow road as access, the promoter was
entitled to FSI only of 0.75. This plan was amended in 1986,
1987, 1989, 1992 and 1994 without any objection from the flat

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takers. At this stage, it may be mentioned that on 6-5-1986, the
layout plan was revised and approved with 5 wings having

additional floors as well as FSI of 1.00 due to construction of 44

ft. wife DP road on the original plot admeasuring 8559.57 sqm.
of land.

(b) From time to time, agreements stood entered into between
the promoter and the flat takers for sale of flats. These

agreements are dated 7-12-1985, 11-4-1987, 18-1-1989,

30-4-1989, 27-7-1991, etc.

(c) On 12-11-1986, the Maharashtra Ownership Flats
(Regulation of the promotion of construction, Sale, Management

and Transfer) Act, 1963 (For short, hereinafter referred to as
“MOFA”) was amended retrospectively. Under that

amendment, Section 7A was inserted, thereby excluding
“additional structures” from the scope of Section 7(1)(ii) and

thereby lifting the requirement of consent of flat takers.
However, the said amendment was restricted to the plots falling
under a scheme or a project under the layout plan. The object

behind enacting Section 7A was to overcome the judgment of
this Court, in the case of Kalpita Enclave Cooperative
Housing Society Ltd. Vs. Kiran Builders Private Ltd. (1986

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Mh.L.J. 110). On 12-4-1989, on receiving occupation
certificate, possession of flats was handed over to the flat takers.

Some flats remained to be sold. They stood in the name of the

promoter.

(d) On 25-3-1991, the Development Control Regulations were

framed which resulted in an increase of FSI from 1 to 1.8 on
account of the introduction of the concept of TDR. For the first

time, under this concept, lands stood separated from the

development potential of the plot. Consequently, the layout plan
stood amended and the promoter obtained sanction on 25-5-1992

for construction of the building in question with 6 wings by
consumption of the balance FSI of 1.00. The promoter

accordingly issued an advertisement for commencement of
construction in accordance with the amended plan. However, it

is the case of the promoter that on account of financial paucity
the construction got stuck.

(e) The plaintiff no.1 is the Cooperative Society registered on
20-1-1993. The layout plan was once again amended on

26-11-1994. The building in question with 6 wings was shown
in the amended plan. The plan was duly sanctioned. It is
important to note that this plan of 1994 was sanctioned in favour

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of the promoter on account of purchase of additional TDR by the
promoter.

(f) In 1997 on account of Slum TDR, the permissible FSI
stood increased to 2 from 1.8.

(g) On 12-8-1997, the Cooperative Society / plaintiff and five
flat takers (members) instituted Suit No. 4385/97 against the

promoter for conveyance, injunction restraining the promoter

from putting up further constructions and questioning the
validity of the sanction given by the competent authority to the

amended plan dated 29-3-2001 under which the competent
authority sanctioned 5 + 2 wings applying the newly available

FSI.

(h) By judgment and order dated 31-3-2004, the Bombay City
Civil Court at Mumbai (trial court) partly decreed the suit,

permitting the promoter to complete construction as per the
amended plan dated 29-3-2001. The trial court gave a period of
three years to the promoter for executing conveyance in favour

of the Cooperative Society under the provisions of MOFA.
Being aggrieved by the grant of three years time to the appellant,
the Cooperative Society preferred First Appeal No. 786/2004

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before this Court. A cross appeal was preferred by the promoter,
being First Appeal No. 989/2004 in which the promoter

contended that under the agreement between the promoter and

the flat takers no time limit for execution of the conveyance
could be set as the promoter was entitled to exploit the full
potential of the plot in question and till such time as the

development potentiality of the plot in question stood exhausted,
the promoter was not statutorily obliged to execute a conveyance

in favour of the Cooperative Society. In this connection, reliance

was placed on the provisions of Section 7A of MOFA.

3. By the judgment and order dated 16th March 2006,
the learned Single Judge of this court, allowed First Appeal No.
786/2004 filed by the Cooperative Society, and dismissed First

Appeal No. 989/2004 filed by the promoter. By the said

judgment, the learned Single Judge directed the promoter to
convey right, title and interest and execute all relevant

documents in respect of Madhu Vihar Scheme in CTS No.
1068/1 admeasuring 6071 sqm. situated at village Kandivali
(West), Mumbai (For short, hereinafter referred to as “the suit

plot”), in favour of the Cooperative Society. By the said
judgment, the learned Single Judge also restrained the promoter,
permanently, from making any construction over the suit plot.
The learned Single Judge has held that the promoter had floated

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the Scheme / Project under the name and style “Madhu Vihar
Scheme” on the suit plot, in accordance with the layout plan and,

that the said Scheme stood completed with the construction of

the flats/shops and the garden.

4. The learned Single Judge has further held that the

Society was registered on 20-1-1993 and under Rule 8 of the
Maharashtra Ownership Flats (Regulations of the Promotion of

Construction, etc.) Rules, 1964 (For short, hereinafter referred to

as “the Rules”), the promoter was statutorily obliged to convey
the title to the Society which they failed to do so even after the

Scheme was completed and possession of the flats was handed
over to the flat takers. By the said judgment, the learned Single

Judge has held that there was an implied trust created; that the
promoter was the trustee and that the flat takers were the

beneficiaries. By the said judgment, it was further held that
under Section 7 of the MOFA, the appellant was prohibited from

putting up additional constructions after the plan stood disclosed
to the flat takers; that the promoter was not entitled to make any
alteration in the structure without the prior consent of the flat

takers; that the promoter could not make any additions in the
structure of the building without the prior consent of the Society.

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5. The learned Single Judge has further held that the
construction of Madhu Vihar started in 1985; that section 7A was

inserted in 1986 and that Madhu Vihar Scheme got completed in

1989. The learned Single Judge has further held that since the
plans were changed at least four times between 1985 and 1989,
in which no additional wing like the one proposed in the plan

approved on 29th March 2001 was included, and therefore, the
promoter was not entitled to derive any benefit from Section 7A

of the MOFA and, as such, was not entitled to construct

additional building in the suit plot.

6. Being aggrieved by the judgment and order passed by
the learned Single Judge, the promoter went in appeal before the

Supreme Court. The Supreme Court, vide judgment and order
dated 10th January 2007, in Civil Appeal No. 3233/2006, was

pleased to set aside the judgment and order passed by the learned
Single Judge of this court and remit the matter to this court for

re-consideration.

7. As per the order of remand passed by the Apex Court,

the parties were heard afresh in both the appeals.

8. For the sake convenience, the parties are referred to

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as “the Promoter” and “the Society”, respectively.

9. Mr. Sancheti, learned Counsel appearing on behalf of

the promoter, submits that the legislature has deleted the
expression “or make any additional construction” from Clause

(ii) of Sub-Section 1 of Section 7 of MOFA, by amendment vide

Maharashtra Act 36 of 1986. It is further submitted that for
removal of doubt, Section 7A has been inserted by the said

amendment which specifically provides that Clause (ii) of Sub-

Section 1 of Section 7, having been retrospectively substituted
by Clause “a” of Section 6 of the Maharashtra Ownership Flats

(Regulations of the promotion of construction, sale management
and transfer) (Second Amendment) Act, 1986, it shall be deemed

to be effective as if the said clause “ii” as so substituted had been
in force at all material times; and the expression “or construct

any additional structures” in Clause (ii) of Sub-Section (1) of
Section 7, shall be deemed never to apply or to have applied in

respect of the construction of any other additional buildings or
structures constructed or to be constructed under a scheme or
project of development in the layout after obtaining the approval

of a local authority in accordance with the building rules or
building bye-laws or Development Control Rules made under
any law for the time being in force.

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10. The learned Counsel appearing for the promoter,

therefore, submits that the legislative intent is very much clear.

He submits that from the statement of objects and reasons, for
bringing out the amendment in 1986, it is clear that the said
amendment was necessary in view of the judgment of this court,

in the case of Kalpita Enclave Cooperative Housing Society
Vs. Kiran Builders Pvt. Ltd. (1986 Mh.L.J. 110). He submits

that the purpose of the amendment was to permit the promoters

to fully exploit potential of the plots and increase the availability
of houses. He submits that the legislative intent is clear, that if

the total layout permits construction of more buildings in
accordance with the building rules or the building bye-laws or

the Development Control Rules, there should be no impediment
in construction of additional building and for construction of the

additional building, consent of the flat takers or the persons
residing in other building in the layout, would not at all be

necessary. In the alternative, he submits that assuming that the
consent is necessary, perusal of the recitals 7, 8, 12, 13, and
Clauses 1, 8, 10, 11, 12, 15, 17, 18, 38 and 51 of the agreement

entered between the promoter and the flat takers would make it
clear that the flat takers had given consent for additional
structure and no separate consent would be necessary.

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11. In support of the aforesaid submissions, the learned

Counsel appearing for the promoter relies on the judgment of

Division Bench of this Court, in Appeal No. 599 of 2002
(Grand Paradi Cooperative Housing Society Ltd. & 31
others Vs. Mont Blanc Properties & Industries Pvt. Ltd. &

another), and in the case of Manratna Developers Vs. Megh
Ratan Cooperative Housing Society Limited & others

(2009(2) Bom.C.R. 836). The learned Counsel also relies on the

judgment of Division Bench of this court, in the case of White
Towers Cooperative Housing Society Ltd. Vs. S.K. Builders

& others (2008(6) Bom.C.R. 371); the judgments of learned
Single Judge of this court, in the case of Bajranglal Eriwal &

others Vs. Sagarmal Chunilal & others (2008(6) Bom.C.R.

887); in the case of Ralph D’souza & others Vs. Danny

D’souza & others (2006(3) Bom.C.R. 326); in the case of The
Mohatta Nagar Cooperative Housing Society Ltd. Vs. M/s.

Vishram Khimji & Sons and others (1994(1) Bom.C.R. 444);
and in the case of Kalpita Enclave Cooperative Housing
Society Ltd. and others Vs. Messrs. Kiran Builders Pvt. Ltd.

(1987(1) Bom.C.R. 355).

12. The learned Counsel appearing for the promoter

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further submits that from the perusal of the evidence, it would be
clear that the building which was subject matter of dispute is an

additional building and not a wing of the building where the flat

takers, who are members of the Society, were residing. He
submits that there is not even a challenge, that the building was
contrary to any bye-laws, regulations, etc. and, as such, they had

no right to object in the construction of the additional building.
The learned Counsel further submits that the permission under

the provisions of Urban Land Ceiling (For short, hereinafter

referred to as “ULC”) Act, 1976, was subject to the provisions
of the MOFA and, therefore, reference to the permission granted

by ULC authorities, was also not necessary for considering as to
whether the additional building could be constructed without the

consent of the Society, or not.

13. The learned Counsel appearing for the promoter
further submits that the provisions of Section 11 of the MOFA

and Rule 9 of the Rules, which would require the conveyance to
be executed within a period of four months from the date on
which the Cooperative Society is registered, would be applicable

only when the period for executing the conveyance has not been
provided in the agreement between the parties. He submits that
as per the agreement between the parties, following four pre-

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conditions, which are pre-requisite for seeking a conveyance,
have not been fulfilled :

(1) Payment is not made,

(2) The last flat sold in 1992,

(3) The conditions, which the flat takers are
required to comply, have not been complied,

(4) The balance construction, which the promoter
is entitled to construct, is not yet complete.

He, therefore, submits that unless the aforesaid conditions

are fulfilled, the Society does not get any right to seek
conveyance in favour of the Society.

14. Mr. Ghelani, learned Counsel appearing on behalf of
the Society, on the contrary, submits that the scope of the present

appeal is limited to examine as to whether the original scheme
propounded by the promoter, amended up to 1987, discloses to
the purchasers, if the scheme consisted of one building with

wings or it contemplates construction of additional building. He
submits that a conjoint reading of the provisions of the MOFA,
with the Rules thereunder, would clearly show that the promoter
is required to disclose entire scheme to the flat taker. He submits

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that the representations contained in brochure published by the
promoter are binding on him. He further submits that the

amenities which were assured in the brochure and which were,

in fact, provided are being taken away by the additional
construction which is not permissible in law. He submits that the
clause in statutory agreement which provides that residual FAR

(FSI) in the plot or the layout not consumed will be available to
the promoter only till registration of the Society, whereas after

registration of the Society, the FAR (FSI) shall be available to

the Society, was very much existence at the relevant time; since
the said portion is deleted only by amendment in March 1997.

15. The learned Counsel appearing on behalf of the

Society further submits that in the entire agreement, the
reference is only to a building and not buildings. He, therefore,

submits that a representation was given to the flat takers, that
one building consisting various wings would be constructed and

not an additional building will be constructed. He further
submits that in Clause 7 of the agreement, a representation is
given, that the construction would be made in accordance with

the scheme sanctioned by the Urban Land Ceiling authorities.
He further submits that the reliance on the alleged consent in
various clauses of the agreement is of no use to the promoter.

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He submits that by various judicial pronouncements, it is a
settled law that the consent as contemplated under Section 7 of

the MOFA has to be informed consent and not a blanket consent.

16. The learned Counsel appearing for the Society further
submits that the plan shown in brochure is totally different than

the plan of 2001. Various amenities, like children’s play area,
sitting area for senior citizens, garden, fountain, parking, which

was already provided, are being taken away under the plan of
2002.

17. The learned Counsel appearing for the Society further
submits that the consent would not have been necessary, had

additional structure been disclosed in the layout at the time of
offering flats to the flat takers.

18. The learned Counsel appearing for the Society

submits that the judgment of Division Bench of this court, in the
case of Grand Paradi Cooperative Housing Society Ltd.
(cited supra), would not be applicable to the facts of the present

case, inasmuch as, the issue regarding blanket consent was
neither raised nor considered by this court.

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19. The learned Counsel appearing for the Society relies
on the judgment of the learned Single Judge of this court, in the

case of Smt. Neena Sudarshan Wadia Vs. M/s. Venus

Enterprises (1984(2) Bom.C.R. 505), and in the case of
Bhuvaraha Maithreyan, Through the Power of Attorney
Holder Dr. Tara Maithreyan Vs. Municipal Corporation for

the City of Pune & others (2003 Vol. 105(3) Bom. L.R. 803).
He further relies on the recent judgment of the Apex Court, dated

31st August 2010, in Civil Appeal No. 2544 of 2010 and

companion appeals, in the case of Nahalchand Laloochand
Pvt. Ltd. Vs. Panchali Cooperative Housing Society Ltd.

20. Mr. Sancheti, learned Counsel appearing for the

promoter, in rejoinder, submits that a conjoint reading of
provisions of Sections 7 and 7A of the MOFA, leaves no scope

for doubt, that the consent of only persons in the building is
necessary and not of the persons in the other buildings. He

submits that what is material is the approval of the local
authority and not the persons residing in the other buildings. He
further submits that the statutory agreement itself provides that

the variations, as considered necessary by the promoter, are
permissible and, therefore, the attack of the Society on the
clauses of the agreement is not sustainable.

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21. Though the learned Counsel appearing for the parties

have advanced their arguments on various aspects of the matter,

I find that this court would be required to decide the appeals
within the parameters as laid down by the Apex Court while
remitting the matter to this court for decision afresh. The Apex

Court has observed thus :

“20. In the light of what is stated above, the
question which needs to be examined in the

present case is whether this case falls within the
ambit of amended S. 7(1)(ii) or whether it falls
within the ambit of S. 7-A of MOFA. As stated

above, under S. 7(1) after the layout plans and
specifications of the building, as approved by the
competent authority, are disclosed to the flat

takers, the promoter shall not make any other
alterations or additions in the structure of the

building without the prior consent of the flat
takers. This is where the problem lies. In the
impugned judgment, the High Court was failed

to examine the question as to whether the project
undertaken in 1985 by the appellant herein was
in respect of construction of additional buildings
or whether the project in the layout plan of 1985
consisted of one building with 7 wings. The

promoter has kept the requisite percentage of
land open as recreation ground/open space.
Relocation of the tennis court cannot be faulted.

The question which the High Court should have
examined is; whether the project in question

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consists of 7 independent buildings or whether it
is one building with 7 wings ? The answer to the
above question will decide the applicability or

non-applicability of S. 7(1)(ii) of MOFA, as
amended. The answer to the above question will

decide whether the time to execute the
conveyance has arrived or not. This will also
require explanation from the competent

authority, namely, Executive Engineer, “R” South
Ward, Kandivali, Mumbai-400 067 (respondent
No.8 herein). In the dates and events submitted
by the appellant – promoter, there is a reference

to the permission granted by ULC authorities
dated 16-11-1984 which states that the owner /

developer shall construct a building with 7
wings. One needs to examine the application

made by the promoter when he submitted the
layout plan in 1985. If it is the building with 7
wings intended to be constructed in terms of the
layout plan then the High Court is also required

to consider the effect of the judgment in the case
of Ravindra Mutneja and others Vs. Bhavan

Corporation and others (2003 (5) Bom. CR 695),
in which the learned single Judge has held that if
a building is put up as a wing of an existing

building, it cannot be constructed without the
prior permission of the flat takers. In that
connection, the High Court shall also consider
permission dated 16-11-1984 under S. 21(1) of

ULC Act, application made to the competent
authority when initial layout plan was
sanctioned, applications for amendments to
layout plans made from time to time and also
agreements between promoter and flat takers.

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21. For the aforesaid reasons and in view of the
law enunciated by us vide this judgment, the
impugned judgment is set aside and the matter is

remitted to the High Court for reconsideration. ”

(Emphasis supplied)

22. In that view of the matter, the following points would

arise for consideration of this court :

(1) As to whether the project undertaken in the

year 1985, by the promoter, was in respect of

construction of 7 independent buildings or

whether it is one building with 7 wings ?

(2) Whether the promoter is liable to convey

his right, title and interest in the land and

building, to the Society, and execute all relevant
documents necessary for the execution of the

conveyance ?, and

(3) Whether the promoter is entitled to make

additional construction on the suit land without
consent of the persons who have taken flats in
the building constructed by the promoter on the
suit land ?

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23. For considering the controversy, in question, it would

be necessary to refer certain provisions of the MOFA. Clause

“m” of Sub-Section 2 of Section 3 of the MOFA reads thus :

” General liabilities of promoter –

(1) ……………………………

(2) A promoter, who constructs or intends to

construct such block or building of flats, shall –

(a) to (l) ………………………………………………..

(m) when the flats are advertised for sale,

disclose inter alia in the advertisement the
following particulars, namely :-

(i) the extent of the carpet area of
the flat including the area of the

balconies which should be shown
separately;

(ii) 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 the instalments thereof may be
paid;

(iii) the nature, extent and
description of the common areas and

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facilities; and

(iv) the nature, extent and

description of limited common areas
and facilities, if any. ”

24. Perusal of Section 4 of the MOFA would reveal that

the promoter before he accepts any sum of money as advance
payment or deposit, which shall not be more than 20 percent 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 Registration Act, 1908

(XVI of 1908); and such agreement shall be in the prescribed
form.

The unamended Section 7 of the relevant rules reads thus :

” After the plans, and specifications of the

buyildings as approved by the local authority as
aforesaid, are disclosed or furnished to the
person who agrees to take one or more flats, the
promoter shall not make-

(i) any alterations in the structures
described therein in respect of the flat or flats
which are agreed to be taken, without the
previous consent of that person; or

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(ii) any other alterations in the structure of
the building (or construct any additional
structures) without the previous consent of all the

persons who have agreed to take the flats.”

(Emphasis supplied)

The words, “or construct any additional structures”, were
deleted by the amendment vide Maharashtra Act 36 of 1986. By
the said amendment, Section 7A was added and it provides that

the amendment to Section 7 would apply retrospectively and it

provided that it shall be deemed to be effective as if the said
clause (ii) as so substituted had been in force at all material

times; and the expression “or construct any additional
structures”, be deemed never to apply or to have applied in

respect of the construction of any other additional buildings or

structures constructed or to be constructed under a scheme or
project of development in the layout.

25. The relevant portion of Section 10 of the MOFA reads
thus :

“Promoter to take steps for formation of
cooperative society or company – (1) As soon
as a minimum number of persons required to
form a cooperative society or a company have
taken flats, the promoter shall within the

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prescribed period submit an application to the
Registrar for registration of the organisation of
persons who take the flats as a cooperative

society or, as the case may be, as a company; and
the promoter shall join, in respect of the flats

which have not been taken, in such application
for membership of a Cooperative society or as
the case may be of a company. Nothing in this

section shall affect the right of the promoter to
dispose of the remaining flats in accordance with
the provisions of this Act.

Provided that, if the promoter fails within
the prescribed period to submit an application to

the Registrar for registration of society in the
manner provided in the Maharashtra Cooperative

Societies Act, 1960 (Mah. XXIV of 1961), the
Competent Authority may, upon receiving an
application from the persons who have taken
flats from the said promoter, direct the District

Deputy Registrar, Deputy Registrar or, as the
case may be, Assistant Registrar concerned, to

register the society :

Provided further that, no such direction to

register any society under the preceding proviso
shall be given to the District Deputy Registrar,
Deputy Registrar or, as the case may be,
Assistant Registrar, by the Competent Authority

without first verifying authenticity of the
applicants’ request and giving the concerned
promoter a reasonable opportunity of being
heard. ”

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26. The relevant portion of Section 11 of the MOFA reads
thus :

” Promoter to Convey title, etc., and execute

documents according to agreement – (1) A
promoter shall take all necessary steps to
complete his title and convey, to the organisation

of persons, who take flats, which is registered
either as a cooperative society or as a company
as aforesaid, or to an association of flat takers or
apartment owners his right, title and interest in

the land and building, and execute all relevant
documents therefor in accordance with the

agreement executed under section 4 and if no
period for the execution of the conveyance is

agreed upon, he shall execute the conveyance
within the prescribed period and also deliver all
documents of title relating to the property which
may be in his possession or power. ”

27. Section 16 of the MOFA provides that the provisions
of this Act, except where otherwise provided, shall be in addition

to the provisions of the Transfer of Property Act, 1882 (IV of
1882) and shall take effect notwithstanding anything to the
contrary contained in any contract.

28. The relevant portion of Rule 9 reads thus :

” Period for conveyance of title of promoter to
organisation of flat purchasers – If no period

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for conveying the title of the promoter to the
organisation of the flat purchasers is agreed
upon, the promoter shall (subject to his right to

dispose of the remaining flats, if any) execute the
conveyance within four months from the date on

which the Cooperative society or the company is
registered or, as the case may be, the association
of the flat takers is duly constituted. ”

29. The clauses 3 and 4 of Form V, which is a model

form of agreement to be entered into between promoter and
purchaser of flat, are declared to be statutory and mandatory by

the legislature. The same are reproduced in the paragraph 17 of

the judgment of the Apex Court, which is reproduced hereafter.

30. Therefore, the first question that will have to be

decided in accordance with the directions of the Apex Court is,

as to whether the project undertaken in 1985 by the promoter
consisted of 7 independent buildings or whether it was one

building with 7 wings. The Apex Court, in this respect, has
directed this court to examine the application made by the
promoter when he submitted the plan in 1985 and also the

permission granted by the Urban Land Ceiling authorities under
Section 21(1) of the Urban Land Ceiling Act, 1976. The Apex
Court has further directed this court to consider the application
for amendment to the layout plan made from time to time and

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also agreement between promoter and the flat takers.

31. As directed by the Apex Court, I have verified the

plans submitted by the promoter, from time to time, from 1985.
The sanction plan dated 21st October 1985, which is at Exhibit
28, would show that the plan consists of 7 wings which are

interlinked to each other. The plan of 1987, which at Exhibit 33,
consists of 5 wings which are again interlinked to each other.

The sanction plan dated 12th April 1989, which is at Exhibit 34,

would again show that it consists of 5 wings which are
interlinked to each other. The plan sanctioned on 20th May

1992, which at Exhibit 36, would show that it is a plan of 6
wings which are interlinked to each other. The plan dated 26th

November 1994, which at Exhibit 37, would again show that it is
6 wings interlinked to each other. Perusal of the sanction plan,

dated 29th March 2001, which is at Exhibit 38, would reveal that
for the first time, it shows 5 wings interlinked to each other with

the construction of one additional proposed building. The plan
also shows the plinth for wing “F”, which was in accordance
with the plans of 1992 and 1994, was proposed to be

demolished. It is, thus, clear that though initially in the year
1985, the sanction plan was shown consisting 7 wings
interlinked to each other, and thereafter, vide amended plans

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sanctioned from time to time of 1994, the number of wings are
changed from 7 to 5 and thereafter from 5 to 6, it is only the

sanction plan of 2001, which shows the layout of 5 wings

interlinked to each other along with one proposed additional
building.

32. The Apex Court has also directed this court to
consider the permission granted by the authorities under Section

21(1) of the ULC Act. It would be relevant to refer to some of

the clauses of the said permission. The relevant clauses read
thus :

“Clause 5 : The said persons shall reserve 10
percent of the dwelling units for sale to the

allottees nominated by the Government of
Maharashtra as specified below :-

11 tenements having built up area 40.00 sq.mt.

1 tenement having built up area 30.00 sq.mt.

2 tenements having built up area 62.30 sq.mt.

tenements distribute proportionately on 1st, 2nd
and 3rd floor in building with 7 wings.

1. Building No. Building with 7 wings.

2. 10 % Reservation of tenements for Govt.

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nominees – 14 tenements consisting built up area
of 594.60 sq.mt.

Clause 8 : The said persons shall make a
statement on the basis of outright purchase and

no such case the selling price shall be as below :

Schedule “A”

————————————————————————

         Type of         Built up        No. of            Selling price
         Tenement area of               tenements Per sq.mt. Per sq.ft.




                                 
                         tenements

————————————————————————

               ig        40.00               86            1453.00 135.00

                         30.00               39            (This rate is
             
                                                            applicable only
                                                            for 10 % Govt.
                                                             nominees quota
                                             --             only)
      

                                            137              tenements and
                                                             shops.
   



————————————————————————

Clause 9 : The said persons shall convey the
land under the building and land to be kept open
as per building regulations, Development
Control Rules of Greater Bombay Municipal
Corporation to the buyers of the tenements as

and when they form Cooperative Housing
Society.

Clause 13 : The area required to be kept open
according to the D.C. Rules, building regulations

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of Bombay Municipal Corporation, Town
Planning Rules and other statutory regulations
shall always be kept open. This part of the land

shall not be used for any construction
whatsoever, even if there is a change in F.S.I. in

future permitting additional construction. ”

33. It is, thus, clear that the said permission also
contemplates one building with 7 wings. Not only this, but the
number of tenements constructed is also shown as 137 of various

sizes. In the plan which was presented to the flat takers,

representation was given that the amenities, that would be made
available, were for occupants of 137 tenements. However, by

the layout of 2002, not only the building is sought to be
constructed on the area which was to be kept as open, but almost

the same number of occupants are likely to be added in the

layout, thereby depriving the members of the Society, the
amenities that were already provided.

34. It is, thus, clear that there is no manner of doubt from
the sanction plans, as well as, the permission granted by the

Urban Land Ceiling authority, that the project in question, as
projected by the promoter and sanctioned by the Corporation in
the year 1985, was of 7 wings which were interlinked to each
other and not of 7 independent buildings. Not only this, but the

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perusal of the brochure would reveal that the layout which was
presented by the promoter to the flat takers would show that the

said project was one building with various wings interlinked to

each other. Perusal of the plan which is annexed with the
agreement between the promoter and the purchaser of the flat
would also reveal that the plan shows one building with various

wings interlinked to each other and it does not show the
additional building which is shown in the plan of 2001. Perusal

of the plan of 1985, with the plan of 2001, would reveal that

there is a substantial change in the layout plan.

35. That leads us to the next question, as to whether it was
necessary for the promoter to have obtained consent of the flat
takers residing in the flats constructed by the promoter on the suit

plot and as to whether he could have constructed the additional

structure without their consent.

36. The Apex Court, in the judgment, while remitting the
matter to this court, after considering all the relevant provisions,
has observed thus :

“15. ………………………….. Consequently, reading
S.7 and S. 7-A, it is clear that the question of
taking prior consent of the flat takers does not
arise after the amendment in respect of any

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construction of additional structures. However,
the right to make any construction of additional
structures/buildings would come into existence

only on the approval of the plan by the
competent authority. That, unless and until, such

a plan stood approved, the promoter does not get
any right to make additional construction. This
position is clear when one reads the amended S.

7(1)(ii) with S. 7-A of the MOFA as amended.
Therefore, having regard to the Statement of
Objects and Reasons for substitution of S. 7(1)

(ii) by the Amendment Act 36/86, it is clear that

the object was to make legal position clear that
even prior to the amendment of 1986, it was

never intended that the original provision of S.
7(1)(ii) of MOFA would operate even in respect

of construction of additional buildings. In other
words, the object of enacting Act No. 36/86 was
to change the basis of the judgment of the
Bombay High Court in Kalpita Enclave case

(supra). By insertion of S. 7-A vide Maharashtra
Amendment Act 36/86 the legislature had made

it clear that the consent of flat takers was never
the criteria applicable to construction of
additional buildings by the promoters. The

object behind the said amendment was to give
maximum weightage to the exploitation of
development rights which existed in the land.
Thus, the intention behind the amendment was to

remove the impediment in construction of the
additional buildings, if the total layout allows
construction of more buildings, subject to
compliance of the building rules or building by-
laws or Development Control Regulations. At
the same time, the legislature had retained S. 3

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which imposes statutory obligations on the
promoter to make full and true disclosure of
particulars mentioned in S. 3(2) including the

nature, extent and description of common areas
and facilities. As stated above, sub-section (1A)

to S. 4 was also introduced by the Legislature by
Maharashtra Act 36/86 under which the promoter
is bound to enter into agreements with the flat

takers in the prescribed form. Under the
prescribed form, every promoter is required to
declare the FSI available in respect of the said
land. The promoter is also required to declare

that no part of that FSI has been utilised
elsewhere, and if it is utilised, the promoter has

to give particulars of such utilization to the flat
takers. Further, under the pro forma agreement,

the promoter has to further declare utilization of
FSI of any other land for the purposes of
developing the land in question which is covered
by the agreement.

16. Therefore, the legislature has sought to

regulate the activities of the promoter by
retaining Ss. 3 and 4 in the Act. It needs to be
mentioned at this stage the question which needs

to be decided is whether one building with
several wings would fall under amended S. 7(1)

(ii). Section 7-A basically allows a builder to
construct additional building provided the

construction forms part of a scheme or a project.
That construction has to be in accordance with
the layout plan. That construction cannot
exceed the development potentiality of the plot in
question. Section 10 of MOFA casts an
obligation on the promoter to form a cooperative

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society of the flat takers as soon as minimum
number of persons required to form a society
have taken flats. It further provides that the

promoter shall join the society in respect of the
flats which are not sold. He has to become a

member of the society. He has the right to
dispose of the flats in accordance with the
provisions of the MOFA. Section 11 inter alia

provides that a promoter shall take all necessary
steps to complete his title and convey the title to
the society. He is obliged to execute all relevant
documents in accordance with the agreement

executed under S. 4 and if no period for
execution of the conveyance is agreed upon, he

shall execute the conveyance within the
prescribed period. Rule 8 inter alia provides that

where a cooperative society is to be constituted,
the promoter shall submit an application to the
Registrar for registration of the society within
four months from the date on which the

minimum number of persons required to form
such society (60%) have taken flats. Rule 9

provides that if no period for execution of a
conveyance is agreed upon, the promoter shall,
subject to his right to dispose of the remaining

flats, execute the conveyance within four months
from the date on which the society is registered.

17. Reading the above provisions of MOFA,

we are required to balance the rights of the
promoter to make alterations or additions in the
structure of the building in accordance with the
layout plan on the one hand vis-a-vis his
obligations to form the society and convey the
right, title and interest in the property to that

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society. The obligation of the promoter under
MOFA to make true and full disclosure of the flat
takers remains unfettered even after the inclusion

of S. 7-A in MOFA. That obligation remains
unfettered even after the amendment made in in

S. 7(1)(ii) of MOFA. That obligation is
strengthened by insertion of sub-section (1A) in
S. 4 of MOFA By Maharashtra Amendment Act

36/86. Therefore, every agreement between the
promoter and the flat taker shall comply with the
prescribed Form V. It may be noted that, in that
prescribed form, there is an explanatory note

which inter alia states that Cls. 3 and 4 shall be
statutory and shall be retained. It shows the

intention of the legislature. Note 1 clarifies that
a model form of agreement has been prescribed

which could be modified and adpated in each
case depending upon the facts and circumstances
of each case but, in any event, certain clauses
including Cls. 3 and 4 shall be treated as

statutory and mandatory and shall be retained in
each and every individual agreements betwen the

promoter and the flat takers. Clauses 3 and 4 of
the Maharashtra Ownership Flats (Regulation of
the Promotion of Construction etc.) Rules, 1964,

are quoted hereinbelow :

“3. The promoter hereby agrees to
observe, perform and comply with all the

terms, conditions, stipulations and
restrictions, if any, which may have been
imposed by the concerned local authority at
the time of sanctioning the said plans or
thereafter and shall, before handing over
possession of the flat to the flat purchases,

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obtain from the concerned local authority
occupation and/or completion certificates in
respect of the flat.

4. The promoter hereby declares that the

Floor Space Index available in respect of
the said land is. ……… square metres only
and that no part of the said floor space

index has been utilized by the Promoter
elsewhere for any purpose whatsoever. In
case, the said floor space index has been
utilised by the Promoter elsewhere, then the

Promoter shall furnish to the flat purchaser
all the detailed particulars in respect of such

utilization of said floor space index by him.
In case, while developing the said land the

Promoter has utilized any floor space index
of any other land or property by way of
floating floor, space index, then the
particulars of such floor space index shall

be disclosed by the Promoter to the Flat
Purchaser. The residual F.A.R. (F.S.I.) in

the plot or the layout not consumed will be
available to the Promoter till the egistration
of the society. Whereas after the

registration of the society the residual
F.A.R. (F.S.I.) shall be available to the
Society.” (Emphasis supplied)

18. The above clauses 3 and 4 are declared to
be statutory and mandatory by the Legislature
because the promoter is not only obliged
statutorily to give the particulars of the land,
amenities, facilities, etc., he is also obliged to
make full and true disclosure of the development

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potentiality of the plot which is the subject-
matter of the agreement. The promoter is not
only required to make disclosure concerning the

inherent FSI, he is also required at the stage of
layout plan to declare whether the plot in

question in future is capable of being loaded with
additional FSI/floating FSI/TDR. In other
words, at the time of execution of the agreement

with the flat takers, the promoter is obliged
statutorily to place before the flat takers the
entire project/scheme, be it a one building
scheme or multiple number of buildings scheme.

Clause 4 shows the effect of the formation of the
Society.

19. In our view, the above condition of true and

full disclosure flows from the obligation of the
promoter under MOFA vide Ss. 3 and 4 and
Form V which prescribes the form of agreement
to the extent indicated above. This obligation

remains unfettered because the concept of
developability has to be harmoniously read with

the concept of registration of society and
conveyance of title. Once the entire project is
placed before the flat takers at the time of the

agreement, then the promoter is not required to
obtain prior consent of the flat takers as long as
the builder put up additional construction in
accordance with the layout plan, building rules

and Development Control Regulations etc. ”

37. The Apex Court, in the aforesaid judgment, in
unequivocal terms, has held that the obligation of the promoter

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under MOFA to make true and full disclosure of the flat takers
remains unfettered even after the inclusion of S. 7-A in MOFA.

It has further been held that the obligation remains unfettered

even after the amendment made in S. 7(1)(ii) of MOFA. It has
further been observed, that the obligation is strengthened by
insertion of sub-section (1A) in S.4 of MOFA by Maharashtra

Amendment Act 36/86. The Apex Court has also held that as per
Clauses 3 and 4 of the Rules, which are declared to be statutory

and mandatory by the Legislature, the promoter is not only

obliged statutorily to give the particulars of the land, amenities,
facilities etc., but is also obliged to make full and true disclosure

of the development potentiality of the plot which is subject
matter of the agreement. It has further been held that the

promoter is not only required to make disclosure concerning the
inherent FSI, but is also required at the stage of layout plan to

declare whether the plot in question in future is capable of being
loaded with additional FSI/floating FSI/TDR. In unequivocal

terms, the Apex Court has held that at the time of execution of
the agreement with the flat takers, the promoter is obliged
statutorily to place before the flat takers the entire

project/scheme, be it a one building scheme or multiple number
of buildings scheme. The Apex Court has held that the
obligation remains unfettered because the concept of

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developability has to be harmoniously read with the concept of
registration of society and conveyance of title. It has been held

that once the entire project is placed before the flat takers at the

time of the agreement, then the promoter is not required to
obtain prior consent of the flat takers as long as the builder put
up additional construction in accordance with the layout plan,

building rules and Development Control Regulations etc.

38. A Division Bench of this court, in the case of White

Towers Cooperative Housing Society Ltd. Vs. S.K. Builders
& others (cited supra), while considering the judgment of the

Apex Court, in the present case, has observed thus :

” The Apex Court in Jayantilal Investments’

case, has clearly observed in para 20, after taking
into consideration the provisions of Clauses 3

and 4 of the Maharashtra Ownership Flats
(Regulation of the Promotion of Construction
etc.) Rules, 1964, that the said provisions are

declared to be statutory and mandatory by the
Legislature because the promoter is not only
obliged statutorily to give the particulars of the
land, amenities, facilities, etc., he is also obliged

to make full and true disclosure of the
development potentiality of the plot which is the
subject matter of the agreement. The promoter is
not only required to make disclosure concerning
the inherent F.S.I., he is also required at the stage
of layout plan to declare whether the plot in

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question in future is capable of being loaded with
additional F.S.I./floating FSI/T.D.R. In other
words, at the time of execution of the agreement

with the flat takers, the promoter is obliged
statutorily to place before the flat takers the

entire project/scheme, be it a one building
scheme or multiple number of buildings scheme.

Having observed so in relation to the statutory

provisions in Clauses 3 and 4 of the said Rules,
the Apex Court has further ruled that :

” the above condition of true and full disclosure

flows from the obligation of the promoter under
MOFA vide sections 3 and 4 and Form V which

prescribes the form of agreement to the extent
indicated above. This obligation remains
unfettered because the concept of developability

has to be harmoniously read with the concept of
registration of society and conveyance of title. “

Obviously, the flat takers stand assured that

in case of any change to be made in the project,
as was disclosed to the flat takers at the time of

entering into agreement, the same has to be by
following the proper procedure and without
disturbance of the rights accrued to the flat

purchasers in relation to the Flats and all benefits
attached to the flats including in relation to the
land on which the building having such flat is
situated. Taking into consideration the same, if a

portion of the plot wherein the structure having
the flat is situated is to be excluded and is to be
amalgamated in the neighbouring plot, and the
project in this regard is not disclosed to the flat
takers at the time of the agreement being entered
with the flat takers, it would be totally contrary

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to the decision of the Apex Court in Jayantilal
Investments’ case. This aspect has not been
considered by the learned Single Judge while

passing the impugned order. ”

39. The learned Single Judge of this court had an
occasion to consider the aforesaid judgment of the Apex Court,

in the case of Megh Ratan Cooperative Housing Society Ltd.
Vs. Rushabh Rikhav Enterprises & others (2009(1) Bom.

C.R. 361), wherein the learned Single Judge has observed thus :

The Supreme Court has held that Clause
No.4 of the model agreement prescribed under

the MOF Act and MOF Rules, incorporates the
statutory obligation and a promoter is required to
declare to the flat takers the floor space index
available in respect of the land in square metres

and the floor space index which the promoter has

utilised. In case, the promoter has utilised FSI of
any other land or property as a floating F.S.I. he
is required to disclose the same to the flat takers.

As stated earlier, the defendant No.1 had
disclosed to the flat purchasers that the total
F.S.I. proposed to be consumed as per the plan at
Exh. “J” was 2490.84 sq. mtres. Now the

defendants propose to consume 4460 sq. mtrs. of
the F.S.I. by utilising floating F.S.I. or T.D.R. of
another property to the extent of 1970 sq. mtrs.
This was not disclosed to the flat purchasers nor
their consent was not obtained for such

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additional utilisation of the FSI. Prima facie, this
could not have been done without consent of the
flat takers. ”

40. It can, thus, be seen that it is settled position of law,

as laid down by the Apex Court, that a prior consent of the flat
owner would not be required if the entire project is placed before

the flat taker at the time of agreement and that the builder puts
an additional construction in accordance with the layout plan,

building rules and Development Control Regulations. It is, thus,
manifest that if the promoter wants to make additional

construction, which is not a part of the layout which was placed

before flat taker at the time of agreement, the consent, as
required under Section 7 of the MOFA, would be necessary.

41. The Apex Court, in the aforesaid judgment, has

specifically directed this court, to consider the effect of the
judgment of the learned Single Judge of this court, in the case of

Ravindra Mutneja and others Vs. Bhavan Corporation and
others (2003(5) Bom.C.R. 695). The learned Single Judge, in
the case of Ravindra Mutneja, has observed thus :

” The real issue as has been noted earlier is
what is the stage up to which the
developer/owner can put up additional
construction after the building in terms of the

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registered plan has been constructed and
occupied. In my opinion, once the buildings
shown in the approved plan submitted in terms of

the regulations under an existing scheme filed
before the authorities under MOFA Act, have

been completed and possession handed over, the
builder/owner cannot contend, that because he
has not formed the society and/or not conveyed

the property by sale deed under the Act he is
entitled to take advantage of any additional F.S.I.

that may become available because of
subsequent events. That would be so at the stage

the building is under construction or the building
is not completed and/or purchasers are not put in

occupation provided such building forms part of
the development plan and/or layout plan already

approved. Subsequent amendment of the layout
plan after the building plan is registered under
MOFA, without the consent, prima facie, of the
flat purchasers would not be permissible. It may

be possible to accept that the development plan
could be modified as long as the right of the

purchasers and the benefits which they are
entitled to including recreational and open areas
are not effected by the revised development plan.

Once the building is completed and the
purchasers are put in occupation in terms of
polan filed and the time to form the society or
convey the property in terms of the agreement or

the rules framed under MOFA is over, the
permission of such purchasers would be required.

In the instant case, the building completion
certificate for the plaintiff’s building, was issued
in the year 1997. The builder/owner Defendant

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Nos.1, 3 and 4 had to put up the construction,
based upon the permission/license granted. The
defendant Nos.1, 3 and 4 had to construct the

building and to convey the title by sale deed in
terms of Rule 9. If property had been conveyed,

prima facie the remaining FSI or FSI which
become subsequently available on the facts of the
case, would be to the society to whom the land

had to be conveyed. The record shows that the
building was approved in December, 2001. It
cannot prima facie, be said that defendant Nos.1,
2, 4 and 5 have any rights under which they are

entitled to put up an additional building contrary
to section 7A of the Act. ”

ig (Emphasis supplied)

The learned Single Judge, therefore, in unequivocal terms
has held that once the building shown in the approved plan
submitted in terms of the regulations under an existing scheme,

has been completed and possession handed over, the

builder/owner cannot contend, that because he has not formed
the society and has not conveyed the property under the MOFA,

he is entitled to take advantage of any additional F.S.I. that may
become available because of subsequent events. It has further
been held that once the building is completed and the purchasers

are put in occupation in terms of plan filed and the time to form
the society or convey the property in terms of the agreement or
the rules framed under MOFA is over, the permission of such
purchasers would be required.

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42. In the present case, the scheme was floated in the

year 1985, showing 7 wings. The building was completed in the

year 1989 and the purchasers who had entered into agreement
with the promoter were put in possession. In this respect, it
would also be relevant to refer to condition No.4 of the

occupation certificate dated 12th April 1989 issued by the
Bombay Municipal Corporation, which reads thus :

” That, the Cooperative Society shall be formed
and registered within three months from the date
of issue hereof, or before B.C.C. whichever is

earlier. “

It is not in dispute, that in furtherance to the statutory

obligation enjoined upon the promoter, in view of Section 10 of

the MOFA and Rule 8 of the Rules, though the promoter had
initially taken steps for forming of Cooperative Society, the

matter was not taken to logical end. As such, the flat takers were
required to move the appropriate authority for registration of the
Society. Accordingly, the competent authority granted

registration to the plaintiff no.1 / Society on 20th January 1993.
It is further to be noted that though the appeal was preferred by
the promoter against the said order, the appeal was rejected. It
could, thus, be seen that the promoter was under the statutory

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obligation in view of Section 11 of the MOFA read with Rule 9
of the Rules, to execute conveyance in favour of the Society,

within a period of four months. In view of the judgment of the

learned Single Judge of this court, in the case of Ravindra
Mutenja (cited supra), once the building shown in the approved
plan was completed and possession handed over and the time

frame prescribed for registration of the Society and conveying
land to the Society is over, the promoter was legally precluded

from putting up further construction without consent.

43. That leaves us to the next question, as to whether the

consent which is deemed to be given in the clauses of agreement
would be a valid consent for the purposes of Section 7 of the

MOFA. The learned Counsel appearing for the promoter,
relying on various clauses i.e. Clauses 1, 8, 10, 11, 12, 15, 17,

18, 38 and 51 of the agreement entered between the promoter
and the flat owners, strenuously contends that there is implied

consent for the additional construction.

44. Recently, after judgment of the Apex Court in the

present case, considering import of the said judgment, the
learned Single Judge of this court, had an occasion to consider
the issue which is raised by the promoter herein, in the case of
Bajranglal Eriwal & others Vs. Sagarmal Chunilal & others

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(2008(6) Bom.C.R. 887), wherein it is observed thus :

” The provisions of the Act, as construed now
by the judgment of the Supreme Court, would

leave no manner of doubt that the statutory bar
upon the promoter altering the structure of a flat
agreed to be purchased under Clause (i) of sub-

section (1) of section 7 and of making any other

alterations or additions in the structure of the
building under Clause (ii), can be lifted only
subject to a disclosure by the developer of the

entire project or scheme. The previous consent
that is contemplated by sub-section (1) of section

7 must be an informed consent. An informed
consent is one which is freely given, after a flat
purchaser is placed on notice by a complete and

full disclosure of the project or scheme which the
builder intends to implement. The consent that is
contemplated by sub-section (1) of section 7 is,

therefore, a specific consent which is relatable to
the particular project or scheme of the developer

which is intended to be implemented. The
observations of the Supreme Court in Jayantilal
Investments, bring about a balance between the

rights of the promoter on the one hand and a flat
purchaser on the other. There is a statutory
embargo upon the making of alterations either in
an individual flat or in respect of the structure of
the building after the disclosure of the plans and

specifications of the building. This embargo was
introduced by the legislature specifically to
obviate the kind of malpractices that were taking
place. The lifting of the embargo is conditional
on the grant of previous consent. The lifting of

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the embargo must be confined strictly within the
parameters which have been envisaged by the
legislature and it is in that conjtext the Supreme

Court has held that the consent can be regarded
as valid if there has been a full disclosure by the

developer of the entire project which he has to
implement. Thus construed, there can be no
manner of doubt that it is not open to a

developer/promoter to rely upon a general
consent. To allow such generalized consents to
operate would defeat the public policy which
underlies the provisions of sub-section (1) of

section 7 as interpreted by the Supreme Court. It
is a well settled principle of statutory

interpretation that the interpretation which the
Court places on a statute must be purposive, so

as to achieve the object and intent of the
legislature. The Maharashtra Ownership Flats
Act, 1963, is an Act to regulate the promotion of
the construction of the sale and management, and

the transfer of flats on ownership basis. The
preamble specifically provides that the State

Government was conscious of the fact that on
account of an acute shortage of housing, there
were “sundry abuses, malpractices and

difficulties relating to the promotion of the
construction of, and the sale and management
and transfer of flats taken on ownership basis.”
The legislature has found that such malpractices

not merely existed, but they were increasing. It
is in this background that the Court must adopt a
purposive interpretation of law and that
interpretation which would defeat the object of
the legislature must be eschewed.”

(Emphasis supplied)

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The learned Single Judge of this court, while taking the

aforesaid view, has also relied on the judgments of other Single
Judges of this court, in the cases of Neena Sudarshan Wadia Vs.

Venus Enterprises (1984(2) Bom.C.R. 505); Tejal Residency
Cooperative Housing Society Ltd. Vs. Brihan Mumbai

Municipal Corporation (2007(6) ALL.M.R. 861); Khatri
Builders Vs. Mohmed Farid Khan (1992(1) Bom.C.R. 305); and

in the case of Ravindra Mutenja (cited supra).

45.

The similar argument, which is advanced before this

court, fell for consideration before the learned Single Judge of this
court, in the case of Neena Sudarshan Wadia Vs. Venus
Enterprises (1984(2) Bom.C.R. 505), wherein the learned Single

Judge has observed thus :

” Now, we have to understand the meaning of
the word `consent’ as used in Clause (ii) of sub-

section (1) of section 7. After the plans and
specifications of the building as approved by the
local authority are disclosed or furnished to a
person who agrees to take a flat from the

promoter, a prohibition is claimed on the
promoter not to make any alterations in the
building or constructed additional structures.

This prohibition can be lifted if before the
promoter carries out the alterations in the
building or before he starts the work of

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additional construction, the promoter obtains the
consent of all the persons who have agreed to
take the flats. For the purpose of obtaining

consent, a promoter must ask the flat owners for
their permission and reveal to them the nature of

the proposed alterations to the building or of the
additional structures to be constructed as,
without such disclosure, the flat owners cannot

know for what work the permission is sought and
for what work they are required to consent.
Again in response to a request for consent, there
must be an affirmative acceptance from all the

persons who have agreed to take the flats. The
word “consent” in the context of the section does

not mean implied consent such as by conduct or
acquiescence or circumstance that might be

consent. Consent in this section is to be
understood to mean as positive consent to
specific items of work or alteration to be carried
out or particular additional structure to be built

by a promoter. This seems to be the object of
enacting these provisions of obtaining previous

consent of the flat owners as otherwise the
malpractices and irregularities intended to be
eradicated by this enactment would continue to

flourish and the promoters would not be deterred
by the penal provision of section 13. A blanket
consent or authority obtained by a promoter at
the time of entering into an agreement for sale or

at the time of handing over possession is not the
consent contemplated by section 7(1)(i) or (ii)
for such a blanket consent or authority would
sew up or nullify these provisions. ”

(Emphasis supplied)

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46. Thus, there is consistent view of this court, that the

blanket consent or authority obtained by the promoter, at the
time of entering into agreement of sale or at the time of handing

over possession of the flat, is not consent within the meaning of
Section 7(1) of the MOFA, inasmuch as, such a consent would

have effect of nullifying the benevolent purpose of beneficial
legislation.

47. It is, thus, clear that it is a consistent view of this

court, that the consent as contemplated under Section 7(1) of the

MOFA has to be an informed consent which is to be obtained
upon a full disclosure by the developer of the entire project and
that a blanket consent or authority obtained by the promoter at

the time of entering into agreement of sale would not be a

consent contemplated under the provisions of the MOFA. I am
in respectful agreement with the consistent view. The

interpretation placed by the learned Single Judges of this court is
in consonance with the benevolent provisions of the MOFA
which have been enacted for protecting flat takers.

48. It is further pertinent to note that in view of Clause 9
of the ULC permission, the promoters were required to convey
the land under the building and land to be kept open as per

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building regulations, Development Control Rules of Greater
Bombay Municipal Corporation to the buyers of the tenements

as and when they form Cooperative Housing Society. It is

further pertinent to note that under Clause 13 of the ULC
permission, the part of the land which was required to be kept
open according to the D.C. Rules, building regulations of

Bombay Municipal Corporation, Town Planning Rules and other
statutory regulations was always required to be kept open and

that the same could not have been used for any construction

whatsoever, even if there is a change in F.S.I. in future
permitting additional construction.

49. It can, thus, be seen that the building having been

completed in 1989 and the Cooperative Society registered on
20th January 1993, and the appeal filed by the promoter

challenging the same having been rejected, the promoter was
under statutory obligation in view of Section 11 of the MOFA,

read with Rule 9 of the Rules, to execute the conveyance within
4 months from the date on which the Cooperative Society was
registered. The said obligation is fortified by Clause 9 of the

ULC permission and Clause 4 of the commencement certificate
dated 12th April 1989. The contention of the learned Counsel
for the promoter, that the precondition to execute the conveyance

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had not been fulfilled and, as such, the conveyance could not
have been sought by the Society, does not appeal to me.

50. In this respect, the learned Counsel appearing for the
promoter has placed reliance on Clauses 38 and 51 of the
agreement. It is submitted that in view of Clause 38, unless the

entire payment was made, the promoter was not obliged to
execute conveyance. Clauses 38 and 51 of the agreement, read

thus :

“Clause 38 : It is expressly agreed between the
Builders and the Purchaser that notwithstanding
what is contained in these presents the Builders

shall have option even prior to the registration of
Cooperative Society, Limited Company,
Incorporated Body or Condominium of

Apartments as the case may be to take
conveyance in respect of the said lands described

in the Fourth Schedule hereunder written either
in their favour or in favour of one or more
persons who may be purchaser or purchasers of

flat/shop/parking space and other premises in the
said proposed Building to be known as
MADHUVIHAR or in the name of such person
or persons who may be the promoters of the
proposed Cooperative Society, as defined under

the Maharashtra Ownership Flats Act, 1962; and
in the event of such conveyance or conveyances
being taken by the Builders in favour of any of
the aforesaid person or persons as the case may
be, then and in that event such person or persons

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shall transfer the said lands in favour of any
Cooperative Society, Limited Company,
Incorporated Body or Condominium of

Apartments upon compliance of all the terms and
conditions of this agreement by the Purchaser

and other purchasers of flats/shops/parking
spaces and premises in the said Building to be
known as MADHUVIHAR and upon all such

flats/shops/parking spaces and other units being
sold and full amount of consideration being
received by the Builders and all terms conditions
and convenants of such agreement or agreements

being observed and performed by the Purchaser
and all such purchasers of flats/shops/parking

spaces and other premises.

Clause 51 : After the Building is completed and
ready and fit for occupation and after the Society
or Limited Company or any other Incorporated
Body of the Purchasers of the flats/shops/parking

spaces in the building is incorporated registered
and only after all the flats/shops/parking spaces

in the said building have been sold and disposed
off by the Builders and after the Builders have
received all dues payable to them under the terms

of the agreement with various flats/shops/parking
spaces holders, the Builders shall obtain a
conveyance in respect of the said property from
the said J.F. Mendes & another in favour of the

said Society or Limited Company or the
Incorporated Body within a reasonable period.
Such conveyance shall be in such form and
contain such terms and conditions and covenants
as the Builders’ Solicitors may in their absolute
discretion determine. ”

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51. In this respect, it is further submitted by the learned

Counsel appearing for the promoter, that the defence witness no.

1 himself has admitted that the last flat was sold somewhere in
January or February 1992. The learned Counsel appearing for

the promoter relies on the evidence of defence witness no.1,
wherein he states that he has not received full consideration from
some of the flat purchasers. I find that the said contention is

without any substance.

ig The defence witness no.1, Chirag,
himself has admitted in his evidence, that most of the flats were
sold in the year 1989 and that the last flat was sold in January or

February 1992. The said witness further admits in his cross
examination in paragraph 8, that he did not submit the account to

the Society till filing of a suit. Except a mere denial to a

suggestion that no amount was payable except the amount
admitted by the plaintiff towards electricity and water, there is

nothing in his evidence to show that any steps were taken to
demand the dues from purchasers of flats.

52. In view of this specific admission, that the last flat
was sold in 1992 and that there being no evidence to show that
any demand was made by the promoter from flat purchasers

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towards any dues, the contention, that since the entire flats were
not sold and the payment was not received, the time to execute

conveyance had not arrived, is totally without substance. In

view of Section 11 of the MOFA and Rule 9 of the Rules, the
promoter was duty bound to execute the conveyance within a
period of four months from the formation of the Society. This

position is fortified by Clause 9 in the ULC permission and
Condition no.4 in the occupancy certificate issued by the

Corporation. The promoter cannot be permitted to derive

advantage of his own wrong in not complying with the statutory
obligation.

53. In this respect, it will also be relevant to note that

Clause 4 of the statutory agreement in Form V, which was in
existence at the relevant time, also included the following

portion :

” The residual F.A.R. (F.S.I.) in the plot or the
layout not consumed will be available to the
promoter till the registration of the society.
Whereas, after the registration of the Society the

residual F.A.R. (F.S.I.) shall be available to the
Society. “

It is to be noted that the clauses were made statutorily

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mandatory vide notification dated 12th January 1990 and the
aforesaid portion was deleted vide amendment to the Rules

notified on 6th March 1997. The right to get the conveyance

executed accrued in favour of the Society, within a period of 4
months, from 12th January 1993 i.e. the date of registration of
the Society. It can, thus, be seen that the aforesaid portion in

Clause 4 was very much in existence when the right to get
conveyance executed in favour of the Society was approved and,

as such, after registration of the Society, the residual F.A.R.

(F.S.I.) was available to the Society and not to the promoter.

54. In so far as the reliance placed by the learned Counsel
appearing for the promoter, on the judgment of this court, in the

case of Grand Paradi Cooperative Housing Society Ltd. Vs.
Mont Blanc Properties & Industries Pvt. Ltd. & another

(Appeal No. 599 of 2002), is concerned, in my view, the said
judgment would not be applicable to the facts of the present

case. It is to be noted that in paragraph 7 of the judgment, the
learned Judges of the Division Bench have held that the
agreement in question, between the parties was executed in the

year 1971 and in the year 1971, the format in which the
agreement is to be entered was not prescribed and that the same
was prescribed for the first time, in the year 1986. In that view

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of the matter, the learned Judges observed, in paragraph 8 of the
judgment, thus :

” Thus, as in 1971, there was no form

prescribed under section 4 in which the builder
had to enter into an agreement, in law, the
agreement entered between the builders and the

flat purchasers for execution of lease of the flats
of the building and the land underneath of the
building in favour of the flat purchasers or the
society, would be valid and binding between the

parties. In our opinion, prima facie, therefore,
there is no substance in the contention raised on

behalf of the plaintiffs that they are entitled to
have conveyance in their favour in terms of

amended section 4 and form of the agreement
prescribed thereunder and not in accordance with
the agreement entered into between them and the
defendant no.1. ”

It is further to be noted that as a matter of fact, the
observations of the Division Bench, in paragraph 10 of the

judgment, would rather support case of the Society than the
promoter, which reads thus :

” It is, thus, clear that the builder is always
entitled to raise additional structures if he
discloses the additional structures in the layout
plan itself at the time when he sales the flats. No
consent of the flat owners is necessary for raising
additional structures. But if the additional

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structures are not disclosed in the layout plan
then previous consent of the flat owners is
necessary. ” (Emphasis supplied)

55. In so far as the judgment of Division Bench of this
court, in the case of Manratna Developers Vs. Megh Ratan

Cooperative Housing Society Limited & others (2009(2)
Bom.C.R. 836), the same also will not be applicable to the facts
of the present case. Perusal of paragraph 12 of the judgment

would reveal that the plaintiff, who was flat purchaser in lower

arm of building “A”, was in occupation of small portion of the
building. From the perusal of the judgment, it would reveal that

the scheme was for development of the property in a phased
manner and not one building scheme, as in the present case. The

Division Bench prima facie found that the amenities in the form

of recreation ground, etc. are nowhere reduced and, as such, in
the facts of the case, finding that no prima facie case was made

out by the plaintiff, interfered with the order passed by the
learned Single Judge. At the cost of repetition, it is to be noted
that the present project was never intended to be a project for

phased development.

56. Though various judgments of the learned Judge have
been referred to, by the learned Counsel appearing on both sides,

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on the interpretation of Section 7(1) of the MOFA, in my view,
reference except to the judgment of Ravindra Mutenja &

others Vs. Bhavan Corporation & others (2003(5) Bom.C.R.

695), would not be necessary, inasmuch as, the law has been
explicitly laid down by the Apex Court in the judgment while
remanding the matter to this court. The applicability of the

judgment in the case of Ravindra Mutenja has already been
considered herein above, as was specifically directed by the

Supreme Court in the judgment of remand.

57. In the recent judgment dated 31st August 2010, in the

case of Nahalchand Laloochand Pvt. Ltd. Vs. Panchali
Cooperative Housing Society Ltd. (Civil Appeal No. 2544 of

2010), the Supreme Court had an occasion to consider the
purpose for enacting MOFA by the legislature, wherein Their

Lordships have observed in paragraph 40 of the judgment, thus :

              "     MOFA was enacted by the Maharashtra
              Legislature     as    it    was     found      that

builders/developers/promoters were indulging in
malpractices in the sale and transfer of flats and

the flat purchasers were being exploited. The
effect of MOFA May be summarized as follows.
First, every promoter who constructs or intends
to construct block or building of flats in the area
to which MOFA applies has to strictly adhere to
the provisions contained therein, i.e., inter alia,

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he has to make full and true disclosure of the
nature of his title to the land on which the flats
are constructed and also make disclosure in

respect of the extent of the carpet area of the flat
and the nature, extent and description of the

common areas and facilities when the flats are
advertised for sale. Secondly, the particulars
which are set out in Section 4(1A)(a)(i) to (x)

have to be incorporated in the agreement with the
flat purchaser. Thirdly, the promoter has to apply
to the Registrar for registration of the
organization (cooperative society or company or

condominium) as soon as minimum number of
persons required to form such organization have

taken flats. As regards unsold flats, the promoter
has to join such organization although his right to

dispose of unsold flats remains unaffected.
Fourthly, and more importantly, the promoter has
to take all necessary steps to complete his title
and convey to the organization his right, title and

interest in the land and building and execute all
relevant documents accordingly. ”

58. In that view of the matter, I am of the considered

view that the promoter was statutorily obliged to execute
conveyance in favour of the Society within a period of 4 months
from 20th January 1993 i.e. the date of registration of the

Society. I am also of the considered view, that the additional
structure which was not forming part of the original layout in the
year 1985, could not have been constructed without consent of
the Society.

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59. In so far as the direction by the learned trial court,

prescribing the period for executing conveyance in favour of the

plaintiffs, of 3 years, is concerned, it is a common ground by the
promoter and the Society, that such a direction by the learned
trial court was not permissible in law. As such, no discussion

would be necessary in so far as the correctness of the said
direction is concerned.

60.

In so far as the direction for appointment of
commissioner for taking accounts to verify and to take accounts

as provided in Order 20 Rule 16 of the Code of Civil Procedure,
is concerned, since the learned trial court has given sound and

cogent reasons in paragraph 31 of the judgment, as to why
appointment of commissioner is necessary, no interference is

warranted in the same.

61. In the result, First Appeal No. 786/2004 will have to
be allowed and First Appeal No. 989/2004 will have to be
dismissed.

62. Hence, the following order :

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(i) First Appeal No. 786/2004 is allowed and First Appeal No.
989/2004 is dismissed.

(ii) The defendant no.1 is directed to forthwith transfer and
convey and cause to transfer and convey the suit property i.e.
“Madhu Vihar” Scheme, in CTS No. 1068/1, admeasuring 6071

square metres situated at Kandivali (West), Mumbai, to the
plaintiffs and to do all acts deeds matters and things necessary

for effectively transferring, conveying and vesting the same into
the plaintiffs.

(iii) The defendant no.1 is restrained from erecting any
additional structure over the suit property i.e. “Madhu Vihar”

Scheme, in CTS No. 1068/1, admeasuring 6071 square metres
situated at Kandivali (West), Mumbai, without the consent of the

persons with whom he has entered into agreements to take flats
in the building constructed on the suit plot.

(iv) The direction of the learned trial court, in so far as
rendering of the accounts by the promoter and appointment of

commissioner is concerned, the same stands confirmed.

(v) Parties shall bear their own costs.

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63. Civil Applications, if any, stand disposed of.

( B.R. GAVAI )
JUDGE

……………………….

Date : 7th October 2010

64. At this stage, the learned Counsel appearing for original

defendant no.1 requests for stay of this judgment for a period of 10
weeks. Mr. Ghelani, learned Counsel appearing for the original

plaintiffs, vehemently opposes the prayer.

65. However, taking into consideration the facts and
circumstances, I am inclined to stay the judgment for a period of

six weeks. In that view of the matter, this judgment is stayed for a
period of six weeks from today.

( B.R. GAVAI )
JUDGE

………………………….

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