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CASE NO.: Appeal (civil)  3233 of 2006

PETITIONER: M/s Jayantilal Investments

RESPONDENT: Madhuvihar Co-operative Housing Society & Ors.

DATE OF JUDGMENT: 10/01/2007

BENCH: Arijit Pasayat & S. H. Kapadia

JUDGMENT: J U D G M E N T KAPADIA, J.

                What are the rights and obligations of a promoter under the provisions  of the Maharashtra Ownership Flats (Regulation of the Promotion of  Construction, Sale, Management and Transfer) Act, 1963 ("MOFA") is the  question which has arisen for determination in this civil appeal.

       On 26.8.1980 an agreement was arrived at between the vendors and  the appellant herein (M/s Jayantilal Investments-Promoter) in respect of  8559.57 sqm. of land in CTS No. 1068 village Kandivili, Tehsil Borivili,  Greater Mumbai. Subsequently, under a 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 appellant-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 lay out 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 only to FSI  of 0.75. This plan was amended in 1986, 1987, 1989, 1992 and 1994 without  any objection from the flat takers. At this stage, it may be mentioned that on  6.5.1986 the lay out plan was revised and approved with 5 wings having  additional floors as well as FSI of 1.00 due to construction of 44 ft. wide DP  road on the original plot admeasuring 8559.57 sqm. of  land.

       From time to time, agreements stood entered into between the  appellant 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.

       On 12.11.1986 MOFA was amended retrospectively. Under that  amendment Section 7A was inserted excluding ’additional structures’ from  the scope of Section 7(1)(ii) and thereby lifted 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 lay out plan. The object behind  enacting Section 7A was to overcome the judgment of the Bombay High  Court in the case of Kalpita Enclave Co-operative Housing Society Ltd.    v.  Kiran Builders Private Ltd.  1986 MhLJ 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  appellant-promoter.  

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.

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Consequently, the lay out plan stood amended and the appellant 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 appellant  accordingly issued an advertisement for commencement of construction in  accordance with the amended plan. However, it is the case of the appellant  that on account of financial paucity the construction got stuck.

       Respondent No. 1 is the Co-operative Society registered on 20.1.1993.  The lay out 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 of the appellant on account of purchase of additional TDR by the  appellant.

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

       On 12.8.1997 the Co-operative Society-respondent No. 1 and five flat  takers (members) instituted suit no. 4385/97 against the appellant-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.

       By judgment and order dated 31.3.2004 the Bombay City Civil Court  at Mumbai (trial court) partly decreed the suit, permitting the appellant to  complete construction as per the amended plan dated 29.3.2001. The trial  court gave a period of three years to the appellant for executing conveyance  in favour of the Co-operative Society under the provisions of MOFA. Being  aggrieved by the grant of three years time to the appellant, the Cooperative  Society (Respondent No. 1 herein) preferred to the Bombay High Court First  Appeal No. 786/04. A cross appeal was preferred by the appellant-promoter  being First Appeal No. 989/04 in which the appellant contended that under  the agreement between the appellant and the flat takers no time limit for  execution of the conveyance could be set as the appellant 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  appellant was not statutorily obliged to execute a conveyance in favour of  the Co-operative Society. In this connection reliance was placed on the  provisions of Section 7A of MOFA.

       By impugned judgment dated 16.3.2006 the Bombay High Court  allowed First Appeal No. 786/04 filed by the Co-operative Society and  simultaneously dismissed First Appeal No. 989/04 filed by the appellant  herein. By the impugned judgment, the High court directed the appellant 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 in favour of the Co-operative Society.  By the impugned judgment, the appellant was restrained permanently from  making any construction over the suit plot bearing CTS No. 1068/1  admeasuring 6071 sqm. situated at Kandivali (West), Mumbai. By the  impugned judgment the High Court held, that the appellant was a promoter;  that it had floated Madhu Vihar Scheme on the said plot; that Madhu Vihar  was the Scheme/ Project undertaken for development of the plot in  accordance with the lay out plan; and, that the said Scheme stood completed  with the construction of the flats/ shops and the garden. By the impugned  judgment, it was 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 ("the Rules), the appellant was  statutorily obliged to convey the title to the society which they failed to do  even after the Scheme got completed and possession of the flats stood  handed over to the flat takers. By the impugned judgment the High Court  held, that there was an implied trust created; that the promoter was the  trustee and that the beneficiaries were the flat takers. By the impugned

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judgment it was further held, that under section 7 of 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 and that under Section 7A, the said  prohibition was not to apply in respect of the construction of any other  additional building or structure constructed or to be constructed under a  scheme or a project of development in the lay out plan. By the impugned  judgment it has been 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. According to the impugned judgment, between 1985  and 1989, the plans were changed at least four times and that no additional  wings like the one proposed in the plan approved on 29.3.2001 was ever  included in the lay out plans between 1985 and 1989 and, therefore, the  appellant-promoter was not entitled to derive any benefit from Section 7A of  MOFA and, consequently, the appellant was not entitled to construct  additional building in the above suit plot. Hence this civil appeal.

       Mr. Sunil Gupta, learned senior counsel appearing on behalf of the  appellant submitted that Section 7 of MOFA enjoined the promoter, inter  alia, not to construct any additional structure without the consent of the flat  takers in the agreed building. This provision was applied by the Bombay  High Court in the case of Kalpita Enclave (supra). The said judgment  prohibited the developer from constructing the additional structure in the  agreed building. Learned counsel submitted that the State Legislature  imposed such a restriction on the promoter contrary to the object of the Act  and, consequently, the legislature stepped in to change the basis of the  judgment of the Bombay High Court in Kalpita Enclave case (supra) by  enacting the Amending Act No. 36/86 retrospectively. According to the  learned counsel, the said Amending Act deleted the said restriction and left  the promoter free to construct any additional structure without obtaining the  consent of the flat takers in the agreed building. Learned counsel submitted  that the underlying purpose of the said amendment is that maximum possible  housing as per the prevailing by-laws should be achieved to enable the  maximum number of members of the public to be accommodated therein  and that the individual rights of flat takers should not be allowed to come in  the way of achievement of this public purpose. Learned counsel emphasized  that the object behind amending Section 7 and Section 7A is to enable the  promoter to construct an additional structure; that the object of Section 7 and  Section 7A is to bring at par a promoter who has sought and has been  granted permission to construct building consuming the maximum FSI  available under the by-laws prevailing on the given date and a promoter who  had sought and was given permission to construct building consuming the  maximum FSI available under the by-laws as prevailing on earlier date and  who otherwise on the given date stands in the same class as the  abovementioned promoter insofar as the question of consumption of the total  FSI available is concerned. Learned counsel submitted that the object behind  the amendment is to ease the problem of shortage of housing. Learned  counsel further submitted that if the above interpretation of the amended  Section 7 and 7A is not accepted, it would give rise to discrimination  between two sets of persons, namely, flat takers who are party to a new  agreement and a new construction plan and those flat takers who have been  party to an earlier agreement in an earlier construction plan. According to  the learned counsel, if the interpretation given by him is not accepted,  persons interested in the former piece of land shall stand facilitated whereas  persons interested in the latter piece of land shall stand vetoed, though the  building by-laws, rules etc. treat them equally. Learned counsel, therefore,  submitted that any other interpretation would defeat the very purpose of the  amendment to Section 7 and Section 7A. On facts, learned counsel  submitted, relying on the lay out plans, that even under the initial lay out  plan of 1985, 7 wings were to be constructed; that the said plan was revised  on 6.5.1986 under which the construction was restricted to 5 wings having  additional floors; that this was prior to the inclusion of Section 7A and,  therefore, when the D.C. Regulations were enacted in 1991 and the concept

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of TDR was introduced, the appellant got increased FSI of 1.8, consequent  upon which the plan was amended and 6 wings came to be sanctioned on  25.5.1992. Similarly, when the FSI was increased to 2, the plan was got  amended and accordingly the appellant obtained a sanction for construction  of 5 + 2 wings. Learned counsel, therefore, urged that the sanction obtained  by the appellant on 29.3.2001 for construction of 5 + 2 wings on the suit plot  was in terms of the original Plan sanctioned on 21.10.1985 when 7 wings  stood sanctioned. In the circumstances, learned counsel urged that the  appellant was entitled to construct 5 + 2 wings which was contemplated  even in the original Plan dated 21.10.1985. Accordingly it was submitted  that, in the facts and circumstances of this case, the amended provisions of  Sections 7 and  7A of MOFA were applicable and, consequently, the  appellant was not obliged to execute a conveyance in favour of the society  till the appellant is in a position to fully exploit the development potentiality  of the suit plot. In the alternative, it is urged that, in any view of the matter,  the appellant is not entitled to execute the conveyance in favour of the  society till the appellant exhausts the FSI of 2.

       Mr. M. K. Ghelani, learned counsel appearing on behalf of the society  submitted that under MOFA there are two concepts, namely,   developeability and conveyance. It was urged that Section 7 and 7A deal  with developeability of the project, while Sections 10 and 11 read with Rules  8 and 9 deal with the subject of formation of Society and transfer of title.  Learned counsel urged that each of the above two concepts operate in  different fields and, therefore, Section 7 and 7A cannot override Sections 10  and 11 read with the relevant rules. It was urged, that under Section 3(m)(iii)  and (iv) a promoter is required to disclose the nature, extent and description  of the common areas and facilities in its advertisement/ brochure; that  section 4(1) requires a promoter to enter into a written agreement in the  prescribed form and Section 4(1A) inter alia provides that such agreements  shall contain the nature, extent and description of common areas and  facilities and, consequently, it is not open to the promoter to contract out of  the prescribed form of the agreement in form V. Learned counsel pointed out  that Section 4(1) provides that such agreement shall be in Form V, that Form  V gives a model form under which the promoter has to declare the FSI  (inherent) available in respect of the land. Under Rule 5 read with the model  form of agreement, the promoter has to declare all relevant particulars in  respect of utilization of FSI and in cases where the promoter has utilized any  FSI of any other land or property by way of floating FSI then the particulars  of such floating FSI has to be disclosed by the promoter to the flat  purchasers. The residual FSI in the plot or the lay out not consumed will be  available to the promoter till the registration of the society. However, after  registration of the society the remaining FSI shall be available to the society.  Learned counsel submitted that Section 7A stood inserted in MOFA vide  Maharashtra Amending Act 36/86 and by the same Amending Act Section  4(1A) was also inserted and, therefore, Section 7A has to be read with  Section 4(1A). Learned counsel, therefore, urged that Section 7A does not  give to the promoter the right of developeability in eternity. In the present  case, learned counsel submitted that the lay out plan as well as the NOC  obtained by the promoter from ULC authorities was to construct a building  with 7 wings. Learned counsel urged that Section 7A was not applicable to  the present case since in the present case the scheme consisted of one  building with 6 to 7 wings. Moreover, it was further pointed out that Section  7A applies when there is a project or scheme which indicates phase wise  development of a large plot made known to the intending flat takers. Section  7A in such cases does not empower the intending flat takers to prevent  construction of additional building according to such scheme. As a corollary,  it was urged that Section 7A does not confer any additional benefits or rights  to a promoter to construct additional building which did not form part of the  scheme/project in the lay out disclosed to the flat takers and, in any event,  not after the obligation to convey has become operative and enforceable  under Sections 10 and 11 read with Rules 8 and 9 of the Rules. Learned  counsel urged that in the present case the society has been registered in  1993. He submitted that in the present case, on facts, the obligation to  convey has become enforceable under Sections 10 and 11. He clarified that

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mere formation of the society does not take away from the promoter the  rights of the promoter to the remaining development. He is not deprived of  his rights to the unsold flats. However, it is not open to the promoter to  resort to an ingenious drafting enabling the promoter to defer execution of  conveyance till eternity. On facts, learned counsel pointed out that in the  present case, the NOC obtained by the promoter from the Urban Land  Ceiling authorities read with the lay out plan/ block plan of 1985 as well as  the agreements with the flat takers showed that the scheme/ project/ lay out  was in respect of only one building with different wings; that the lay out  plan does not indicate phase wise development; that the agreement with the  flat takers indicated the scheme for only one building and, in the  circumstances, Section 7A is not attracted. That in any event, it was not open  to the promoter to unilaterally change the scheme/ lay out by adding to it  additional building and in the process remove the existing facilities and  amenities provided in the lay out plan. Learned counsel urged that on facts  of the present case, it was one building project which got completed in 1989  when occupation certificate was issued and, in the circumstances, the  promoter was not entitled to put up additional constructions.

       Looking to the importance of the matter in which we were required to  harmoniously construe the provisions of Sections 3 and 4 on one hand with  Section 7 and 7A on the other hand as also Sections 10 and 11 of MOFA and  keeping in mind the question of public importance, we requested Mr. G.E.  Vahanvati, learned Solicitor General of India to assist the Court, keeping in  mind the externalities existing in such cases coming from Mumbai. Learned  Solicitor General of India has given us written submissions. He has  reproduced the various judgments of the Bombay High Court under MOFA.  It is submitted that, it is not open to the builders to insert clauses in the  agreement with the flat takers stating that conveyances will be executed only  after the entire property is developed. Learned amicus curiae submitted that  the contention of the promoter in the present case is that its obligation to  form society and execute a conveyance only after completion of the scheme  is misconceived because under Sections 10 and 11 when the builder enters  into an agreement with the flat takers he is required to form a cooperative  society as soon as the minimum number of flat takers is reached and,  thereafter, the conveyance has to be executed in favour of the society within  four months after the formation thereof in terms of Section 11. He submitted  that MOFA has been enacted to regulate the activities of the builders and not  to confer benefits on them. He submitted that Section 7A was inserted only  for removal of doubts and to provide that the deleted words "construct any  additional structure" shall be deemed never to have been there  notwithstanding any judgment, decree or order of any court which means  that the builder could construct any additional structure without the consent  of the flat purchasers. However, it is pointed out that Section 7A does not  have the effect of conferring any rights on builders to claim an exemption  from their obligations under Sections 10 and 11 of MOFA.

       Before dealing with the point in issue one needs to look at original  Section 7 which was in existence in the Statute prior to its amendment by  Maharashtra Amending Act No. 36/86.         The unamended Section 7 reads as follows: "7.(1)  After the plans, and specifications of the buildings  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

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

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who have agreed to take the flats."                                                             (emphasis supplied) The amended Section 7 reads as follows: "7.   After plans and specifications are disclosed no  alterations or additions without consent of  persons who have agreed to take the flats; and  defects noticed within three years to be  rectified.

(1)  After the plans and specifications of the  building, 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;  

(ii)    any other alterations or additions in the  structure of the building without the  previous consent of all the persons who  have agreed to take the flats in such  building."                                                                                     (emphasi s supplied)

       The judgment of the Bombay High Court in Kalpita Enclave case  (supra) was based on the interpretation of unamended Section 7 of MOFA.  Consequently, it was held that a promoter was not entitled to put up  additional structures not shown in the original lay out plan without the  consent of the flat takers. Thus, consent was attached to the concept of  additional structure. Section 7 was accordingly amended. Section 7A was  accordingly inserted by Maharashtra Amending Act No. 36/86. Section 7A  was inserted in order to make the position explicit, which according to the  legislature existed prior to 1986, implicitly. Section 7 of MOFA came to be  amended and for the purpose of removal of doubt, additional Section 7A  came to be added by Maharashtra Act 36/86. By this amendment, the words  indicated in the parenthesis in the unamended Section 7(ii), namely, "or  construct any additional structures" came to be deleted and consequential  amendments were made in Section 7(1)(ii). Maharashtra Act No. 36/86  operated retrospectively. Section 7A was declared as having been  retrospectively substituted and it was deemed to be effective as if the  amended clause had been in force at all material times. Further, it was  declared vide Section 7A that the above quoted expression as it existed  before commencement of the Amendment Act shall be deemed never to  apply in respect of the construction of any other additional buildings/  structures, constructed or to be constructed, under a scheme or project of  development in the lay out plan, notwithstanding anything contained in the  Act or in any agreement or in any judgment, decree or order of the court.  Consequently, reading Section 7 and Section 7A, it is clear that the question  of taking prior consent of the flat takers does not arise after the amendment  in respect of any 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 Section 7(1)(ii) with Section 7A of the MOFA as amended.  Therefore, having regard to the Statement of Objects and Reasons for  substitution of Section 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 Section 7(1)(ii)  of MOFA would operate even in respect of construction of additional

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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 Section 7A 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 lay out  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 Section 3 which imposes statutory  obligations on the promoter to make full and true disclosure of particulars  mentioned in Section 3(2) including the nature, extent and description of  common areas and facilities. As stated above, sub-section (1A) to Section 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 utilized elsewhere, and if  it is utilized, the promoter has to give particulars of such utilization to the  flat takers. Further, under the proforma 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.

       Therefore, the legislature has sought to regulate the activities of the  promoter by retaining Sections 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 Section 7(1)(ii). Section 7A  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 lay out 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 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 Section 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.         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 lay out plan on the one hand vis-‘-vis his  obligations to form the society and convey the right, title and interest in the  property to that 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 Section 7A in MOFA. That obligation remains unfettered  even after the amendment made in Section 7(1)(ii) of MOFA. That  obligation is strengthened by insertion of sub-section (1A) in Section 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 clauses 3 and 4 shall be statutory and shall  be retained. It shows the intention of the legislature. Note 1 clarifies that a

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model form of agreement has been prescribed which could be modified and  adapted in each case depending upon the facts and circumstances of each  case but, in any event, certain clauses including clauses 3 and 4 shall be  treated as statutory and mandatory and shall be retained in each and every  individual agreements between the promoter and the flat taker. 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 sanctioning the said plans or  thereafter and shall, before handing over  possession of the Flat to the Flat Purchaser, 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 \005\005  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 utilized 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  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."                                                             (emphasis supplied)

       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 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 lay out 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.

In our view, 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 developeability  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 lay out plan, building rules and Development Control  Regulations etc..         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

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amended Section 7(1)(ii) or whether it falls within the ambit of Section 7A  of MOFA. As stated above, under Section 7(1) after the lay out 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 has 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 lay out 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 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 Section  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-400067  (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 lay out plan in 1985. If it is the  building with 7 wings intended to be constructed in terms of the lay out plan  then the High Court is also required to consider the effect of the judgment in  the case of  Ravindra Mutneja and Ors. v.  Bhavan Corporation and  Ors. 2003 (5) BomCR 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 section 21(1) of ULC Act, application made to the competent  authority when initial lay out plan was sanctioned, applications for  amendments to lay out plans made from time to time and also agreements  between promoter and flat takers.  

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. As the matter has been under litigation  for a considerable length of time, we hope that due priority will be given for  early disposal of this matter.

We wish to express our deep appreciation for the assistance rendered  by learned Solicitor General of India as amicus curiae in the matter.

Subject to what is stated, the appeal is allowed with no order as to  costs.