The Division Bench of the Hon'ble Bombay High Court in 2016 in its judgment of Paul Parambi, Chief Promoter, Springs CHS Ltd. and Ors. v. The Bombay Dyeing and Manufacturing Co. Ltd. and Ors.1 had decided this issue and the issue of the legality of a Unilateral Declaration under Maharashtra Apartment Owners Act ,1963 ("MAO Act").

Facts:

  1. The Bombay Dyeing and Manufacturing Co. Ltd ("Promoter") constructed a building Springs ("Building") and sold several flats to various flat purchasers in 2009. However, no co-operative Society was formed until the year 2014.
  2. Petitioner No. 1 as the Chief Promoter of the Proposed Society filed a proposal for registration of the Society in 2014.
  3. During the hearing of the Proposal for registration the Promoter objected stating that it had executed and registered a Declaration in 2011 under the MAO Act and it had formed a condominium named "Springs Condominium Association of Apartment Owners"
  4. However, the Assistant Registrar in December 2014 passed an Order permitting registration of the Co-operative Society and issued a Registration Certificate under Maharashtra Co-operative Societies Act, 1963 (MCS Act).
  5. The Order permitting Registration of the Co-operative Society was challenged by the Promoter in Appeal before the Divisional Joint Registrar.
  6. The Flat Purchasers of the Building also filed a Suit against the Promoter seeking cancellation of the Deed of Declaration and enforcement of their rights under Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 ("MOFA")
  7. In 2015, the Divisional Joint Registrar allowed the Appeal filed by the Promoter and quashed and set aside the Order permitting registration of the Co-operative Society.
  8. In Revision before the Ministry of Cooperation, Marketing and Textile, State of Maharashtra in 2016, the Order of 2015 passed by the Divisional Joint Registrar quashing the Order of registration of the Society was quashed and the matter was remanded to the Deputy District Registrar.
  9. The District Deputy Registrar held that the proposal of registration of the Society cannot be taken into consideration without cancellation of the Deed of Declaration.

Contentions:

The Counsels for the Petitioners argued that

  1. The Condominium ought to have been registered within 4 months and since there was a failure to do so, the flat purchasers could register a society after the four-month period under 10 (2) of MOFA.
  2. That the pendency of suit seeking cancellation was not a fetter on the District Deputy Registrar from registering the Society.
  3. The Promoter has to submit the property consisting of building/s under the provisions of the MAO Act by executing and registering a Declaration under MAO Act and inform the Registrar as defined under MCS Act, accordingly. Only when both these conditions are fulfilled a bar under section 10(2) MOFA would come into operation.
  4. The fact of registration of the "Springs Condominium Association of Apartment Owners" was informed to the Assistant Registrar and not to the Registrar and hence this intimation was in law no intimation at all.
  5. The Deed of Declaration was unilaterally executed and registered, and it was in breach of the provisions of MAO Act.
  6. Once substantial number of flats were sold by the Promoter in the Building, the Promoter was not the sole owner of the property.

Counsels for the Respondents argued that

  1. Section 10 (2) of MOFA is an independent provision and no time period has been provided for submitting the property to the MAO Act so long as it is done prior to an application for registration of a Society.
  2. All that the Registrar has to see is that whether a Declaration has been executed and registered submitting the property to the MAO Act and once it is brought to the consideration of the authorities the bar kicks in and it would not be lawful to form a society or a company.

Decision:

The Court considered the submissions and held that:

  1. One of the Object and reasons at the time of bringing the MAO Act was that each apartment should for all purposes, constitute a heritable and transferable immoveable property.
  2. The Preamble to the Act suggests that the MAO Act was brought into force to provide for ownership of an individual apartment in a building and to make the apartment transferable property.
  3. The MAO Act applies only to the property, the sole owner or all owners of which submit the same to the provisions of the Act.
  4. If there is more than one owner of the of the property, then all of them have to join in execution and registration of a Declaration under the MAO Act.
  5. If there is more than one owner a single owner cannot unilaterally submit the property to the provisions of the MAO Act.
  6. The provision of section 10 (2) of MOFA is an independent provision and no time period has been prescribed thereunder for submitting the property to the MAO Act so long as it is done prior to an application being filed for the registration of a co-operative society.
  7. If any property consisting of a building or buildings is constructed or to be constructed and the Promoter submits the property to the provisions of the MAO Act by executing and registering a Declaration as provided by that Act, then the Promoter shall inform the Registrar of the same as defined in the MCS Act, accordingly.
  8. Only upon two conditions-(i) submission of the property to the provisions of the MAO Act by executing and registering a Declaration and (ii) the Promoter informing the Registrar as defined under the MCS Act -being fulfilled it would be unlawful to form any co-operative society or a company.
  9. If a Promoter submits a property to provisions of the MAO Act, it is to be done by executing and registering a Declaration as provided by the MAO Act. If a Declaration is not as per the provisions of the MAO Act, the bar u/s 10 (2) which makes it unlawful to form a co-operative Society or a Company would not be attracted.
  10. For a Declaration to have complete legal effect, it must be in conformity with section 11 and section 13 of MAO and its registration is compulsory.
  11. A unilateral execution and registration of the Deed of Declaration was ex facie contrary to the provisions of the MAO Act and could not be considered as a Declaration at all for the purpose of the section 10 (2) of MOFA.

The Hon'ble Court observed that the Society had executed a Unilateral Declaration behind the back of the Flat Purchasers and when they purchased their respective flats, the respective flat purchasers were never informed that the property that they purchased was going to be submitted to the provisions of the MAO Act. The Hon'ble Court thus held that the unilateral execution and registration of the Deed of Declaration by Respondent No. 1 submitting the property to MAO Act cannot be an impediment to the consideration of the application of the Petitioners to form a co-operative Society.

Is this Decision still binding?

Pursuant to the aforesaid judgment being passed, a Special Leave Petition was filed before the Hon'ble Supreme Court. The Hon'ble Supreme Court by the consent of the parties set aside the judgment of the Hon'ble Bombay High Court mentioned herein above.

The aforesaid judgment was cited before the Hon'ble Bombay High Court in CIPLA Limited and Ors. v. the Competent Authority and the District Deputy Registrar Co-operative Society, Mumbai2 where a similar issue was being argued. In CIPLA, the Hon'ble Bombay High Court held that:

  1. For the purpose of submitting the property to the provisions of MAO Act, by the developers or owners, they were not only required to execute a duly registered Deed of Declaration but the Developer was required to inform the authority under section 10(2) of the MOFA of the Declaration.
  2. These twin provisions are mandatory and not directory.
  3. In view of the fact that it was set aside by the Hon'ble Supreme Court only by the consent of the parties and not on adjudication of any issue or after considering the arguments advanced by parties, the decision of the Hon'ble Bombay High Court in Paul Parambi continues to have a binding effect as precedent and holds the field.

Footnotes

1. 2017 (1) ABR 673

2. 2021 (3) ABR 589

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