TDR From Reserved Land Cannot Defeat Deemed Conveyance Rights Of Societies: Bombay High Court

On 18 June, the Bombay High Court upheld the grant of deemed conveyance in favour of three housing societies in Mumbai, holding that compensation or Transferable Development Rights (TDR) arising from acquisition of land reserved for a municipal market and a primary school cannot be treated as development potential of a residential layout so as to delay conveyance.

Justice Sandeep V. Marne partly allowed a writ petition filed by Kiran Builders Pvt. Ltd. challenging the deemed conveyance order, while rejecting the developer's contention that future development rights from the reserved lands could be used for proposed Buildings N and P and therefore justify deferring conveyance. The Bench observed:

“The compensation receivable either in monetary terms or in the form of TDR cannot be treated as a development potential for land to be conveyed in favour of Respondent-Societies. Once land is acquired, it would get separated from the layout and would have no relationship with the development carried out in the layout.”

Further that “Till Municipal Corporation acquires the land and pays compensation/TDR to the Petitioner, conveyance of the land meant for the Societies cannot be delayed.”

The dispute involved three housing societies: Kalpita Enclave Co-operative Housing Society Ltd., Kalpita Enclave Building No. L Co-operative Housing Society Ltd., and Kalpita Enclave Building No. M Co-operative Housing Society Ltd., which sought deemed conveyance of land forming part of the Kalpita Enclave residential layout at Vile Parle, Mumbai.

Kiran Builders Pvt. Ltd. developed the 21,736 sq. metre layout and had proposed Buildings N and P. However, the buildings were not constructed after the Municipal Corporation found that the land surrendered for a Development Plan road was less than assumed, leading to insufficient FSI.

After withdrawal of an earlier appeal arising from a conveyance dispute on 16 September 2016, the three societies jointly applied for deemed conveyance under Section 11(3) of the Maharashtra Ownership Flats Act, 1963 (MOFA).

By order dated 15 May 2017, the Competent Authority granted unilateral deemed conveyance of the entire 21,736 sq. metre property, including existing structures, in favour of the societies. Kiran Builders Pvt. Ltd. challenged this order through a writ petition before the Bombay High Court.

The developer argued that land reserved for a municipal market (158.05 sq. metres) and a primary school (243.07 sq. metres) generated transferable development rights that could be used for Buildings N and P. The societies countered that the earlier proceedings did not bar them from seeking deemed conveyance.

Rejecting the developer's arguments, the Court held that withdrawal of the appeal to pursue deemed conveyance was legally permissible. It observed:

“What can be done during pendency of Suit can also be done during pendency of the Appeal. It is always open for a party to withdraw a conveyance suit and file application for deemed conveyance. Legislature has consciously provided for a quicker and swifter remedy to the Societies to secure conveyance of land. Therefore, merely because a suit is instituted, the same does not prevent a Society from applying for deemed conveyance by withdrawing the suit.”

The Bench further held that transferable development rights arising from acquisition of reserved land are freely transferable and need not be utilised on the same property. Upholding the grant of deemed conveyance, it ruled that compensation or transferable development rights arising from acquisition of reserved lands cannot be treated as development potential of the layout and cannot be used to delay conveyance.

However, noting that parts of the land had been surrendered, reserved, acquired, or affected by slum encroachments, it modified the Competent Authority's order and directed issuance of a fresh deemed conveyance certificate for 16,584.55 sq. metres instead of the entire 21,736 sq. metres.

Accordingly, the High Court partly allowed the appeal.

Appearances for petitioner (Kiran Builders Pvt. Ltd.): Advocates Mahendra Ghelani, Nizzica Pinto and Sneha Vani.

Appearances for respondents (Kalpita Enclave Co-operative Housing Society Ltd. & Ors.): Senior Advocate Birendra Saraf with Advocates Rohan Savant, Nirmal Devmani, Aman Saraf and Abhijeet Mahadeokar, instructed by Diwakar Gond.