ESHA EKTA APARTMENTS CO-OPERATIVE HOUSING SOCIETY LIMITED AND OTHERS v. MUNICIPAL CORPORATION OF MUMBAI AND OTHERS

CORPORATION OF MUMBAI [GS. SINGHVI, J.]

separately; A

(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 installments thereof may be paid;

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

(iv) the nature, extent and description of limited common areas and facilities, if any.

(n) sell flat on basis of carpet area only:

Provided that, the promoter may separately charge for the common areas and facilities in proportion 'to the carpet area of the flat'.

Explanation - For the purposes of this clause, the carpet area of the flat shall include the area of the balcony of such flat." E

Section 4(1) also contains a non-obstante clause and lays down that a promoter who intends to construct or constructs a block or building of flats shall, before accepting any money as advance payment or deposit, which shall not be more than 20 per cent of the sale price, enter into a written agreement for sale with the buyer. Section 4(1A) specifies the particulars to be included in such agreement and the documents which must form part of it. Section 4(2) casts a duty on the promoter to get the agreement registered in accordance with the provisions of the Registration Act, 1908. Section 7 contains a prohibition against alterations or additions in the plans and specification without the consent of the persons who have agreed to take the flats. The promoter is also required to rectify the defects noticed within three years. Section 7(2) casts a duty on the promoter to construct and complete the building in accordance H

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A with the plans and specifications. Section 13 postulates punishment to any promoter who is found guilty of violating the provisions contained in Sections 3, 4, 5 (except sub-section (2)) and 1O and 11 .

42Copy pinpoint42. Rule 3 of the Maharashtra Ownership Flats 8 (Regulations of the Promotion of Construction, etc.) Rules, 1964 lays down the manner of making disclosure by the promoter to the flat buyers. Rule 5 specifies the particulars to be incorporated in the agreement required to be entered into C between the promoter and the flat purchaser. Form V appended to the rules contains the model form of agreement to be entered into between promoter and flat purchaser.

43Copy pinpoint43. The above noted provisions were interpreted by this Court in Jayantilal Investments v. Madhuvihar Cooperative D Housing Society (2007) 9 SCC 220. After noticing the relevant statutory provisions the two Judge Bench held:

"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 society. The obligation of the promoter under MOFA to make true and full disclosure to the flat takers remains unfettered even after the inclusion of Section 7-A 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 (1-A) in Section 4 of MOFA by Maharashtra Amendment Act 36 of 1986. 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. H Note 1 clarifies that a model form of agreement has been

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CORPORATION OF MUMBAI [G.S. SINGHVI, J.] prescribed which could be modified and adapted in each A 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 B of the Form V 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 local authority concerned at the time of sanctioning the said plans or thereafter and shall, before handing over possession of the flat to the flat purchaser, obtain from the local authority concerned 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 utilised 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 utilisation of said floor space index by him. In case while developing the said land the promoter has utilised 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 FAR (FSI) in the plot or the layout not consumed will be available to the promoter till the registration of the society. Whereas H

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A after the registration of the society the residual FAR (FSI), shall be available to the society."

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, B 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 c of layout plan to declare whether the plot in question in future is capable of being loaded with additional FSI/ floating FSl!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 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 puts up additional construction in accordance with the layout plan, building rules and Development Control G Regulations, etc."

44Copy pinpoint44. It is thus evident that the 1963 Act obligates the promoter to obtain sanctions and approvals from the concerned authority and disclose the same to the flat buyers. The Act also H provides for imposition of penalty on the promoters. However,

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CORPORATION OF MUMBAI [G.S. SINGHVI, J.]

the provisions contained therein do not entitle the flat buyers A to seek a mandamus for regularization of the unauthorized/ illegal construction.

45Copy pinpoint45. In view of the above discussion, we hold that the petitioners in the transferred case have failed to make out a 8 case for directing the respondents to regularize the construction made in violation of the sanctioned plan. Rather, the ratio of the above-noted judgments and, in particular, Royal Paradise Hotel (P) Ltd. v. State of Haryana and Ors. (supra) is clearly attracted in the present case. We would like to reiterate that no authority administering municipal laws and other similar laws can encourage violation of the sanctioned plan. The Courts are also expected to refrain from exercising equitable jurisdiction for regularization of illegal and unauthorized constructions else it would encourage violators of the planning laws and destroy the very idea and concept of planned development of urban as well as rural areas.

46Copy pinpoint46. In the result, the appeals and the transferred case are dismissed and it is declared that there is no impediment in the implementation of notices issued by the Corporation under E Section 351 of the 1888 Act and order dated 3/8.12.2005 passed by the competent authority. The Corporation is expected to take action in the matter at the earliest.

47Copy pinpoint47. We also direct that the State Government and its functionaries/officers as also the officers/employees of the Corporation shall not put any hurdle or obstacle in the implementation of notices issued under Section 351 of the 1888 Act.

48Copy pinpoint48. It is needless to say that the flat buyers shall be free to avail appropriate remedy against the developers/builders.

B.B.B. Appeals & Transferred Case dismissed.