MOFA| Promoters Not Required To Obtain Prior Consent For Additional Construction If Full Project & Development Potential Is Disclosed: Bombay HC

The Bombay High Court has reiterated that under the Maharashtra Ownership of Flats Act, 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 flat takers as long as the builder puts up additional construction in accordance with the layout plan, building rules and Development Control Regulations.

Lifting the stay order on additional construction after finding adequate disclosure of development potential, the Bench of Justice RI Chagla observed that, "the Supreme Court in considering Clauses 3 and 4 of Form V of MOFA has held that the condition of true and full disclosure flows from the obligation cast on the promoter vide Sections 3 and 4 of the MOFA and Form V, which is the prescribed form of agreement. The obligation remain unfettered because the concept of developability has to be harmoniously read with concept of registration of Society and conveyance of title, and 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 flat takers as long as the builder puts up additional construction in accordance with the layout plan, building rules and Development Control Regulations."

Senior Counsel Sharan Jagtiani, along with others, appeared for the plaintiff, while Senior Counsel Virag Tulzapurkar appeared for the defendants.

The Court was considering an interim application by Sheth Shelters to lift prior High Court orders halting its construction activities on a redevelopment site. These orders were issued following concerns raised by property owners about the disclosure of development potential.

The property owners argued that there was insufficient disclosure regarding Transferable Development Rights (TDR), particularly in the utilization plan. They also raised concerns about the impact of additional construction on the layout's overall scheme.

In response, the developer argued that they had fulfilled their disclosure obligations in the Agreement for Sale or MOFA Agreement. They highlighted that the use of TDR was permissible and had been approved by the Municipal Corporation of Greater Mumbai (MCGM) during layout plan sanctioning. The developer also claimed that the property owners had acknowledged the developer's right to use TDR.

The issue which arose for determination before the Court was whether adequate disclosure of the development potential of the suit land has been made in conformity with the mandatory requirements under Clause 3 and Clause 4 of Form V of MOFA. 

The Court observed that, "In the present case, I find that the Developer has made the adequate disclosure of the developable potentiality of the suit land and that is as per the requirement of extant law on the date of sanctioning of the 1997 layout plan and thus, there is no advantage being taken by the Developer of any change of law by constructing a building beyond the developable potentiality."

It was also emphasized that where the entire scheme is disclosed to the purchasers under the Agreement for Sale, there is no separate requirement of consent for the construction of a building under that scheme under Section 7A of MOFA.

Subsequently, it was held that there was no merit in the arguments made by the petitioner, and the order was passed in favour of the developer.

Appearances:

Plaintiffs: Senior Counsel Sharan Jagtiani, Counsels Priyank Kapadia, Kaustubh Patil, Amogh Singh, Roshan Sawant

Defendants: Senior Counsel Virag Tulzapurkar, Counsels Simil Purohit, Jasmine Kachalia, Deepu Jojo, Viren Mandhle, Sahil Singh, Karl Tamboly, Vatsal Shah Yunus Vakharia.

Cause Title: Venus Vasant Valley Co-operative Housing Society Limited vs Sheth Shelters Private Limited & Ors.

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