Bombay High Court: a builder's insolvency does not block a flat owners' society's right to deemed conveyance

Allowing a writ petition by Rose Villa Co-operative Housing Society Ltd. against the Mumbai District Deputy Registrar of Co-operative Societies, the Bombay High Court (Justice Sandeep V. Marne) held that a developer's insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 do not bar a flat purchasers' society from obtaining a unilateral deemed conveyance under Section 11(3) of the Maharashtra Ownership Flats Act, 1963. The Competent Authority had refused the Society's deemed-conveyance application because the developer was under the Corporate Insolvency Resolution Process, invoking the Section 14 moratorium, and because the developer claimed flat purchasers had consented to it retaining rights to build two additional floors. The Court held that once a promoter sells all flats in a building, Section 11(1) obliges it to convey title to the society, and its continuing failure to do so cannot convert undisclosed land into an 'asset' protected by the Section 14 moratorium.

It also held that the purchasers' consent letters were vague, blanket consents without proper disclosure, so any additional floor-space index arising later under the 2034 Development Control Regulations belongs to the Society, not the developer. The matter was sent back for the deemed-conveyance certificate to issue within three months.