Bombay HC: TDR is immovable property, and a promoter can't indefinitely delay conveyance

In an appeal from an interim order in a suit under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), the Bombay High Court modified a trial court's injunction to protect flat purchasers' rights over Transferable Development Rights (TDR) linked to a Mumbai redevelopment project. The plaintiffs, who held flat purchase agreements from the developer, sought to restrain the developer from transferring compensation or TDR granted by the Municipal Corporation for land acquired for a road, and from creating third-party rights over an already-issued Development Rights Certificate, pending trial of their suit to enforce the developer's statutory obligations under MOFA. Justice M.M. Sathaye held that FSI and TDR, being benefits arising from land that can be bought and sold like land itself, must be treated as immovable property, as the Bombay High Court had earlier held in Chheda Housing Development Corporation; allowing the developer to trade the TDR during the suit's pendency would let it realise today's value while the flat purchasers, for whom a cooperative society should by now have been formed and the property conveyed, bear the risk of losing future appreciation.

Relying on a line of Bombay High Court rulings including Lakeview Developers v. Eternia CHS and Nusli Neville Wadia, the Court reiterated that a promoter has a statutory duty under MOFA to convey the land and building to the flat purchasers' society and cannot indefinitely retain or exploit development potential to delay that conveyance. The appeal was allowed and the injunction extended to cover the disputed plot and the certificate.