Deemed Conveyance valid ?

Justice Rajan J. Kochar (Retd.)

We all can be fooled all the times to come !

1. On 25.2.2008 a Legislative mirage was created by amending the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, for ‘short’ “MOFA”. Ss. 2 to 5 were inserted in S.11 of the Act for the popular consumption to satisfy the long standing grievance of the co-operative Societies against the tribe of the builders as a whole for their failure to effect conveyance of “right, title and interest in the land and building” and to execute all relevant documents therefor in accordance with the agreement executed under S.4 of the MOFA. A mandatory provision of S.11 has already been in existence and in force, of course literally, since inception of this Act of 1963 ! As candidly admitted by the Hon’ble Dy. Chief Minister of the state, MR. Chhagan Bhujabal from the platform of the Mumbai District Co-operative Housing Societies Federation in his speech on 19.9.2010 that the provisions of this Section were not enforced as there is a strong lobby of the builders functioning against its enforcement and therefore an amendment became necessary to give right of “deemed conveyance” to the societies. This amendment of S.11 was, indeed, not required at all had the Societies vigorously enforced this valuable right vested in them as long as the in the year 1963. Though the unamended S.11 had not created a proper forum to enforce and to execute the conveyance, the Societies failed to avail of regular civil remedy in the Civil Courts for a decree against the Builders (Promoters) under S.11 of the Act. Conferring a right without proper remedy and competent forum to assert leaves the right minded citizens to doubt the legislative intent for having left such a crucial lacuna in the legislation. The legislature has perhaps left this lacuna to drive the office bearers of the Societies to resort to the costly and time consuming civil courts and to slog there for decades and for the generations of the office – bearers to come ! This perhaps is the real reason for the societies for not having tried to enforce their rights under unamended S.11 of the Act from 1963. Society members were kept frowning at the builders and the builders smiling for ever ! Had the Legislature been a little alert to provide for a remedy with forum under S.11 of the Act, the present hoax of “deemed Conveyance” would not have been necessary. Shrewd politicians from the Ruling Party in the State have been driving the members of the co-operative societies to chase the illusion of “deemed conveyance” as a clever device under their slogan of “Vachan Purti”, a political gimmic !

2. Under S.4 of the Act the Promoter (builder) is mandated to register the written agreement for sale entered with each of the flat purchasers, under the provisions of the Registration Act, 1908. Under S.10 of the Act Promoter (builder) is required to form a cooperative society of the flat purchasers and get the society registered under the Maharashtra Co-operative Societies Act, 1960. In case of failure on the part of the Promoter to form and to get the society registered, the flat purchasers as the members of the society are entitled to apply for registration and the concerned authority is required to register the society after verifying authenticity of the members’ request and after giving the Promoter a reasonable opportunity of hearing. Here it is crystal clear that before granting registration of a society, either at the instance of the Promoter or the members/flat purchasers the obvious evidence for the concerned authority would be the list of the flat purchasers’ alongwith their agreements for sale entered between the Promoter and the flat purchasers. This would be the only clinching documentary evidence to satisfy and to verify the authenticity of the claim for registration of a society. Neither is there any other document provided in the law nor any is required to substantiate the claim for registration under S.10 of MOFA. On the basis of these documents viz., the authentic list of the members of the society and the true and authentic copies of the agreements for sale of the flats, the concerned registering authority has to issue a registration certificate to the society and such certificate must be taken as conclusive proof that the society possessed and had produced before the authority for its verification and satisfaction the required authentic documentary evidence. Such a certificate must be accepted as final and conclusive evidence for all the purposes in any proceedings under any law including the one under S.11 (2 to 5) of the Act unless of course, the very registration certificate is under genuine challenge. It is needless to emphasis that at this stage and in these proceedings the Promoter (builder) was granted full opportunity of hearing and thereafter only the society of the flat purchasers was registered after examining the documents of title including the agreements for sale. One cannot fathom that there could be any other document or evidence judicially required for the purpose of “deemed conveyance”. There is not even a whisper anywhere in the amended S.11 what more is required for grant of “deemed conveyance”.

: Misconceived Amendments in S.11 of the Act :

3. The State Executive had introduced the provisions in S.11 of the Act only as a political gimmick in order to allure the large number of members/residents of a large number of cooperative housing societies in the city and suburbs of Mumbai and other cities in the State. It appears that neither the Department of Law and Judiciary nor the State Law Commission have fully done their home work on this far reaching point. The Law Ministry of the state appears to have pushed these redundant amendments in this Act without appreciating the concept of the term “deemed” or “deemed to be”. There is a vast case law developed by the judiciary including the Privy Council and the Supreme Court, while interpreting this concept and while giving the correct meaning to this term which creates a fiction. It is elementary for any draftsman of a bill which would be a statute after its passage in the legislature, to consult the standard commentaries to know the finer shades of legal maxims and terms used in the statues. The minimum that was expected from them that an English dictionary was opened to see the plain legal meaning of “deem” or “deemed”, if not any law lexicon ! The Legislators and the Cabinet Ministers have wholly trusted the Executive and in particular the Law and Judiciary Department which is principally manned by the person of the District Judge’s cadre waiting to be elevated to a higher assignment. If the State Law Commission did not properly guide the drafting of such an ordinary bill for what purpose such a white elephant should be maintained ?

4. S.11 (3) of the Act has created the legal fiction of conveyance having been deemed to have taken place. Apart from the clumsy drafting of the provisions, it does not clearly impart the intention or objective of the amendment. Let us read it :

“S.11(3) If the promoter fails to execute the conveyance in favour of the co-operative society formed under section 10 or, as the case may be, the company or the association of members of such co-operative society or, as the case may be, the company or the association of apartment owners may, make an application, in writing, to the concerned Competent Authority accompanied by the true copies of the registered agreements for sale, execute with the promoter by each individual member of the society or the company or the occupation certificate, if any, for issuing a certificate that such society, or as the case may be, company or association, is entitled to have an unilateral deemed conveyance, execute in their favour and to have it registered.”

5. The only document to be annexed with the application seeking conveyance is a true copy of the agreement for sale and nothing else apart from an ‘occupation certificate’, if any. Not a very relevant document for the purpose. We have already seen above that this very foundational document was already verified by the registering authority and had granted registration certificate to the cooperative society and the same must be a conclusive society. What for then under this provision once again an agreement for sale is required is beyond our comprehension. Even after receipt of the application with the prescribed accompaniment there is no deeming provision that the property would at once stand conveyed in the name of the society. What is further provided under sub-sections (4) and (5) read with the Rules published on 27th September 2010 is a full and wholesome trial where both the parties are called upon to file their pleadings etc. for the decision of the competent authority to issue “a certificate that such a society………is entitled to have a unilateral deemed conveyance executed in their favour and to have registered it.”

6. Under subsection 4 the Competent Authority is required to “make such enquiry as deemed necessary and after verifying the authenticity of the documents” and “after giving reasonable opportunity of being heard” and “on being satisfied that it is a fit case for issuing such a certificate shall issue a certificate to the Sub-Registrar……….” “that it is a fit case for enforcing unilateral execution of conveyance deed conveying the right, title and interest of the promoter in the land and building in favour of the applicant, as deemed conveyance.”

7. And this legal fiction of “deemed” has further more proved to be wholly misnomer employed without proper understanding as it is not the end of the journey. Subsection 5 takes the process at the doorstep of the Sub-Registrar or the concerned appropriate Registration Officer who is again required to hear the Promoter (builder) to show cause why the unilateral instrument should not be registered as “deemed conveyance” and after once again giving a reasonable opportunity of being heard the said final authority may, on being satisfied that it was a fit case for unilateral conveyance, register that instrument as ‘deemed conveyance’.

8. It ex-facie appears that the bill was drafted in the office of the Builders ! It is heavily tilted to only safeguard their interest at any cost and at all costs ! They are to be heard by the Competent Authority, thereafter by the Sub-Registrar or any appropriate Registrar and again a hearing to the Promoter (builder) finally !

9. Hearing the builders at every stage, reasonable opportunity of being heard……………….leaves a lot of scope and gap of opportunity to challenge the final order by crying that no opportunity of hearing was granted. Unfortunately our Courts are ever ready to entertain such grievances even at the drop of the hat to quash and set aside such order evenafter long drawn battle for “deemed conveyance”. Our system will not allow this concept of “deemed conveyance” to reap the fruits for the end consumer as the Promoters have a very strong lobby at every stage to throttle the cooperative housing movement even with the help bureaucracy and the ruling politicians. In addition to 5 subsections of S.11 of the Act there are 13 Rules and 6 forms for the purpose of achievement of dream of the “deemed conveyance” to be followed by the Societies desirous of getting this order of registration of “deemed conveyance”. It would be most ridiculous to call the end result to fit in the legal fiction “deemed” when the society is compelled to undergo the ordeal of S.11 read with the 13 Rules framed thereunder. It amounts to full fledged trial and there is nothing “deemed” or “unilateral” when both the sides have faced a trial and thereafter the Registrar finally passes an order under S.11 (5) of the Act. I also fail to understand the provisions of competent authority, sub-registrar and the Registrar and hearing the Promoter at every stage ! Why such multiplicity of stages and duplication of work if what is intended is a quick relief of “deemed conveyance” ? Besides, the end product of such a prolonged ordeal of litigation can never be legitimately termed in legal parlance a “deemed conveyance”. It would be decision in accordance with law directing the Promoter to perform specifically as per the Agreement for Sale as promised therein. It will be an order of “specific performance” of the contract. It will not be a “legal fiction” which is implied in the term “deemed”.

What the Provision Really should have been !

10. After S.11 (1) add the following sub-sections 2 and 3 to read as under:-

(2) In case the Promoter fails to execute the conveyance deed in favour of the co-operative society or a company or an association of flat takers or apartment owners within one month from a specific request made in that behalf by them conveying his right, title and interest in the land and building and execute all relevant documents therefore in accordance with the agreement executed under S.4, within a period of 3 months, after the request as aforesaid it will be deemed that the property would stand conveyed in the name of the society, the company or the association of apartment owners, as the case may be, in terms of the Agreement for sale to be filed as an instrument of conveyance of the property by the Society before the Registering Authority.”

(3) On submission by such society, the company or association of apartment owners, as the case may be, to the concerned appropriate Registration Officer or his nominee, he shall register the document deemed conveyance filed by the society, the company or the association of apartment owners, as the case may be, with an application in the form of an affidavit of the chairman and the Secretary for registration of the document. Such application shall be accompanied by a true copy of the agreement for sale and registration certificate of the society. He may hear the promoter before issue of the registration certificate of “deemed conveyance”, after verifying the documents with the originals.

11. In my considered opinion the present S.11 of the Act should be amended by deleting its subsections 2 to 5 and by substituting them by the above two simple sub-sections to accomplish the objective of “deemed conveyance.” Even a penal provision may be made to deal with strictly the false or untenable or mischievous cases to punish the signatories and even the society or as the case may be. Here again I would suggest another amendment to get the result within a time bound frame from the authority. In case the registration authority fails to grant the required certificate within a period of 90 days from the date of the application the certificate of registration of the deemed conveyance shall be deemed to have been granted. Such provisions are found in many enactments to expedite the matters at the desk level of the executives.

12. These amendments if accepted may need a few simple regulations to lay down the procedure to facilitate the smooth desk working in the office.

Let us have Deemed Conveyance genuinely and not deception !

Let those in the seat of power know that there are also some who know a bit of Law !!

Justice R. J. Kochar

Former Judge,

Bombay High Court.

Views are personal.