Deemed Conveyance in favour of Society
By Mr. Avikshit Moral & Mr. Mustafa Motiwala
There is an obligation on the part of every Promoter to complete his title and convey to the Society the rights in respect of the land on which the building has been constructed. This obligation has been provided under Section 11 of the Maharashtra Ownership Flats Act, 1963 (“Act”). In fact, the legislature by the use of the word ‘shall’ in Section 11 made it very clear that the obligation imposed on the Promoter is a mandatory condition. “(1) A promoter shall take all necessary steps…..”. In Vrindavan (Borivali) Co operating Housing Society Ltd. vs. Karmakar Bros and Others it was held that non – execution of conveyance by builder is an offence.
Inspite of this, after 45 years of enactment of the Act, we were faced with a scenario where approximately 88,000 societies did not have conveyance of the land in their favour. To deal with this scenario the concept of Deemed Conveyance was introduced in Maharashtra in the year 2008 by amending sub section (c) to Section 11.
WHEN DOES CONVEYANCE HAPPEN?
Before we deal with Deemed Conveyance, one has to first understand, the provisions of Section 11 of the Act i.e. when is a Promoter required to convey the land in favour of the Society? The following steps are the prerequisite to the Promoter executing a conveyance in favour of the Society.
- Rule 8 of the Maharashtra Ownership Flat Rules, 1964 (“Rules”) puts an obligation on the Promoter to make an application to the Registrar for formation of the society within 4 months from the date on which the minimum number of persons required to form society has taken flat; and
- Rule 9 of the Rules further states that if no period for conveying the land is agreed upon by the parties then the Promoter shall execute a conveyance within 4 months from the date on which the co-operative society has been registered.
On the promoter failing to comply with the above requirements, a society becomes eligible for its right to obtain Deemed Conveyance.
Deemed Conveyance as a term is known by most people, however the requirements and procedure of the same are still not know to the public at large. Under the provisions of the Act, deemed conveyance means that on the failure on the part of the Promoter to comply with its obligations as mentioned hereinabove, the land and building is deemed to have been conveyed to the Society and the same is required to be brought on the revenue record.In this regard a Competent Authority has been designated who will hear the parties on the basis of applications received from the aggrieved party and transfers the title in favour of the society by passing the necessary order and deemed conveyance certificate and appoint an authorised officer to execute the conveyance deed in favour of the society on behalf of the Promoter or the land owner as the case may be.
The Members of the Co- Operative Housing Society are required to agree to undertake the process and pass necessary resolutions for Deemed Conveyance. All professionals/consultants are also appointed thereafter.
Thereafter the documents required for Deemed Conveyance are to be collected and the necessary application is to be made.
During this stage, the application is made to the Competent Authority. After hearing, necessary orders are passed and an order of Deemed Conveyance of the Society is obtained.
- Stamp Duty Adjudication
(a) In case of the agreements for sale for purchase of the Flats areduly stamped and registered with the sub-registrar, the market value as on the date of registration of such documents will be worked out;
(b) In case the agreements for sale for purchase of the Flatsare not duly stamped and registered, the stamp duty on the present market value will be calculated for such flats; and
(c) In case of co-operative housing society, as per the explanation given in Article 25 of the Schedule I of the Maharashtra Stamp Act, 1958, if the flat purchasers have paid the stamp duty at the time of their individual agreement, the same would be adjusted at the time of final conveyance. Therefore, the society need not pay separate stamp duty at the time of conveyance and the Deed of Deemed Conveyance will be stamped for Rs. 100/-. However, if some flat owners have not paid or have paid less than the required stamp duty, the difference will have to be paid at the time of executing the conveyance. Such difference in Stamp Duty is generally borne and paid by the flat holders who have paid less or no stamp duty.
After the Deemed Conveyance Deed is adjudicated and properly stamped the same will be registered with the concerned Sub Registrar of Assurances. The Managing Committee of the Society may be authorized in this regard to sign on such documents on behalf of the Society.
After the execution and registration of the conveyance the Society’s name is incorporated in the Land Revenue Records.
ADVANTAGES OF CONVEYANCE:
It is always advisable that a Society undertakes this procedure and there are numerous advantages attached to it. Some of them are as under:
(a) Getting a clean a marketable title to the property;
(b) Retaining additional F.S.I which may be available by change of regulations or otherwise;
(c) Loan can be raised by mortgage for repairing of the buildings;
(d) Permission for reconstruction will be given by the planning authorities; and
(e) Redevelopment process becomes easier including obtaining permissions.