Case Note & Summary
The Bombay High Court dealt with cross-appeals arising from an interim injunction granted in a suit filed by cooperative housing societies against the Hiranandani developers. The litigation stemmed from a development agreement under which land in Powai was allotted by MMRDA to the developers for constructing MIG flats. Instead, the developers built luxurious apartments and sold them to the societies in Sector IV-A, allegedly exhausting the entire permissible FSI. The societies sought conveyance of the land and an injunction to prevent further construction on Sector IV-A using TDR. The Single Judge granted the injunction, leading the developers to appeal. The High Court, after examining the terms of the agreement, the provisions of the Maharashtra Ownership of Flats Act, 1963 (MOFA) including Section 7A, and the Supreme Court’s decision in Jayantilal Investments, upheld the injunction. It held that prima facie the developers could not indefinitely retain the right to construct after consuming the consumable FSI, thereby defeating the societies’ right to conveyance. The court further observed that any clause in the agreement or note below the performance lease giving perpetual development rights could not override the statutory scheme of MOFA. The PIL order directing construction of MIG flats did not authorize construction specifically on Sector IV-A, and the developers could not take advantage of their own wrong. The appeals were accordingly disposed of by confirming the restraint order.
Headnote
A) Property Law - Cooperative Housing Societies - Conveyance Rights - Maharashtra Ownership of Flats Act, 1963, Section 7A - Dispute involved developer's attempt to construct additional buildings on Sector IV-A after exhausting consumable FSI and denying conveyance to societies - Court held that a developer cannot indefinitely delay conveyance by relying on a clause in the agreement permitting construction for eternity after consuming perimeter FSI, as it would defeat the statutory scheme of MOFA - Held that injunction restraining further construction was properly granted (Paras 8-10). B) Property Law - Transferable Development Rights - Exhaustion of FSI - Maharashtra Ownership of Flats Act, 1963, Section 7A - Developer argued that TDR from changes in Development Control Rules allowed additional construction on Sector IV-A even after FSI exhaustion - Court held that a note below the performance lease or any agreement clause does not confer a right to develop for eternity by taking advantage of future TDR, particularly when conveyance to societies is due - Held that the right to conveyance under MOFA prevails over such clauses (Paras 8-10). C) Civil Procedure - Binding Precedent - Ratio Decidendi of Supreme Court - Not applicable - Court relied on Jayantilal Investments vs. Madhuvihar Coop. Housing Society to emphasize that the Supreme Court's ratio must be followed, and that High Court observations in a PIL order cannot be read as a statute to grant substantive rights not otherwise available - Held that the developer could not derive a right to construct on Sector IV-A from the PIL directions, which merely required construction of MIG flats on remaining vacant land generally (Paras 10-11). D) Equitable Principles - Unclean Hands - Developer's Wrong - Not applicable - Developer had prima facie violated the original condition of constructing MIG flats by building luxurious housing and was now attempting to further exploit the land to the detriment of the societies - Court held that a developer cannot be permitted to take advantage of his own wrong, especially when alternative vacant lands were available for the required MIG construction (Paras 10).
Issue of Consideration
Whether, after exhausting entire consumable FSI on Sector IV-A, the developer can further construct using TDR relying on Section 7A of MOFA; Whether a perpetual development clause in the agreement overrides the cooperative housing societies' right to conveyance; Whether the PIL order permits construction of MIG flats on Sector IV-A.
Final Decision
The High Court upheld the injunction granted by the Single Judge, restraining the developer from further construction on Sector IV-A. The court held that the developer cannot, prima facie, rely on a clause in the agreement to construct for eternity and deny conveyance after exhausting consumable FSI. The PIL order did not give a right to construct on Sector IV-A. The appeal by the developer (189/2015) was dismissed, and the cross-appeal by societies (128/2015) was allowed to the extent of confirming the injunction.
Law Points
- Developer cannot construct for eternity and deny conveyance after consuming consumable FSI
- clause in agreement or note below performance lease does not grant perpetual development rights through TDR from regulatory changes
- PIL order does not authorize construction on Sector IV-A
- Supreme Court ratio in Jayantilal Investments binds over High Court observations that cannot be read as a statute
- developer cannot take advantage of his own wrong
