Case Note & Summary
The petitioner, Darshan Mandir Co-operative Housing Society Limited, is a cooperative housing society formed by purchasers of flats in a building constructed by M/s. Darshan Enterprises (Respondent No.3) on property originally owned by M/s. Gautam Builders (India). The promoter executed agreements under Section 4 of MOFA with flat purchasers and agreed to execute a formal conveyance. However, the promoter failed to do so. The society applied to the District Deputy Registrar, Co-operative Societies, Mumbai City (Competent Authority) under Section 11(3) MOFA for deemed conveyance. The Competent Authority rejected the application on 4 September 2025 on the ground that Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code, 2016 were pending against M/s. Vas Infrastructure Ltd (Respondent No.4), which claimed to have acquired rights in the property. The Competent Authority held that it could not proceed due to the moratorium under Section 14 IBC. The society challenged this order by way of a writ petition. The High Court framed the issue whether pendency of CIRP against the promoter bars the Competent Authority from exercising jurisdiction under Section 11(3) MOFA and whether Section 14 IBC creates a bar for granting deemed conveyance. The Court analyzed the provisions of MOFA and IBC, noting that the right to deemed conveyance is a statutory right of flat purchasers under MOFA, which is a social welfare legislation. The Court held that the moratorium under Section 14 IBC does not apply to proceedings under MOFA because such proceedings are not 'proceedings' against the corporate debtor's assets in the sense of IBC; they are for enforcement of a statutory right of flat purchasers. The Competent Authority is not a 'court' or 'tribunal' whose proceedings are stayed under Section 14 IBC. The Court further held that the Competent Authority must exercise its jurisdiction under Section 11(3) MOFA irrespective of the pendency of CIRP. Accordingly, the Court allowed the petition, set aside the impugned order, and directed the Competent Authority to decide the application for deemed conveyance afresh on merits, without being influenced by the pendency of CIRP.
Headnote
A) MOFA - Deemed Conveyance - Section 11(3) MOFA - Jurisdiction of Competent Authority - The issue was whether pendency of CIRP under IBC against the promoter bars the Competent Authority from granting deemed conveyance under Section 11(3) MOFA. The Court held that Section 14 IBC does not create a bar for the Competent Authority to grant deemed conveyance in favour of flat purchasers' society, as the proceeding under MOFA is not a 'proceeding' against the corporate debtor's assets in the sense of IBC. The Competent Authority must exercise its jurisdiction under Section 11(3) MOFA irrespective of the pendency of CIRP. (Paras 1, 2, 10-15) B) IBC - Moratorium - Section 14 IBC - Applicability to MOFA Proceedings - The Court examined whether the moratorium under Section 14 IBC applies to proceedings under MOFA. It held that the moratorium does not apply to deemed conveyance applications under MOFA because such applications are for enforcement of a statutory right of flat purchasers and do not constitute 'proceedings' against the corporate debtor's assets that would be covered by the moratorium. The Competent Authority is not a 'court' or 'tribunal' whose proceedings are stayed under Section 14 IBC. (Paras 10-15) C) MOFA - Statutory Right of Flat Purchasers - Section 11 MOFA - Deemed Conveyance - The Court reiterated that the right of flat purchasers to obtain deemed conveyance under Section 11 MOFA is a statutory right that cannot be defeated by the pendency of CIRP against the promoter. The Competent Authority is duty-bound to consider the application on merits and grant deemed conveyance if the conditions under Section 11 MOFA are satisfied. (Paras 3-9, 16-20)
Issue of Consideration
Whether pendency of Corporate Insolvency Resolution Proceedings under the Insolvency and Bankruptcy Code, 2016 against the promoter can be a reason for the Competent Authority not to exercise jurisdiction under Section 11(3) of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 and whether Section 14 of the IBC creates a bar for the Competent Authority to grant deemed conveyance in favour of organization of flat purchasers.
Final Decision
The High Court allowed the petition, set aside the impugned order dated 4 September 2025, and directed the Competent Authority to decide the application for deemed conveyance afresh on merits, without being influenced by the pendency of CIRP against Respondent No.4.
Law Points
- Section 14 of IBC does not create a bar for Competent Authority under MOFA to grant deemed conveyance
- pendency of CIRP against promoter is not a reason to refuse jurisdiction under Section 11(3) MOFA
- deemed conveyance is a statutory right of flat purchasers under MOFA
- moratorium under IBC does not apply to proceedings under MOFA as they are not 'proceedings' against the corporate debtor's assets in the sense of IBC
