Landowners Participating in Construction Activity Qualify as Promoters Under MOFA: Bombay HC

Bombay High Court has ruled that landowners who actively participate in building construction through lease arrangements are 'promoters' liable to transfer ownership title to flat purchasers.

Justice Sandeep V. Marne, sitting as a single judge, delivered the verdict while dismissing a challenge to a deemed conveyance order, holding that the expansive definition of 'promoter' under the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 prevents landowners from retaining reversionary rights when they have effectively caused the construction of the project.

Key Takeaways

Definition of Promoter under MOFA

Landowners who exert control over construction materials, timelines, and insurance for a project are legally classified as promoters, not mere lessors.

Statutory Right Overrides Contractual Leases

Associations of flat purchasers are entitled to the full right, title, and interest of the promoter, meaning ownership cannot be restricted to a mere leasehold interest if the promoter owns the land.

No Estoppel Against Statute

Executing an Indenture of Assignment for leasehold rights does not prevent a housing society from later seeking a unilateral deemed conveyance of full ownership under the law.

Finality of Deemed Conveyance

Orders of deemed conveyance are not final determinations of title, and aggrieved parties retain the liberty to file civil suits to establish their rights.

Landowner as Promoter

The Bombay High Court analyzed the definition of 'promoter' under Section 2(c) of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963, emphasizing the phrase "causes to be constructed." The Court observed that if a landowner participates in the construction activity, deciding the manner in which the building is constructed or taking part in its sale, they wear "two hats", both as landowner and promoter.

The Court reasoned that "In the present case, the Lessor has fully participated in cause of construction of the building on the demised land. He decided the period of construction, material to be used for construction, he had authority to verify whether construction was done in accordance with sanctioned plans or not, etc. Considering the above contractual clauses, it can easily be discerned that Lessor had fully participated in construction of the building and therefore he would definitely fit into definition of the term ‘promoter’ under Section 2(c) of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963."

The Bombay High Court further clarified that even if a promoter is a mere lessee, Section 11(1) of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 requires them to take steps to perfect their title. The Bench noted that since the Petitioners were legally retaining the right, title, and interest despite their obligations, the Competent Authority was justified in exercising jurisdiction under Section 11(3).

Ratio

A landowner who causes the construction of a building by exercising contractual control over the building process, materials, and insurance, and who retains a right to acquire ownership of the structure upon the expiry of a lease, falls within the definition of a 'promoter' under Section 2(c) of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963. Consequently, such a landowner is under a statutory obligation under Section 11 to convey their full right, title, and interest in the land and building to the cooperative society of flat purchasers, notwithstanding any contractual agreement to the contrary.

Background

The dispute originated from an order dated 23 June 2025, passed by the District Deputy Registrar, Cooperative Societies, Mumbai City-3, issuing a certificate of unilateral deemed conveyance for land admeasuring 3901.70 sq.m. in favor of Respondent No.3-Society. The Petitioners, heirs of the original landowner, challenged this, arguing that their father had only granted a 98-year lease to the developers (Respondent Nos. 4 to 7) and that the society could not claim rights higher than the leasehold rights possessed by the developers.

The Petitioners relied on Vaidehi Akash Housing Pvt. Ltd. vs. New D.N. Nagar Co-op. Housing Society Union Ltd. and Others to argue that Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 obligations cannot be foisted on them without privity of contract. However, the Court distinguished this, noting that the unique lease terms, including the landowner’s right to determine construction materials and the automatic vesting of the building in the landowner after the lease term, made the Petitioners 'promoters.' The Court also referred to Haroon Hussain Khatri and Anr. vs. The Competent Authority and District Deputy Registrar, Co-operative Societies, Mumbai Suburban and Ors. to support the finding that landowners who cause construction through lessees are promoters. Relying on Haresh Vijaysinh Bhatia & Ors. Vs. District Deputy Registrar & Ors. and Prestige Garden A-1 CHSL vs. State of Maharashtra and Ors., the Court reiterated that statutory rights in Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 override contractual covenants for mere leasehold interests. The Bombay High Court ultimately upheld the deemed conveyance, noting that the order facilitates the redevelopment of the building, which aligns with the objectives of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963.

Case Details:

Case No.: WRIT PETITION NO.5991 OF 2026

Neutral Citation: 2026:BHC-AS:36937

Case Title: Rohini Gupta and Anr. V/s. District Deputy Registrar, Cooperative Societies and Ors.

Appearances:

For the Petitioner(s): Mr. Karl Tamboly with Mr. Nilesh Modi i/b M/s. Rustamji & Ginwala Law Firm

For the Respondent(s): Mr. Mayur Khandeparkar with Mr. Devansh Shah, Mr. Hitesh Rajpurohit, Ms. Ami Oza, Mr. Bishwajeet Mukherjee, Ms. Humera Syed, Mr. Omkar Mendarkar, Mr. Naman Gupta and Ms. Akanksha Yadav i/b Impetus Legal Advocates & Legal Consultants for Respondent No. 3; Ms. Savina Crasto, AGP for the Respondent-State.

Source: 2026 CaseBase(BOM) 5645