Supreme Court Clarifies Limits of Competent Authority under MOFA in Deemed Conveyance Cases Involving Third-Party Rights

The Judgment in the Case of Arunkumar H. Shah HUF v. Avon Arcade Premises Co-operative Society Ltd. & Ors. (CIVIL APPEAL NO. 5377 OF 2025 (Arising out of Special Leave Petition (C) No. 5432 of 2021), was delivered by a Division Bench of the Supreme Court of India, comprising Hon’ble Justice Abhay S Oka and Justice Ujjal Bhuyan on 21st April 2025. This case deals with whether a competent authority under the Maharashtra Ownership Flats Act (MOFA) could grant a “deemed conveyance” of land that was not part of the agreement between a developer and flat buyers, especially when serious title disputes and third-party rights were involved.

Facts of the Case:

ChampabenHiralal Shah owned a plot of land in Vile Parle, Mumbai. In 1972, she and her sons formed a partnership firm, M/s. CH Shah & Sons, with the plot as her capital contribution. After her death, the firm was reconstituted. In 1987, the firm was dissolved via a deed of dissolution, and the plot was partitioned. Lalbhai H. Shah received a portion (Lalbhai Plot), and Arun H. Shah (Karta of the Appellant HUF) received the remaining portion (Arun Plot). The deed specified that construction on each plot would be according to prevailing regulations. If Lalbhai transferred his interest to a flat purchaser organization, a perpetual lease of the Arun Plot to Arun (or his nominees) would be executed.

In 1987, Lalbhai formed a new firm, with the Lalbhai Plot as his capital. This firm constructed a building, and from 1991 onwards, entered into flat purchase agreements (FPAs) with buyers under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer Act), 1963 (MOFA). In 1993, the Municipal Corporation of Greater Mumbai (MCGM) issued an occupation certificate for the building. The first Respondent, a co-operative society of flat purchasers, was formed and registered in 2005.

The first Respondent initially filed a complaint seeking conveyance of only the Lalbhai Plot, which was granted by the District Forum in 2017. Later, in 2020, the first Respondent applied under MOFA for a deemed conveyance of the entire original plot (including the Arun Plot). The District Deputy Registrar, Co-operative Societies, Mumbai City (11th Respondent), allowed this application ex parte, granting deemed conveyance of the larger plot, conditional on the first Respondent granting a perpetual lease of the Arun Plot to Arun Hiralal Shah HUF (the Appellant). Arun Hiralal Shah HUF (the Appellant) filed a writ petition in the Bombay High Court, challenging this Order. The Bombay High Court confirmed the competent authority’s order but allowed the Appellant to file a suit to adjudicate the title, which led to the present Appeal before the Supreme Court.

Main Issues:

1. Whether the competent authority under Section 5A of the MOFA had the jurisdiction to grant a deemed conveyance of the ‘Arun Plot,’ which was not part of the agreement between the developer and the flat purchasers.
2. Whether the competent authority under MOFA is empowered to adjudicate disputed questions of title, especially when they impact third parties.
3. Whether the High Court was right in confirming the Order of the competent authority.

Contentions of the Parties:

Appellant Contentions(Arunkumar H. Shah HUF)

The Appellant’s counsel argued that the 11th Respondent’s power under MOFA was limited to enforcing the rights of the first Respondent society and the obligations of the developer (10th Respondent) to execute conveyances as per the flat purchase agreements. They contended that the Arun Plot was not part of those agreements, and therefore, the 11th Respondent had no jurisdiction to order its deemed conveyance. The Appellant relied on several Bombay High Court decisions, including Mazda Construction Company[1], Marathon Next Gen Realty Ltd.,[2] and ACME Enterprises[3], and also on the Supreme Court’s decision in Abdul Kuddus v. Union of India[4], to argue that the competent authority under Section 5A of MOFA cannot adjudicate disputed title issues or issues affecting third parties. They asserted that the competent authority should have directed the first Respondent to file a regular civil suit to resolve the title dispute, especially given the serious title disputes and the involvement of third-party rights.

RespondentContentions(Avon Arcade Premises Co-operative Society Limited & Ors.):

The Respondents asserted that the competent authority’s order was valid and within the scope of MOFA. They argued that the deemed conveyance was necessary to protect the rights of the flat purchasers and ensure the proper transfer of the property. The Respondents maintained that the High Court’s decision was sound and that the liberty granted to the Appellant to file a separate suit adequately addressed the concerns regarding the title dispute. They contended that the entire larger plot was necessary for the full enjoyment of the property by the society.

Supreme Court :

The Supreme Court allowed the Appeal, setting aside the Bombay High Court’s Order and the Order of the competent authority dated 18th September 2020.

The Supreme Court held that the competent authority under Section 5A of MOFA does not have the power to adjudicate matters where there are serious disputes about title and demarcation of land, especially when it involves the rights of third parties. The Court emphasized that the authority’s role is limited to facilitating the conveyance of land as per the agreement between the developer and the flat purchasers. It cannot decide on issues that require a full trial and the examination of complex legal questions.

The Supreme Court reasoned that since the dispute involved a third party (the Appellant) and contentious issues regarding the title and boundaries of the Arun Plot, the proper course of action would have been for the first Respondent to file a regular civil suit. This would have allowed for a comprehensive adjudication of the matter, with all parties having the opportunity to present their case and evidence. The Court concluded that the competent authority acted beyond its jurisdiction in Ordering the deemed conveyance of the Arun Plot.

Sarthak Kalra, Advocate

Senior Associate

The Indian Lawyer & Allied Services

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[1] 1 (2012) SCC Online Bombay 1266

[2] 2 (2015) 5 Maharashtra Law Journal 318

[3] 3 (2023) SCC Online Bombay 1102

[4] 4 (2019) 6 SCC 604