(1) IN THE HIGH COURT OF JUDICATURE AT BOMBAY, CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 786 OF 2004 WITH FIRST APPEAL NO. 989 OF 2004 -------------- FIRST APPEAL NO. 786 OF 2004 1. Madhuvihar Cooperative Housing Society, having its registered office at Madhuvihar, MGX Road 4, Kandivali (W), Mumbai - 400 067. 2. Parmanand Natwarlal Parekh, Residing at No. 602-A, Madhuvihar, MGX Road 4, Kandivali (W), Mumbai - 400 067. 3. Himatlal Virchand Sheth, Residing at No. 40C-C, Madhuvihar, MGX Road 4, Kandivali (W), Mumbai - 400 067. 4. Mr. Ketan Surayakant Trivedi, residing at Flat No. 602-A, Madhuvihar, MGX Road 4, Kandivali (W), Mumbai - 400 067. (2) 5. Kirit Ramanlal Dalal, residing at Flat No. 303, Madhuvihar, MGX Road 4, Kandivali (W), Mumbai - 400 067. 6. Harshad Kantilal Shah, residing at Madhuvihar, .. Appellants MGX Road 4, Kandivali (W), (Original Mumbai - 400 067. plaintiffs) versus 1. M/s. Jayantilal Investments, a Registered partnership firm, carrying on business at 75, Abdul Rehman Street, Mumbai-3, and having branch office at 101, Balaji Arcade, S.V. Road, Kandivali (W), Mumbai - 400 067. 2. The Municipal Corporation of Greater Bombay, having its Office at Mahapalika Bhavan, Mahapalika Marg, Mumbai-1. 3. The Executive Engineer, Building Proposal (WS), "R" South Ward, having its office at Municipal .. Respondents Market, Near Station, (Original Kandivali, Mumbai - 400 067. defendants) ........................... (3) Mr. Mahendra Ghelani, Advocate, with Ms. Veena Advani and Mr. Pratik Shah, Advocates, for the appellants. Mr. Pradeep Sancheti, Senior Advocate, with Mr. Vatsal Shah, Advocate, i/b. Ms. Kumud A Bhatia, Advocate, for respondent no.1. Mr. Vinod Mahadik, Advocate, for respondent nos.2 and 3. ............................... FIRST APPEAL NO. 989 OF 2004 M/s. Jayantilal Investments, a registered partnership firm, carrying on business at 75, Abdul Rehman Street, Mumbai-3, .. Appellant and having branch office at (Original defendant 101, Balaji Arcade, S.V. Road, no.1) Kandivli (W), Mumbai - 400 067. versus 1. Madhuvihar Cooperative Housing Society, having its registered office at Madhuvihar MGX Road 4, Kandivli (W), Mumbai-67. (4) 2. Mr Parmanand Natwarlal Parekh, residing at Flat No. 602-A, Madhuvihar MGX Road 4, Kandivli (W), Mumbai-67. 3. Mr. Himatlal Virchand Sheth, residing at Flat No. 40C-C, Madhuvihar MGX Road 4, Kandivli (W), Mumbai-67. 4. Mr. Ketan Suryakant Trivedi, residing at Flat No. 602-A, Madhuvihar MGX Road 4, Kandivli (W), Mumbai-67. 5. Mr. Kirit Ramanlal Dalal, residing at Flat No. 303, Madhuvihar MGX Road 4, Kandivli (W), Mumbai-67. 6. Mr. Harshad Kantilal Shah, residing at Madhuvihar, MGX Road 4, Kandivli (W), Mumbai-67. 7. The Municipal Corporation of Greater Mumbai, having its office at Mahapalika Marg, Mumbai-1. 8. The Executive Engineer, Building Proposal (W/S), "R" South Ward, having its office at .. Respondents Municipal Market, near Station, (Original Kandivli, Mumbai-67. plaintiffs) ....................... (5) Mr. Pradeep Sancheti, Senior Advocate, with Mr. Vatsal Shah, Advocate, i/b. Ms. Kumud A Bhatia, Advocate, for the appellant. Mr. Mahendra Ghelani, Advocate, with Ms. Veena Advani and Mr. Pratik Shah, Advocates, for respondent nos.1 to 6. Mr. Vinod Mahadik, Advocate, for respondent nos.7 and 8. ************** CORAM : B.R. GAVAI, J. Date of reserving the judgment : 15th September 2010 Date of pronouncing the judgment : 7th October 2010 JUDGMENT : 1. The present appeals, which have been remanded for decision afresh, as per the judgment of the Supreme Court, in Civil Appeal No. 3233 of 2006, challenge the judgment and decree, dated 31st March 2004, in L.C. Suit No. 4385 of 1997, passed by the learned Judge of the City Civil Court, Greater Mumbai. (6) 2. The facts, in brief, giving rise to the filing of present appeals, are as under : (a) On 26-8-1980, an agreement was arrived at between the vendors and the appellant in Appeal No. 989/2004 (original defendant no.1 - hereinafter referred to as "promoter"), in respect of 8559.57 sqm. of land in CTS No. 1068 at village Kandivili, Tehsil Borivali, Greater Mumbai. Subsequently, under the Revised Draft Development Plan, a 44 ft. wide road was indicated and, consequently, the area admeasuring 8559.57 sqm. stood divided. On account of this division, a plot admeasuring 6071 sqm. emerged as the suit land. On 16-11-1984, the promoter obtained NOC under Section 21(1) of the Urban Land Ceiling Act, 1976 ("ULC Act") permitting it to construct a building with 7 wings and 137 tenements for weaker section. The construction was to be made in accordance with the prevailing Municipal Regulations, Town Planning requirements and Statutory Regulations. On 21-10-1985, the layout plan was sanctioned. It indicated 1 building with 7 wings. At that time, due to existence of a narrow road as access, the promoter was entitled to FSI only of 0.75. This plan was amended in 1986, 1987, 1989, 1992 and 1994 without any objection from the flat (7) takers. At this stage, it may be mentioned that on 6-5-1986, the layout plan was revised and approved with 5 wings having additional floors as well as FSI of 1.00 due to construction of 44 ft. wife DP road on the original plot admeasuring 8559.57 sqm. of land. (b) From time to time, agreements stood entered into between the promoter and the flat takers for sale of flats. These agreements are dated 7-12-1985, 11-4-1987, 18-1-1989, 30-4-1989, 27-7-1991, etc. (c) On 12-11-1986, the Maharashtra Ownership Flats (Regulation of the promotion of construction, Sale, Management and Transfer) Act, 1963 (For short, hereinafter referred to as "MOFA") was amended retrospectively. Under that amendment, Section 7A was inserted, thereby excluding "additional structures" from the scope of Section 7(1)(ii) and thereby lifting the requirement of consent of flat takers. However, the said amendment was restricted to the plots falling under a scheme or a project under the layout plan. The object behind enacting Section 7A was to overcome the judgment of this Court, in the case of Kalpita Enclave Cooperative Housing Society Ltd. Vs. Kiran Builders Private Ltd. (1986 (8) Mh.L.J. 110). On 12-4-1989, on receiving occupation certificate, possession of flats was handed over to the flat takers. Some flats remained to be sold. They stood in the name of the promoter. (d) On 25-3-1991, the Development Control Regulations were framed which resulted in an increase of FSI from 1 to 1.8 on account of the introduction of the concept of TDR. For the first time, under this concept, lands stood separated from the development potential of the plot. Consequently, the layout plan stood amended and the promoter obtained sanction on 25-5-1992 for construction of the building in question with 6 wings by consumption of the balance FSI of 1.00. The promoter accordingly issued an advertisement for commencement of construction in accordance with the amended plan. However, it is the case of the promoter that on account of financial paucity the construction got stuck. (e) The plaintiff no.1 is the Cooperative Society registered on 20-1-1993. The layout plan was once again amended on 26-11-1994. The building in question with 6 wings was shown in the amended plan. The plan was duly sanctioned. It is important to note that this plan of 1994 was sanctioned in favour (9) of the promoter on account of purchase of additional TDR by the promoter. (f) In 1997 on account of Slum TDR, the permissible FSI stood increased to 2 from 1.8. (g) On 12-8-1997, the Cooperative Society / plaintiff and five flat takers (members) instituted Suit No. 4385/97 against the promoter for conveyance, injunction restraining the promoter from putting up further constructions and questioning the validity of the sanction given by the competent authority to the amended plan dated 29-3-2001 under which the competent authority sanctioned 5 + 2 wings applying the newly available FSI. (h) By judgment and order dated 31-3-2004, the Bombay City Civil Court at Mumbai (trial court) partly decreed the suit, permitting the promoter to complete construction as per the amended plan dated 29-3-2001. The trial court gave a period of three years to the promoter for executing conveyance in favour of the Cooperative Society under the provisions of MOFA. Being aggrieved by the grant of three years time to the appellant, the Cooperative Society preferred First Appeal No. 786/2004 (10) before this Court. A cross appeal was preferred by the promoter, being First Appeal No. 989/2004 in which the promoter contended that under the agreement between the promoter and the flat takers no time limit for execution of the conveyance could be set as the promoter was entitled to exploit the full potential of the plot in question and till such time as the development potentiality of the plot in question stood exhausted, the promoter was not statutorily obliged to execute a conveyance in favour of the Cooperative Society. In this connection, reliance was placed on the provisions of Section 7A of MOFA. 3. By the judgment and order dated 16th March 2006, the learned Single Judge of this court, allowed First Appeal No. 786/2004 filed by the Cooperative Society, and dismissed First Appeal No. 989/2004 filed by the promoter. By the said judgment, the learned Single Judge directed the promoter to convey right, title and interest and execute all relevant documents in respect of Madhu Vihar Scheme in CTS No. 1068/1 admeasuring 6071 sqm. situated at village Kandivali (West), Mumbai (For short, hereinafter referred to as "the suit plot"), in favour of the Cooperative Society. By the said judgment, the learned Single Judge also restrained the promoter, permanently, from making any construction over the suit plot. The learned Single Judge has held that the promoter had floated (11) the Scheme / Project under the name and style "Madhu Vihar Scheme" on the suit plot, in accordance with the layout plan and, that the said Scheme stood completed with the construction of the flats/shops and the garden. 4. The learned Single Judge has further held that the Society was registered on 20-1-1993 and under Rule 8 of the Maharashtra Ownership Flats (Regulations of the Promotion of Construction, etc.) Rules, 1964 (For short, hereinafter referred to as "the Rules"), the promoter was statutorily obliged to convey the title to the Society which they failed to do so even after the Scheme was completed and possession of the flats was handed over to the flat takers. By the said judgment, the learned Single Judge has held that there was an implied trust created; that the promoter was the trustee and that the flat takers were the beneficiaries. By the said judgment, it was further held that under Section 7 of the MOFA, the appellant was prohibited from putting up additional constructions after the plan stood disclosed to the flat takers; that the promoter was not entitled to make any alteration in the structure without the prior consent of the flat takers; that the promoter could not make any additions in the structure of the building without the prior consent of the Society. (12) 5. The learned Single Judge has further held that the construction of Madhu Vihar started in 1985; that section 7A was inserted in 1986 and that Madhu Vihar Scheme got completed in 1989. The learned Single Judge has further held that since the plans were changed at least four times between 1985 and 1989, in which no additional wing like the one proposed in the plan approved on 29th March 2001 was included, and therefore, the promoter was not entitled to derive any benefit from Section 7A of the MOFA and, as such, was not entitled to construct additional building in the suit plot. 6. Being aggrieved by the judgment and order passed by the learned Single Judge, the promoter went in appeal before the Supreme Court. The Supreme Court, vide judgment and order dated 10th January 2007, in Civil Appeal No. 3233/2006, was pleased to set aside the judgment and order passed by the learned Single Judge of this court and remit the matter to this court for re-consideration. 7. As per the order of remand passed by the Apex Court, the parties were heard afresh in both the appeals. 8. For the sake convenience, the parties are referred to (13) as "the Promoter" and "the Society", respectively. 9. Mr. Sancheti, learned Counsel appearing on behalf of the promoter, submits that the legislature has deleted the expression "or make any additional construction" from Clause (ii) of Sub-Section 1 of Section 7 of MOFA, by amendment vide Maharashtra Act 36 of 1986. It is further submitted that for removal of doubt, Section 7A has been inserted by the said amendment which specifically provides that Clause (ii) of Sub- Section 1 of Section 7, having been retrospectively substituted by Clause "a" of Section 6 of the Maharashtra Ownership Flats (Regulations of the promotion of construction, sale management and transfer) (Second Amendment) Act, 1986, it shall be deemed to be effective as if the said clause "ii" as so substituted had been in force at all material times; and the expression "or construct any additional structures" in Clause (ii) of Sub-Section (1) of Section 7, shall be deemed never to apply or to have applied in respect of the construction of any other additional buildings or structures constructed or to be constructed under a scheme or project of development in the layout after obtaining the approval of a local authority in accordance with the building rules or building bye-laws or Development Control Rules made under any law for the time being in force. (14) 10. The learned Counsel appearing for the promoter, therefore, submits that the legislative intent is very much clear. He submits that from the statement of objects and reasons, for bringing out the amendment in 1986, it is clear that the said amendment was necessary in view of the judgment of this court, in the case of Kalpita Enclave Cooperative Housing Society Vs. Kiran Builders Pvt. Ltd. (1986 Mh.L.J. 110). He submits that the purpose of the amendment was to permit the promoters to fully exploit potential of the plots and increase the availability of houses. He submits that the legislative intent is clear, that if the total layout permits construction of more buildings in accordance with the building rules or the building bye-laws or the Development Control Rules, there should be no impediment in construction of additional building and for construction of the additional building, consent of the flat takers or the persons residing in other building in the layout, would not at all be necessary. In the alternative, he submits that assuming that the consent is necessary, perusal of the recitals 7, 8, 12, 13, and Clauses 1, 8, 10, 11, 12, 15, 17, 18, 38 and 51 of the agreement entered between the promoter and the flat takers would make it clear that the flat takers had given consent for additional structure and no separate consent would be necessary. (15) 11. In support of the aforesaid submissions, the learned Counsel appearing for the promoter relies on the judgment of Division Bench of this Court, in Appeal No. 599 of 2002 (Grand Paradi Cooperative Housing Society Ltd. & 31 others Vs. Mont Blanc Properties & Industries Pvt. Ltd. & another), and in the case of Manratna Developers Vs. Megh Ratan Cooperative Housing Society Limited & others (2009(2) Bom.C.R. 836). The learned Counsel also relies on the judgment of Division Bench of this court, in the case of White Towers Cooperative Housing Society Ltd. Vs. S.K. Builders & others (2008(6) Bom.C.R. 371); the judgments of learned Single Judge of this court, in the case of Bajranglal Eriwal & others Vs. Sagarmal Chunilal & others (2008(6) Bom.C.R. 887); in the case of Ralph D'souza & others Vs. Danny D'souza & others (2006(3) Bom.C.R. 326); in the case of The Mohatta Nagar Cooperative Housing Society Ltd. Vs. M/s. Vishram Khimji & Sons and others (1994(1) Bom.C.R. 444); and in the case of Kalpita Enclave Cooperative Housing Society Ltd. and others Vs. Messrs. Kiran Builders Pvt. Ltd. (1987(1) Bom.C.R. 355). 12. The learned Counsel appearing for the promoter (16) further submits that from the perusal of the evidence, it would be clear that the building which was subject matter of dispute is an additional building and not a wing of the building where the flat takers, who are members of the Society, were residing. He submits that there is not even a challenge, that the building was contrary to any bye-laws, regulations, etc. and, as such, they had no right to object in the construction of the additional building. The learned Counsel further submits that the permission under the provisions of Urban Land Ceiling (For short, hereinafter referred to as "ULC") Act, 1976, was subject to the provisions of the MOFA and, therefore, reference to the permission granted by ULC authorities, was also not necessary for considering as to whether the additional building could be constructed without the consent of the Society, or not. 13. The learned Counsel appearing for the promoter further submits that the provisions of Section 11 of the MOFA and Rule 9 of the Rules, which would require the conveyance to be executed within a period of four months from the date on which the Cooperative Society is registered, would be applicable only when the period for executing the conveyance has not been provided in the agreement between the parties. He submits that as per the agreement between the parties, following four pre- (17) conditions, which are pre-requisite for seeking a conveyance, have not been fulfilled : (1) Payment is not made, (2) The last flat sold in 1992, (3) The conditions, which the flat takers are required to comply, have not been complied, (4) The balance construction, which the promoter is entitled to construct, is not yet complete. He, therefore, submits that unless the aforesaid conditions are fulfilled, the Society does not get any right to seek conveyance in favour of the Society. 14. Mr. Ghelani, learned Counsel appearing on behalf of the Society, on the contrary, submits that the scope of the present appeal is limited to examine as to whether the original scheme propounded by the promoter, amended up to 1987, discloses to the purchasers, if the scheme consisted of one building with wings or it contemplates construction of additional building. He submits that a conjoint reading of the provisions of the MOFA, with the Rules thereunder, would clearly show that the promoter is required to disclose entire scheme to the flat taker. He submits (18) that the representations contained in brochure published by the promoter are binding on him. He further submits that the amenities which were assured in the brochure and which were, in fact, provided are being taken away by the additional construction which is not permissible in law. He submits that the clause in statutory agreement which provides that residual FAR (FSI) in the plot or the layout not consumed will be available to the promoter only till registration of the Society, whereas after registration of the Society, the FAR (FSI) shall be available to the Society, was very much existence at the relevant time; since the said portion is deleted only by amendment in March 1997. 15. The learned Counsel appearing on behalf of the Society further submits that in the entire agreement, the reference is only to a building and not buildings. He, therefore, submits that a representation was given to the flat takers, that one building consisting various wings would be constructed and not an additional building will be constructed. He further submits that in Clause 7 of the agreement, a representation is given, that the construction would be made in accordance with the scheme sanctioned by the Urban Land Ceiling authorities. He further submits that the reliance on the alleged consent in various clauses of the agreement is of no use to the promoter. (19) He submits that by various judicial pronouncements, it is a settled law that the consent as contemplated under Section 7 of the MOFA has to be informed consent and not a blanket consent. 16. The learned Counsel appearing for the Society further submits that the plan shown in brochure is totally different than the plan of 2001. Various amenities, like children's play area, sitting area for senior citizens, garden, fountain, parking, which was already provided, are being taken away under the plan of 2002. 17. The learned Counsel appearing for the Society further submits that the consent would not have been necessary, had additional structure been disclosed in the layout at the time of offering flats to the flat takers. 18. The learned Counsel appearing for the Society submits that the judgment of Division Bench of this court, in the case of Grand Paradi Cooperative Housing Society Ltd. (cited supra), would not be applicable to the facts of the present case, inasmuch as, the issue regarding blanket consent was neither raised nor considered by this court. (20) 19. The learned Counsel appearing for the Society relies on the judgment of the learned Single Judge of this court, in the case of Smt. Neena Sudarshan Wadia Vs. M/s. Venus Enterprises (1984(2) Bom.C.R. 505), and in the case of Bhuvaraha Maithreyan, Through the Power of Attorney Holder Dr. Tara Maithreyan Vs. Municipal Corporation for the City of Pune & others (2003 Vol. 105(3) Bom. L.R. 803). He further relies on the recent judgment of the Apex Court, dated 31st August 2010, in Civil Appeal No. 2544 of 2010 and companion appeals, in the case of Nahalchand Laloochand Pvt. Ltd. Vs. Panchali Cooperative Housing Society Ltd. 20. Mr. Sancheti, learned Counsel appearing for the promoter, in rejoinder, submits that a conjoint reading of provisions of Sections 7 and 7A of the MOFA, leaves no scope for doubt, that the consent of only persons in the building is necessary and not of the persons in the other buildings. He submits that what is material is the approval of the local authority and not the persons residing in the other buildings. He further submits that the statutory agreement itself provides that the variations, as considered necessary by the promoter, are permissible and, therefore, the attack of the Society on the clauses of the agreement is not sustainable. (21) 21. Though the learned Counsel appearing for the parties have advanced their arguments on various aspects of the matter, I find that this court would be required to decide the appeals within the parameters as laid down by the Apex Court while remitting the matter to this court for decision afresh. The Apex Court has observed thus : "20. In the light of what is stated above, the question which needs to be examined in the present case is whether this case falls within the ambit of amended S. 7(1)(ii) or whether it falls within the ambit of S. 7-A of MOFA. As stated above, under S. 7(1) after the layout plans and specifications of the building, as approved by the competent authority, are disclosed to the flat takers, the promoter shall not make any other alterations or additions in the structure of the building without the prior consent of the flat takers. This is where the problem lies. In the impugned judgment, the High Court was failed to examine the question as to whether the project undertaken in 1985 by the appellant herein was in respect of construction of additional buildings or whether the project in the layout plan of 1985 consisted of one building with 7 wings. The promoter has kept the requisite percentage of land open as recreation ground/open space. Relocation of the tennis court cannot be faulted. The question which the High Court should have examined is; whether the project in question (22) consists of 7 independent buildings or whether it is one building with 7 wings ? The answer to the above question will decide the applicability or non-applicability of S. 7(1)(ii) of MOFA, as amended. The answer to the above question will decide whether the time to execute the conveyance has arrived or not. This will also require explanation from the competent authority, namely, Executive Engineer, "R" South Ward, Kandivali, Mumbai-400 067 (respondent No.8 herein). In the dates and events submitted by the appellant - promoter, there