The Supreme Court in case of State Of Maharashtra vs Aspi Chinoy has recently held that State Government is not entitled for any premium on sale of any flats in a society wherein (a) The plot on which the society is formed was allotted by the collector to a developer/ society on lease; and (b) The same was not allotted at the concessional value.

BACKGROUND

In the year 1971, the State Government had invited offers for the lease of a plot in Back Bay Reclamation Estate. In response to the said notice, one Aesthetic Developers Private Limited (Developer) tendered the bid which was accepted by the State Government in the year 1972. Upon acceptance of the bid, the Developer held the plot as lessee for a term of 99 years. Thereafter, the Developer constructed a building on the said plot consisting of flats. The Developer then sold those flats to individual purchasers on ownership basis and thereafter a Co-operative Society was formed by the said flat purchasers in year 1977 (Society).

On 16 December 2000, Mr Aspi Chinoy (Respondent) entered into an agreement with Mrs Reshmi Devi Agarwal for purchase of right title interest in a particular flat. When Respondent approached the Sub-Registrar`s office for registration of sale deed, the registration was declined and he was directed to obtain a NOC from Collector. Owing to the said order, Respondent moved a writ before the Bombay High Court.

Judgment passed by Hon`ble Bombay High Court.

The Bombay High Court granted relief sought by the Respondent on three primary grounds:

• Ownership Transfer of Flats: It was observed that with respect to lease of land by the State Government to Developer, the members of the Society did not step into the shoes of Developer after the land and building was conveyed to Society since the members of Society had ownership right only over flats and not on the land over which the building was constructed.
   
• Tenant Co-Partnership Society-Members Rights only of Flat: It further observed that the Society was tenant co-partnership society wherein the members had exclusive right, title and interest in the flat and no right in the land over which the Society was constructed hence, in that case members of the Society does not require permission from Collector while selling their respective flat.
   
• 1983 Resolution of State Government: Thereafter, while adjudicating on issues pertaining to 1983 Resolution of State Government, it observed that the resolution is applicable only to those societies to whom the conveyance has been given by State Government at the concessional rate . Since in the present case, the land was conveyed to Society by Developer and not by Government the 1983 resolution would not be applicable.
   
• On the basis of the above, Hon`ble Bombay High Court allowed the writ petition of the Respondent. Aggrieved by the Judgment of the Bombay High Court, State Government (Appellant) filed a Special Leave Petition before Supreme Court.

Arguments of the Appellant:

Appellants` primary contention was that the Bombay High Court erred in considering the Government Resolution dated 1983 and 1999, wherein the Appellants were entitled to claim premium on transfer of any flats on the reclaimed land or land allotted to society on the foreshores.

Appellants further contended that the plot was leased to developer in the year 1972 and vide lease deed, the Developer was obliged to abide by all the terms and conditions of lease subsequently made by the State Government vide resolutions or addendums.

Supreme Court`s View:

After hearing the parties, the Supreme Court noted that 1983 Resolution provided grant of land to co-operative societies at concessional rates. After the resolution of 1983, due to passage of time and no change in policies, the Government revised the scheme in the year 1999 and introduced premiums on grant of transfer of flat. Therefore, 1999 Resolution was in continuation of 1983 Resolution.

The Apex Court further noted that the plot in dispute was allotted to the Developer who participated in the bid in response to public notice and as per the terms of the bids the Developer constructed the building on the said plot and sold the flats in the said building to individual flat purchasers. After the flats were sold, the Society was formed on the said plot in the year 1977 by the flat purchasers.

Therefore, the plot was not allotted to Society but to developer on lease. Hence, 1983 Resolution and 1999 Resolution was not applicable to members of such Society.

On above grounds, the Apex Court dismissed the Special Leave Petition and upheld the Judgement of Bombay High Court.
 

MHCO Comment : The Judgement of Supreme Court has clarified that reclamation land in Mumbai before 1983 Resolution and not granted on concessional rate are not subject to Collector`s NOC. The Collector consent will only be required if plot has been allotted to the Society post 1983 Resolution. This judgment will put quietus to many pending litigations before the Bombay High Court dealing with similar issues.

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Author: Bhushan Shah - Partner

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This update was released on 17 Nov 2022.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
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