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Published on 1/23/2018 1:52:47 PM
Flat buyers must check if builder has right to construct & sell flats
The law mandates that certain documents must be registered, yet even without registration, permits these documents to be admissible in evidence. Would this be construed to dispense with the requirement to execute the agreement, whether registered or otherwise?

Case Study: Raj Developers had constructed Savitri Sadan building at Bhayander on a plot of land jointly owned by eight members of the Thakkar family. The builder failed to form the society. The shop owners and flat purchasers then formed a society on their own without the builder's assistance. It was registered as Savitri CHS in March 1994.

The society later attempted to get conveyance of the land and building. As the builder failed to execute conveyance, the society filed a complaint before the Thane District Forumagainst the developer and eight members of the Thakkar family who had owned the building plot.

The forum observed that there was neither any agreement in respect of transferring the title from the land owners to the builder, nor was there any registered development agreement authorizing the builder to construct the building and sell the flats. The forum observed that when the builder does not have clear title, he cannot pass on the title to the society. Hence the forum concluded that it could not order execution of the conveyance. So the complaint was dismissed.

The society appealed against this order. Its argument was that the Maharashtra Ownership

Flats Act specially provided for unregistered agreements to be accepted in evidence.

The Maharashtra State Commission observed that the issue was not about the document being registered or not. It was whether the builder had any right to construct the building and sell the flats. There was no document to show that the builder had purchased the land or the land owners had given him a right to sell flats in the property. So, when the builder himself does not have any right, he cannot create a further right in favour of the society.

Accordingly, the Commission concluded that it did not have the power to direct the flat owners or the developer to execute conveyance. By its order (15.1.2017) delivered by Justice Bhangale for the Bench along with member D R Shiraso, the State Commission reaffirmed the view expressed by the District Forum, and dismissed the society's appeal.

Conclusion: Flat purchasers must ascertain whether a builder has the right to construct a building and sell flats. A tacit understanding between the land owner and builder would be of no help. What is required is that there must be a written contract between the land owner and the builder. In the absence of such an agreement, the flat purchasers would never get any right to the flat purchased by them. So the only option available would be to seek a refund of their money along with compensation and costs.



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