IBC cannot stall deemed conveyance of housing society
Third Party objections of the respondent no.4 who was not the original developer / promoter and who was not party to the flat agreements, cannot obstruct conveyance rights of the housing society.
Bombay HC Discouraged Misuse of IBC to Stall Deemed Conveyance – HLD that CIRP cannot be used to circumvent or obstruct the statutory obligations and rights of the housing society for the deemed conveyance for the housing project, that too, completed a decade earlier.
The Authority rejected the application of the petitioner society for deemed conveyance with liberty to file fresh application on conclusion of the CIRP under IBC pending against the Respondent No.4.
The original owner had development agreement with respondent no.3 which had executed the agreements with the flat purchasers. Moreover, respondent no.3 has agreed to convey land the and the building in favour of the society as per clause 33 of MOFA agreement. The society was formed on 19.12.1991.
The respondent no.4 had purchased the adjoining properties and objected to the application of the society for conveyance.
The respondent no.4 is not the original developer / promoter of the society land and had not sold the flats or executed the agreements with the purchasers.
he Competent Authority performs a statutory function and confers a statutory benefit upon flat purchasers which function is not in the nature of a recovery action. It is not a claim enforcement mechanism. It is an exercise of statutory power to perfect title in favour of an organization of purchasers. Therefore, it is held that statutory rights of third parties and statutory duties of authorities continue despite insolvency or moratorium.
What is sought to be done in the present case is an attempt on the part of Respondent No.4 to circumvent the provisions of Section 11 of MOFA by taking aid of CIRP initiated by an altogether unconnected entity (Canara Bank). In many cases, the developers are corporate entities who undertake numerous projects over the period of time. If such developer-company fails to convey land in contravention of Section 11(1) of MOFA in respect of a building which is constructed a quarter of century ago but attracts CIRP from an unconnected financial creditor, the same would not suspend the statutory obligation under Section 11(1) imposed on such developer
Judgment dated 22.6.2026 of the High Court of Bombay in Writ Petition No.16318 of 2025 of Darshan Mandir Cooperative Housing Society Limited Vs. District Deputy Registrar, Cooperative Society, Mumbai (4) and others
