Promoter Need Not Seek Consent For Additional Construction If Full Project Is Disclosed At Agreement Stage: Bombay High Court

The Bombay High Court stated that promoter need not seek consent for additional construction if full project disclosed at agreement stage.

“Once the entire project is placed before the flat takers at the time of the agreement, then the promoter is not required to obtain prior consent of the flat takers as long as the builder puts up additional construction in accordance with the layout plan, building rules and Development Control Regulations” stated the bench.

The Bench of Justice Gauri Godse observed that it is necessary to balance the rights of the promoter to make alterations or additions in the structure of the building in accordance with the layout plan on the one hand vis-àvis his obligations to form the society and convey the right, title and interest in the property to that society.

In this case, the agreement in favour of the respondent/plaintiff is executed under the provisions of The Maharashtra Ownerships Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (“MOFA”) by the appellants, i.e. defendant no. 1 as promoter.

The suit is filed to seek rectification in terms of the agreement and specific performance of the rectified agreement, and challenge the amendment to the sanctioned layout.

By the impugned order, the application filed by the plaintiff seeking the grant of a temporary mandatory injunction and a temporary prohibitory injunction is decided. The prayer for a temporary mandatory injunction to hand over possession of the suit flat is rejected.

However, the trial court partly allowed the interim application and granted a temporary injunction restraining defendant nos. 1 to 3 (promoters) from carrying out any activity in the said project with respect to the additional construction and from dealing with or creating any further third-party interest and handing over the possession to the flat purchasers of the additional floors.

The appellant submitted that the sanctioned plan attached to the plaintiff's agreement and the relevant clauses in the agreement clearly indicate disclosure of the full potential of the land under development. All the necessary approvals granted by the competent authorities upheld the additional construction, hence there is no substance in the grievance raised on behalf of the plaintiff that the additional construction would hamper the structural integrity of the building.

The respondent/plaintiff submitted that the entire complexion of the project has changed in view of the additional construction in terms of the amended plan. The promoter does not deny the plaintiff's factual averments in the written statement. The trial court considered the plaintiff's specific contention regarding the change in the nature of the amenities while granting the interim injunction.

The question before the bench was whether the respondent/plaintiff is entitled to an interim injunction.

The bench after referring to various judgments observed that at the time of execution of the agreement with the flat purchasers, the promoter is obliged statutorily to place before the flat purchasers the entire project/scheme, be it a one-building scheme or multiple number of buildings scheme and the condition of true and full disclosure flows from the obligation of the promoter under MOFA vide Sections 3 and 4 and Form V, which prescribes the form of agreement and this obligation remains unfettered because the concept of developability has to be harmoniously read with the concept of registration of society and conveyance of title.

The bench stated that “Prima facie, the clauses in the agreement executed in favour of the plaintiff, particularly the clauses in paragraph 11, would not amount to any blanket consent. The challenge to the specific clauses containing informed consent itself indicates that the plaintiff was well aware of the informed consent for utilisation of the full potential of the land under development, including the proposed additional units as reflected in the sanctioned layout of 2015 attached to the plaintiff's agreement. Admittedly, there is no alteration in the flat, or there is no alteration or change in the common amenities to be provided as per the agreement and the sanctioned layout. Hence, the order granting an injunction with drastic consequences would not be sustainable.”

The issue of disclosure of the full potential of the project and developability, and the informed consent of the flat purchaser cannot be decided on any straightjacket formula, in as much as, these issues would depend upon the facts of each case. The concept of informed consent cannot be stretched beyond the statutory obligations of the Promoter as contemplated under Sections 3 and 4 of MOFA and form V, which prescribes the format of the agreement, stated the bench.

In view of the above, the bench allowed the appeal.

Case Title: M/s. Krishna Constructions v. Mr. Subhash Uttam Dalvi

Case Number: APPEAL FROM ORDER NO. 744 OF 2024

Counsel for Appellants: Surel Shah, a/w Atharva Kamble and Ishaan Kapse i/b. Mrinal Shelar

Counsel for Respondent: Abhinav Chandrachud

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