February 04, 2019
Real Estate Law- Held that promoter is obliged to make full and true disclosure of the development potentiality of the plot which is the subject matter of the agreement and if any departure is to be made in the scheme so disclosed, consent of flat takers must be obtained.
Case name: Shri. Vitthal Laxman Patil v. Kores (India) Ltd. Real Estate Division Mumbai & Ors.
The seminal issue that fell for consideration before the High Court of Bombay in the case was whether after making disclosure to flat purchasers of a sanctioned layout plan showing a certain number of buildings and open and amenity spaces was it permissible to a promoter to construct an additional building without seeking consent from the flat purchasers?
The High Court of Bombay in the case made reference to the relevant provisions of the Maharashtra Ownership Flats Act (MOFA) i.e. Section 7 which prohibits the promoter, after the plans and specifications are disclosed, from making alterations or additions without the consent of persons who have agreed to take flats from him. However, the said provision was amended in 1986 and Section 7A was incorporated, according to which the question of taking prior consent of flat takers arises only when an addition to the structure of the building is to be carried out and not when additional structures (i.e. structures independent of the building concerned) are to be erected.
The High Court in the aforesaid context opined that Sections 3 and 4 of MOFA read with clauses 3 and 4 of Form V of Maharashtra Ownership Flats Rules, 1964- which deal with the obligations of the promoter, firstly, to disclose all particulars of the building or project involving more than one buildings and then to construct in accordance with such particulars. Thus, these require the promoter to make a full disclosure of the proposed building and its amenities or the project of buildings and their amenities, and then to comply with such disclosure whilst constructing the building.
While elaborating on the aforesaid, the High Court also made reference to Supreme Court’s verdict in the case of Jayantilal Investments vs. Madhuvihar Co.op. Housing Society, wherein the Apex Court in context of Sections 7 and 7A held that reading the two groups of provisions, it was clear that the obligation of the promoter under MOFA to make true and full disclosure to the flat takers remained unfettered even after the amendment of MOFA by Maharashtra Amendment Act 36 of 1986.
Thus, in view of the aforesaid obiter dicta and law prevailing on the subject, the High Court of Bombay in the case ruled that the promoter is not only obliged statutorily to give to the purchasers the particulars of the land, building, amenities, facilities, etc., he is also obliged to make full and true disclosure of the development potentiality of the plot which is the subject matter of the agreement and if any departure is to be made in the scheme so disclosed, consent of flat takers must be obtained.
The entire case can be accessed here.
 (2007) 9 SCC 220