No NOC to transfer flats built on land leased to developer: Supreme Court

The court clarified that no NOC (No-Objection Certificate) is required from the collector to sell such flats.

Urvi MahajaniUpdated: Friday, September 30, 2022, 11:57 PM IST
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Supreme Court of India | PTI

In a significant order, the Supreme Court has held that the Maharashtra government cannot charge a premium to grant permission for transfer of flats in cooperative housing societies built on land leased to a builder after an auction.

The court clarified that no NOC (No-Objection Certificate) is required from the collector to sell such flats.

Justice BR Gavai, in a detailed order on Friday, dismissed the state government’s appeal challenging a Sep 29, 2009, order of the Bombay High Court.

In June 2000, the collector had written to the sub-registrar, Bombay City, Old Customs House, not to register any transaction of transfer of flats in buildings situated in Backbay Reclamation blocks 3 and 5, Nariman Point and Cuffe Parade, without an NOC from his office. The NOC would be issued against payment of a premium.

Back in 1971, the government had invited bids to develop five plots in Backbay Reclamation Estate. Following due procedure, the bid was awarded to Aesthetic Builders Pvt Ltd for two plots. The developer had to construct and sell flats worth not less than Rs10 lakh on ownership basis. The purchasers of the flats would thereafter form a cooperative society which would then take over the rights of the company.

The 22-storey Jolly Maker Apartments 3 was built by the company and the flats sold to various parties. The building got an occupation certificate on Dec 12, 1975. The purchasers of the flats formed the Varuna Premises Cooperative Society Ltd.

The dispute arose when senior advocate Aspi Chenoy purchased a flat in the building. When he approached the sub-registrar for registration, he was directed to secure an NOC from the collector. He then filed a petition in the High Court which ruled in his favour.

Shekhar Naphade, counsel for the government, contended before the Supreme Court that in view of the government resolution of May 12, 1983, and the GR of July 9, 1999, the state was entitled to claim premium as a condition to grant permission to transfer the flats.

However, senior counsel CU Singh, appearing for Chenoy, contended that the government has interest in the land which it has leased and not in the flats and hence cannot levy any fee or premium for transfer of such flats.

The court noted that the government was empowered to allot land to cooperative societies of different categories on concessional rates as per its 1983 and 1999 GRs. Also, due process was followed while granting development rights and forming the cooperative society.

“The present case is not a case where the land is allotted to a cooperative society by the government,” Justice Gavai noted. “The land was leased to the builder, who was the successful bidder, and after the ownership of flats was transferred to the private individuals, a society of flat owners was formed.”

Dismissing the government’s arguments, the justice said that since the land was not allotted to a society but to a builder on lease, who then constructed flats for private individuals and subsequently a society was formed, the 1983 and 1999 GRs “would not be applicable to the members of such societies”.

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