DEEMED CONVEYANCE A LEGAL FRAUD SUPERSEDING TO LAW OF TRANSFER OF PROPERTY?

DEEMED CONVEYANCE OF LEASE HOLD LAND

Interesting topic, isn’t it?

Why we needed it? Because builders in anticipation of more FSI never executed Conveyance.In MOFA 1963 it is mandatory to execute conveyance as soon as 10 flats are sold and form a Housing Society. But in absence of regulatory laws they avoided to keep their claim alive to further develop the land. However with passage of time buildings constructed in 1970-80s became dilapidated. In absence of Conveyance ( in case of freehold) and  Deed of Assignment ( in case of leasehold) Societies faced problems. So government came out with Deemed Conveyance concept.

Deemed conveyance rules refer to the process particularly under the Maharashtra Ownership Flats Act (MOFA) 1963, where ownership of the land and building legally transfers to a housing society if the builder (promoter) fails to do so within the legally mandated timeframe after the society’s formation. After applying to the competent authority (like the District Deputy Registrar), the society can obtain a deemed conveyance certificate, granting it legal title to the property and control over it, even without the builder’s cooperation.

What is Deemed Conveyance?

  • A legal process where ownership rights of land and building are automatically transferred to a housing or cooperative society.
  • It occurs when the builder (promoter) fails to execute the conveyance deed, transferring ownership, within the time specified by law.
  • It provides societies with legal ownership of the land their buildings stand on, giving them control over redevelopment and finances

Now its understood that there can be Deemed Conveyance of Freehold Land and also Lease Hold. But can there be Deemed Conveyance of Deed of Assignment?

First let us see the provision of the Transfer of Property Act , 1882 regarding Lease.

  1. Lease defined. —

A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent defined. —The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

How Lease is Terminated? The provisions are in Section 111

  1. Determination of lease. —

A lease of immoveable property determines—(a)by efflux of the time limited thereby;(b)where such time is limited conditionally on the happening of some event—by the happening of such event;(c)where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event—by the happening of such event;(d)in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right;(e)by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them;(f)by implied surrender;(g)by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or

(2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or

(3) the lessee is adjudicated an insolvent, and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease;

(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.

Illustration to clause (f)A lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon.

Explanation:

A plain and grammatical interpretation of Section 111(d) of the Transfer of Property Act leaves no room for doubt that unless the interests of the lessee and that of the lessor in the whole of the property leased, become vested at the same time in one person in the same right, a determination of the lease cannot take place. On taking an assignment from some of the co-owner landlords, the interests of the lessee and the lessor in the whole of the property do not become vested at the same time in one person in the same right. Therefore, a lessee who has taken assignment of the rights of a co-owner lessor, cannot successfully raise the plea of determination of tenancy on the ground of merger of his lessee’s estate in that of the estate of the landlord. It is, thus, clear that there is no substance in the contention of the learned counsel for the appellants that in the case on hand, it should have been held that the tenancy stood determined and the application of the landlord for a direction to the tenant to deposit the rent in arrears should have been dismissed. The position of the appellants as tenants continue and they are bound to comply with the requirements of the Rent Control Act under which the order for deposit has been passed against them. Pramod Kumar Jaiswal And Others vs Bibi Husn Bano & Ors on 3 May, 2005

WHAT IS MERGER?

In Megarry’s Manual of the Law of Real Property, 8th Edition, it is explained as follows:-

“Merger is the counterpart of surrender. Under a surrender, the landlord acquires the lease, whereas merger is the consequence of the tenant retaining the lease and acquiring the reversion, or of a third party acquiring both lease and reversion. The principle is the same in both surrender and merger: the lease is absorbed by the reversion and destroyed. For merger to be effective, the lease and the reversion must be vested in the same person in the same right with no vested estate intervening.”

When an owner of property grants a lease to another, he retains with himself the reversion and transfers the right as a lessee to the transferee. When that transferee, the first lessee, leases out the building or a part thereof further, that lessee retains with him the reversion of that sub-lease and transfers to the sub-lessee only the rights of a lessee under him. Even in spite of the transfer of the reversion of the first lease by the ultimate landlord to the sub-lessee, the original lessee, on the strength of the tenancy created by him, is entitled to seek eviction of his tenant, namely, the sub- tenant on the strength of his letting. The fact that the sub-tenant had acquired the ultimate reversion, might not stand in the way since so long as the tenancy in favour of the original lessee is not terminated in the mode known to law, that lessee would continue to enjoy the rights of the transfer in his favour by way of lease.

The merger takes place in terms of Section 111(d) of the Transfer of Property Act, only in a case where the interests of the lessee and that of the lessor in the whole of the property, become vested at the same time in one person, in the same right. Supreme Court in Nalakath Sainuddin vs. Koorikadan Sulaiman such a sub-tenant had rightly approached the Rent Control Court for eviction of his lessor, the lessee from the landlord, by invoking the relevant provisions of the Rent Control Act on the strength of the transfer of ownership in his favour by the head lessor. The rights under the original lease still continued with the original lessee and the right in the property to possess, outstanding with the lessee had not come into the hands of the sub-lessee merely on the strength of the assignment of the ultimate reversion. It could not, therefore, be said that there was a coalescing of the interest of the lessee and the lessor in the assignee landlord, (the sub-tenant) in respect of the original lease in the whole of the property as contemplated by Section 111(d) of the Transfer of Property Act.

Can Society obtain Deemed Conveyance of a Lease Hold property?

What is Deemed Conveyance?

The concept of deemed conveyance is a legal remedy available to cooperative housing societies under the Maharashtra Ownership Flats Act (MOFA), 1963. This provision addresses situations where the property’s promoter (builder or developer) fails to voluntarily transfer the land and building title to the society within a stipulated period, even if the individual flat agreements were based on a deed of assignment of leasehold rights.

Pramod Kumar Jaiswal And Others vs Bibi Husn Bano & Ors on 3 May, 2005 A plain and grammatical interpretation of Section 111(d) of the Transfer of Property Act leaves no room for doubt that unless the interests of the lessee and that of the lessor in the whole of the property leased, become vested at the same time in one person in the same right, a determination of the lease cannot take place. On taking an assignment from some of the co-owner landlords, the interests of the lessee and the lessor in the whole of the property do not become vested at the same time in one person in the same right. Therefore, a lessee who has taken assignment of the rights of a co-owner lessor, cannot successfully raise the plea of determination of tenancy on the ground of merger of his lessee’s estate in that of the estate of the landlord. It is, thus, clear that there is no substance in the contention of the learned counsel for the appellants that in the case on hand, it should have been held that the tenancy stood determined and the application of the landlord for a direction to the tenant to deposit the rent in arrears should have been dismissed. The position of the appellants as tenants continue and they are bound to comply with the requirements of the Rent Control Act under which the order for deposit has been passed against them. The High Court has rightly dismissed the revision.

 In Madan Pal v. Bashanti Kumar Shit, AIR 1989 CALCUTTA 223, a sub-lessee of a portion had acquired a part of the interest of the superior lessor. The plea of extinguishment by a merger was raised. The Court held, “The interest of the lessor and the lessee in the whole of the property should become vested at the same time in one person and in the same right, i.e., there must be the union of the entire interest of the lessor and the lessee. Thus, a lease is not extinguished because the lessee purchases a part of the reversion. Again, the union of estate cannot occur if there is any intervening estate. In the instant case the petitioner has acquired only 1/3rd interest of the lessor. Moreover, the petitioner has not acquired the interest of the opposite party, who is his lessee. He has acquired only a partial interest of the superior landlord or the lessor of the first degree. It cannot, therefore, be said that there has been the union of the entire interest of the lessor and the lessee. There is no merger even though by virtue of the purchase, the petitioner has become one of the co-sharer landlords of the opposite party, but the sub- tenancy created by the opposite party in favour of the petitioner cannot be said to have determined.”

Can Lease Hold get merged after registration of Deemed Conveyance?

Yes, when Promoter /builder has failed to execute Deed of assignment.

It is not a document which stands alone or is a distinct transaction. It is a grant or conveyance in terms of what the agreement between parties stipulates and provides for being conveyed to the flat purchasers. Therefore, the Applicant is permitted to apply to the Competent Authority for Deemed Conveyance, and such application is to be accompanied by true copies of the registered agreements for sale executed by the Promoter with each individual member/ flat purchaser and other relevant documents. It is to further that and to insist on the promoters fulfilling their obligations within the prescribed period, but noticing that their failure has resulted in hardship to flat purchasers, that the Legislature has stepped in. To my mind, this is not a power which can be exercised by the Competent Authority in ignorance of or by brushing aside the earlier provisions and contents of the agreement with the flat purchasers. Equally, the Competent Authority has to take into consideration the contents of other relevant documents. See Pramod Kumar Jaiswal and others -Versus Bibi Husn Bano & Ors.

Can there be Deemed Conveyance of Deed of Assignment?

No, you cannot have a “deemed conveyance” of a “deed of assignment”; these are separate legal concepts, and “deemed conveyance” is a process for transferring title to a housing society when a builder fails to provide the title deed. A Deed of Assignment transfers existing interest in property, while a Deemed Conveyance is an action by a government authority to provide a title deed to a society when the proper deed isn’t forthcoming from the builder.

If anyone furnishes false information to obtain Deemed Conveyance is committing a criminal offence. Obtaining an order of deemed conveyance through fraudulent means is a punishable offense, as it involves misrepresentation or deceit to gain an illegal advantage. Such actions are considered a form of cheating and are subject to legal consequences under various laws, which can include penalties and imprisonment, as outlined in sections of the Maharashtra Ownership Flats Act and general fraud-related statutes.

Why Fraudulent Means Are Punishable?  Cheating:  Using deceit, false pretences, or deliberate misrepresentation to obtain an order of deemed conveyance is a form of cheating under the Indian Penal Code.

Misuse of Legal Process:  Fraudulent actions undermine the integrity of the deemed conveyance process and the legal system designed to protect flat purchasers.

Violation of Maharashtra Ownership Flats Act (MOFA):  The Maharashtra Ownership Flats Act, 1963 (MOFA) provides for penalties, including imprisonment and fines, for offenses committed under the act, which can include fraudulent behavior related to conveyance.

Potential Consequences

Criminal Prosecution: Individuals found to have committed fraud in the process can face criminal charges and penalties.

Invalidation of the Order: The order of deemed conveyance obtained through fraud can be declared invalid by the courts.

Civil Liability: The society can take civil action to recover losses or damages caused by the fraudulent conduct

Tushar Jivram Chauhan And Anr vs The State Of Maharashtra Bombay High Court observed that, ” the Competent Authority, as well as the Applicant-Society are under obligation to serve the Petitioners and/or such person who are the owners of the property, and after giving the hearing to the parties, may pass the order even though it is stated to be unilateral deemed conveyance. The concept of “unilateral deemed conveyance” nowhere permitted and/or entitled the Authorities and/or the parties, to insist upon the ex-parte order and/or order behind the back of the owners/promoters in such circumstances. The procedure so prescribed under the Act and the Rules and if the order is against the principle of nature justice, such order, in my view, needs to be interfered with.”

Answer is No. https://shrutidesai.in/deed-of-conveyance-deed-of-assignment-when-and-why-executed-as-such/

Conclusion:

Giving enlarged power to Registrar of Society to execute Deemed Conveyance is not a good sign. One cannot brush aside ownership rights of landowner though Deemed Conveyance is not a final document but of course if executed in connivance and subsequently building is demolished the flat owners would lose their right in the property. Especially when cooperation department is so corrupt. Its not their fault. Every chair has its own price.

 

Mumbai

18th September 2025