I hold as under:--
(1) A Certificate of Title need not necessarily be unconditional or unqualified. It can be qualified to the limited extent of implied statutory exception contained in Section 3(2)(b) of Maharashtra Ownerships Flats Act, 1963 as interpreted above. The Format of Certificate of Title prescribed by the rules is mandatory subject only to limited scope for adaptability as explained in the judgment. A qualified certificate of title must furnish all relevant information as set out in paragraph 19 of this judgment.
(2) The Promoter must fall in one of the several categories enumerated in paragraph 16 of this judgment. To the limited extent, the expression 'title of the promoter'is used in the Maharashtra Ownership Flats Act, 1963 in the special sense so as to permit particular class of developers to act as promoters although such promoters/developers are not the owners of freehold or leasehold land.
(3) In clearest cases, adverse possession can be considered as marketable title free from all encumbrances. If the claim of adverse possession is disputable and there is reasonable prospect of litigation, the Advocate is duty bound to refuse certificate of title.
(4) The Advocates must never certify doubtful titles as the unwary flat purchasers would thereby be prejudiced.
(5) Advocates owe statutory and professional duty to protect unwary flat purchasers and public interest and not merely their clients.
(6) Advocates and Solicitors, by their very training and background should be circumspect in their action and conduct and should follow the usual norms viz:--
(a) Peruse the title-deeds;
(b) Have searches taken in the office of the Sub-Registrar (and also of the Registrar of Companies in case the Vendor is a Limited Company);
(c) Issue Public Notices in at least two newspapers (one in vernacular and the other in English circulating in the area where the property is situated) inviting claims of any member of the public against or in respect of the property in question;
(d) Ask the Purchaser to require his Architect to ascerlain whether the land is under set-back or reservation;
(e) Administer Requisitions on title and be satisfied about the answers;
(f) Obtain Declaration on Oath from the relevant persons regarding the factual position before issuing a Certificate of Title.
1. By my order dated 30th July 1991, I have granted injunctions, inter alia, in respect of flats and shops in the building under construction on the suit land or any part thereof and also passed a conditional order for appointment of receiver in respect of the suit land and all the structures standing on the suit land or any part thereof. The defendant No. 1 is constructing 51 flats and several shops after amalgamation of the suit plot with two other plots. I had therefore thought it proper to direct the parties to file affidavits so as to identify the flats and shops covered by the abovereferred order dated 30th July 1991. After considering the affidavit of defendant No. 2 dated 5th August 1991 and affidavit of plaintiff No. I dated 8th August 1991 and the
submissions of learned counsel for the plaintiffs and defendants Nos. 1 to 3, I pass this clarificatory order to the effect that the order dated 30th July 1991 shall be applicable to 39 flats and 4 shops particularised in Exhibits 1 and 2 to the affidavit of defendant No. 2 dated 5th August 1991 in addition to the same being applicable to the suit plot. On a prima facie view of the matter, I have decided to accept the identity of the flats and the shops constructed or being constructed on the suit plot or part thereof as set out in the affidavit of defendant No. 2.
2. I am not permitting defendants Nos. 1 to 3 to re-open the matter in respect of any of the matters already decided by me by may order dated 30th July 1991 and not covered by the liberty granted by the said order. Hence it is directed that paragraph 4 of the affidavit of defendant No. 2 dated 5th August 1991 and reply thereto shall be treated as deleted.
3. One of the questions which arose for consideration of the Court while deciding this notice of motition was about the validity of the certificate of title appended to the printed agreements of sale in respect of flats and shops on the suit plot relied upon by defend-ant No. 1 in support of its plea of bona fides. Having regard to the legal position enunciated in the later part of this order and overall view of the facts of this case, I have no hesitation in observing that prima facie the said certificate of title is unsatisfactory. The said certificate is based inter alia on the declaration of defendants Nos. 4 to 9 to the effect that the plaintiffs are not traceable and the plaintiffs are presumed to have died and that defendants Nos. 4 to 9 are in adverse possession of the suit land as against the plaintiffs. I have already commented on the said declaration in my order dated 30th July 1991. M/s Pravin Mehta & Mithi & Co. Advocates, are lawyers of repute. This fact however is of limited relevance. As Advocates of experience and repute, they have much larger responsibilities in the matter they handle. I express my unhappiness in respect of the said certificate of title. The matter will be examined in further depth at final hearing of the suit. At the stage of issuing of certificate of title, order dated 30th August 1968 cancelling Mutation Entry No. 3072 dated 27th September 1967 was in existence. The said order dated 30th August 1968 passed by the Tahsildar was set aside by the Sub-Divisional Officer much later. If the Advocates issuing the certificate of title inter alia had proceeded on the basis that the transaction of conveyance of September 1966 in favour of the plainliffs was vitiated by reason of the said order dated 30th August 1968 passed by the Tahsildar, it could be one of the possible views. Possibility of the said Advocates being misled by their clients cannot be ruled out. However it cannot be ignored that the registered Deed of Conveyance itself sets out that the Vendors had handed over vacant possession of the plot to the plaintiffs. This aspect is not even referred to in the certificate of title. Reliance on declaration of defendants Nos. 4 to 9 as one of the basis for certifying the title has disturbed me a lot. I am not going deeper into the matter. This aspect of the matter is interlinked with professional reputation of Advocates. I therefore do not wish to say anything more and leave this aspect open for further investigation at the trial of the suit. I am therefore refraining from making any adverse comments against the Advocates personally. However, in view of disturbing features of this case, it is necessary to consider the provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as 'the Act') and the rules made thereunder and formulate the principles of law governing the issue of certificate of title and apply the relevant principles to the impugned certificate of title for taking a prima facie view of the matter.
4. Having regard to the larger questions directly involved in the matter necessitating recording prima facie finding on the certificate of title issued in this case, I decided to issue notice to the Bombay Incorporated Law Society to assist the Court on three questions specifically formulated. After February 1977, the profession of Attorneys is statutorily abolished in India. Thus all the branches of legal profession were integrated into a single category known as Advocates. However, according to the usage of the profession, Advocates specialising inter alia in conveyancing continue to be guided by the Incorporated Law Society now a voluntary organisation. It is common knowledge that the profession of Attorneys/Solicitors is recognised in England and several commonwealth countries. In our court also, Incorporated Law Society is recognised as one of the Association of Advocates now organised on voluntary basis concerning itself with the task of specialisation in certain categories of legal work.
5. Before the three questions formulated by me concerning interpretation of the provisions of the Act are discussed, it is necessary to summarise the provisions of the Maharashtra Ownership Flats Act 1963 and the Rules made thereunder. On 16th December 1963, the said Act received the assent. The said Act was preceded by appointment of a Committee headed by Shri B. B. Paymaster, Secretary to the Government (Law and Judiciary Department). The Government Resolution dated 20th May 1960 in the Urban Development and Public Health Department reads as under:--
"It has come to the notice of the Government that many enterprising individuals are taking advantage of the prevailing acute shortage of housing accommodation in congested places like Greater Bombay and are carrying on, on a large scale, the business of constructing and selling residential flats on what is commonly known as 'ownership basis'. The prospective owners have to pay large sums of money towards the purchase of such flats, often in advance, but in many cases possession is not given in time and there is no clear title to the land. A number of such irregularities and malpractices connected with the ownership flats system have come to light. Government has therefore decided to appoint a Committee to examine the question in all its aspects and make suggestions for preventing or remedying such malpractices and irregularities and ensuring some measure of remedy for buyers of such ownership flats."
6. The preamble to the Act indicates that it was passed inter alia to regulate the promotion of construction and sale of ownership flats in view of increasing malpractices brought to the notice of the State Government in view of acute shortgage of housing in severa! areas of the State of Maharashtra. The shortage of housing accommodation has increased by leaps and bounds. In the same proportion, if not more, malpractices also have increased. It is the need of the hour that Judges and Advocates perform their duties to check the malpractices and do their bit towards the success of legislative mission.
7. Section 2(c) of the Act defines the expression 'promoter' as under:--
" 'Promoter' means a person who constructs or causes to be constructed a block or building of flats or apartments for the purpose of selling some or all of them to other persons, or to a company, co-operative Society or other association of persons, and includes his assignees; and where the person who builds and the person who sells are different persons; the term includes both."
8. Section 3(1) of the Act obligates the promoter to make full and true disclosure of the nature of his title to the land on which flats are constructed. The said Section obligates the promoter to furnish information and documents to the intending flat purchasers as set out therein. S. 3(2)(b) of the Act obligates the promoter to make full and true disclosure of ail encumbrances on such land including any rights, title, interest or claim of any party in or over such land.
9. Section 3(2)(a) of the said Act requires the promoter to make full and true disclosure of the nature of his title to ihe land on which the flats are constructed or are to be constructed which title must be duly certificated by an Advocate or an attorney of at least three years' standing. Advocates occupy a place of pride in our legal system and are known for their detachment and objectivity. Advocates are expected to act fairly, reasonably and justly and not to issue certificate of title as a matter of course merely to assist their clients. The legislature has obligated the promoter to obtain a certificate of title from an Attorney-at-Law or by an Advocate of not less than three years' standing before he can accept any deposit or amount from a flat-purchaser.
10. Section 4(1) of the said Act obligates the promoter to enter into a written agreement with a flat purchaser before the promoter accepts any sum of money as advance payment or deposit. Such amount of advance payment or deposit cannot exceed 20% of the sale price. The said Section also requires that the agreement shall be registered under the Registration Act, 1908.
11. Section 4(1A) of the said Act provides, as a matter of statutory compulsion, that the written agreement required to be entered into between the promoter and the flat purchaser shall contain the particulars as specified therein. S.4(1A)(b) of the Act requires the promotor to attach to such agreement, copies of the certificate of title which he has obtained from his Advocate under cl. (a) of sub-sec. (2) of S. 3, copy of the Property Card or extract of Village Forms VI or VII and XII or any other relevant revenue record showing the nature of the title of the promoter to the land on which the flats are constructed or are to be constructed, and copy of the pleas and specifications of the flat as approved by the concerned local authority.
12. Section 9 of the said Act prohibits the promoters from creating any mortgage or charge on the land after the agreement with the flat purchaser is registered except with the previous consent of the flat buyer. S. 11 of the said Act is directly relevant. The said section reads as under:--
"11. Promoter to convey title, etc., and execute documents according to agreement.-
A promoter shall take all necessary steps to complete his title and convey, to the organisation of persons who take flats, which is registered either at a co-operative society or as a company as aforesaid, or to an association of flat-takers or apartment owners his right, title and interest in the land and building, and execute all relevant document therefor in accordance with the agreement executed u/ S. 6 and if no period for the execution of the conveyance is agreed upon, he shall execute the conveyance within the prescribed period and also deliver all documents of title relating to the property which may be in his possession or power."
The said Section obligates the promoter to complete his title before the due date i.e. (1) remove the encumbrances and charges on the land and (2) obtain all statutory permissions and approvals required for conveying of title. The said Section does not mean that the Promoter need not possess any title on the date of agreement of sale of flats on ownership basis.
13. Section 15(1) of the said Act empowers the State Government to make rules for carrying into effect the provisions of the Act. S. 15(2) enumerates some of the specific heads in respect whereof the abovereferred rule-making power may be exercised without prejudice to the generality of the power conferred u/S. 15(1) of the said Act. Section 15(2)(b) and S. 15(2)(e) of the said Act confer ample powers on the State Government to prescribe the form of the agreement and the form of certificate of title. S. 15(3) provides that every rule made under the said Act shall be placed before each House of the State Legislature. S.16 provides that the provisions of the said Act shall be in addition to the provisions of the Transfer of Property Act, 1882 except where otherwise provided.
14. On 10th April 1987, the Government of Maharashtra made the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Rules, 1987. By R.3 of the said Rules, it was provided that the promoter shall, before accepting any advance payment or deposit, enter into an agreement with the flat purchaser in Form V containing the particulars specified in clause (a) of sub-sec. (1 A) of S. 4 and shall attach thereto the copies of the documents specified in cl. (b) of the said sub-sec. (1A). The said amended rule replaced the pre-existing Rule 5 Rule 5 of the said rules replaced by'the abovereferred amending rules is relevant. Model Form V is directly relevant as the draft of a certificate of title required to be issued by an Advocate or attorney is now prescribed by the rule-making authority as part and parcel of the agreement required to be entered into between the promoter and the flat purchaser. Notes 1 and 2 (Explanatory Notes) forming part of Form V are also directly relevant for the purpose of considering the questions which arise in this case. By Note No. 1, it was provided that Form V was only a model form of agreement which will have to be modified and adapted in each case having regard to the facts and circumstances of each case. It was stated in the said note that the statutory and mandatory clauses will have to be retained in each and every agreement. Note No. 2 of the said Explanatory Notes reads as under:
"Clause (c) of S. 2 of the said Act defines a Promoter to mean, inter alia, a person who "causes to be constructed a block or building of flats" i.e. an owner of the land and building who engages a developer (also a promoter) as his agent to develop the land and building and authorises him to dispose of flats. In such a case the owner will have to be joined as Confirming Party to the tripartite agreement in model form of agreement to be executed between the Promoter, Flat Purchaser and the Owner, so that the Owner is bound by all the terms, conditions and covenants of the triparite agreement."
Note No. 2 is mandatory.
15. On 12th of January 1990, the Government of Maharashtra further amended the rules by issuing Notification No. FOB. 1085/7956(VI)-D.II specifically prescribing that Clauses 1 to 5, 8 to 13 and 22 in Form V were mandatory and statutory and the said clauses must be retained in every agreement. It is in dispute whether each of these clauses is consistent with the Act i.e. Maharashtra Ownership Flats Act, 1963.
16. It emerges from the scheme of the said Act read with the definition of the expression "Promoter" contained in S.2(c) of the said Act and Rule 5 of the statutory form referred to hereinabove that the Promoter must fall in either of the following categories:--
(1)The Promoter may be the owner of freehold land; or
(2) The Promoter may be the lessee of the land intended to be developed, provided the indenture of lease authorises the promoter to construct flats and sell the same on ownership basis;
(3) The promoter may have entered into an agreement to purchase the land from the lawful owner thereof. In such a case, the Vendor of the promoter must have a valid title to the said land and the agreement must not be terminable by the Vendor.
(4) The Promoter is an agent of the owner or of the authorised lessee duly entitled to construct and dispose of flats on ownership basis. In such a case, the promoter/developer must make the owner of freehold or leasehold interest as Confirming Party to the agreement of sale of flat on ownership basis so as to bind the owner with all the terms, conditions and covenants of third party agreement. When the Promoter falls in 3rd or 4th category, the promoter has no title to the land in the sense in which the word "title" is normally understood in the property law. To this limited extent the expression "promoter's title" is used in the Maharashtra Ownership Flats Act 1963 in the special wider sense.
17. It is clear from the scheme of the Act that the promoter need not necessarily be the absolute owner of the land or a long-term lessee thereof. At the same time, it is imperative that the promoter must have sufficient entitlement and right to construct on the land and dispose of the flats on ownership basis so as to bind the owner of the freehold and the leasehold interest. If the promoter is not the owner of the land or is not the duly authorised lessee of the property but is developing the same as a mere developer under an agreement, the owner or the authorised lessee must necessarily be made a Confirming Party to the transaction in respect of agreement to sell the flat with each of the flat buyers so as to bind the owner or the lessee with the transaction and not to leave the flat buyer in a lurch later on. If the promoter is developing the land as agent of the owner, such agency must be irrevocable. The above construction follows by necessary implication and is supported by the scheme of the Act and its objects to protect the flat purchasers and check the malpractices.
18. The first question which arises for consideration of the Court is whether a certificate of title to be issued by an Advocate or an Attorney must necessarily be unconditional or unqualified or whether it can be conditional or qualified? I have been well assisted in discharge of my duty to interpret the relevant provisions by Mr. A. S. Bobde, Advocate-General of State of Maharashtra, Mr. J. R. Gagrat, President, Incorporated law Society, and the experienced counsel of this Court Sarvashri A. N. Mody, M. H. Shah and N. G. Thakkar. After considering the various aspects of the matter, I hold that a certificate of title to be issued by an Advocate or an Attorney need not necessarily be unconditional or unqualified. A certificate of title to be issued by an Advocate or an Attorney can be qualified only to a limited extent i.e. to the extent of existing encumbrances and charges which must be redeemed or removed before the due date as contemplated by S. 3(2)(b) of the Act read with S. 11 thereof. S. 3(2)(b) of the Act provides that the land may be subject to encumbrances at the time when the agreement to sell the flat is entered into. Such encumbrances can be easily removed before the title to the land is conveyed in favour of the organisation of flat purchasers, whether a company or a society. Apart from statutory exception in terms of S.3(2)(b) of the Act and the provision for obtaining of statutory approvals, No Objections and permissions before execution or registration of conveyance, the title of the promoter or of the original owner or the vendor or the lessor or the lessee must be clear, marketable and free from any reasonable doubt. If any claims are made by any third party in pursuance of public notice, which may be issued by the Advocate or Attorney, the Advocate or Attorney must examine the claim and come to an impartial conclusion as to whether the title of the person concerned is affected by reason of such claim.
19. In my judgment, the Advocate must first address himself to the question as to whether the vendor, lessor, original owner or the promoter has clear marketable title or not. If a clean and clear certificate of title in the terms prescribed can be issued by the Advocate, so much the better. If it cannot be issued because of the land being subject to any preexisting encumbrances, the certificate of title can be adapted to a limited extent as explained hereinafter. In such a case the certificate of title must disclose at least the following:--
(1) Nature of the title of the promoter;
(2) Nature of the title of the vendor or the promoter or of the person through whom the promoter claims;
(3) Encumbrances and claims on the land;
(4) Steps required to be taken by the promoter for completing title as absolute, clear and marketable while conveying the property or causing the same to be conveyed to the organisation of flat purchasers on due date;
(5) Whether the agreement to sell the flat will bind the owner of the land?
(6) Whether the title of the promoter or his vendor or the person through whom the vendor claims is of doubtful nature in any manner? If so, the nature of doubt entertained.
(7) Whether the authorisation granted in favour of the promoter by the owner, lessee or the vendor is irrevocable so as to bind the owner with the agreements for sale of the flats? Whether an agreement to purchase the land by the promoter is revocable or irrevocable?
20. The legal profession is a noble profession. The Legislature has trusted the members of the legal profession to protect the unwary flat purchasers, assist the authorities in controlling the malpractices and safeguard the public interest. In case the title of the promoter or the person through whom the promoter claims his title is doubtful, the Advocate must clearly state in his certificate that the title of the person concerned is doubtful, without any hesitation. Duty to protect members of the public and unwary flat purchaser is of paramount importance and is as important as to assist his client. Members of the legal profession can assist their clients only lawfully and within the limits of law.
21. I am not prepared to hold that the format of the certificate of title prescribed by the State Government in exercise of its rule-making power is merely recommendatory. If I take such a view, the very object of the law would be endangered and defeated. I am not prepared to hold that the relevant rules are ultra vires the Act. The format of the certificate of title prescribed by the Government is subject to an implied statutory exception in respect of encumbrances on the date which must be disclosed by the promoter and which have got to be removed before the due date fixed by the agreement and the law for execution of conveyance in favour of organisation of flat buyers and obtaining of all necessary approvals, no objections and sanctions required at the stage of execution of conveyance and its registration and not earlier. To put it in other words, a certificate of title can be qualified only to a limited extent as explained above.
22. The next question which arises for my consideration is whether a certificate of title can be issued by an Advocate relying on the plea of the Builder that he has completed his title by adverse possession even though his plea is reasonably disputable. If the promoter or his vendor has clear title to the land by adverse possession supported by a decree of a Court or by unimpeachable documentary evidence and there is no scope whatsoever for entertaining a reasonable doubt in the matter, the certificate of title can undoubtedly be issued by the Advocate treating the title by adverse possession as marketable title. In a matter of this nature, the duty of an Advocate is too delicate. By and large, those who plead adverse possession do not have clear proof of adverse possession. By and large, the claim of adverse possession is disputable. The scheme of the Act provides that the promoter shall have to arrange for delivery of the tide deeds to the organisation of flat purchasers at the time when the sale is completed. If there is reasonable doubt about title of adverse possession and reasonable prospect of litigation in respect of title to the land in question, no certificate of title can be issued at all. If the Advocates issue certificate of title on basis of doubtful claim of adverse possession, they would be committing breach of their professional duty. Advocates are expected to apply skill and professional expertise while issuing certificate of title. If they take minimum care as expected of them under the law and apply their skill and act honestly, they have nothing to worry. In such a case no professional person can be personally held liable under the law of torts or before a disciplinary authority like the Bar Council. If the Advocates issue certificates of title indiscriminately and without due regard to their statutory duty, they must be held liable in damages to the damnified flat purchasers.
23. A question then arises as to whether an Advocate or an Attorney issuing certificate of title is under a duty towards unwary flat buyers and whether he is supposed to safeguard public interest while issuing such certificate. This question has necessarily to be answered in the affirmative. The certificate of title is required to be annexed to the agreement for sale of flat on ownership basis. It is required to be publicised. Every intending flat buyer is entitled to a copy of the certificate of title. There is acute shortage of accommodation now a days that people hardly go through the document like Agreements for Sale containing number of clauses. It is common knowledge that flat purchasers attach importance to the reputation of the Advocates issuing certificate of title. The reputation of the Advocate or Solicitor issuing the certificate of title is considered relevant by the flat buyers while making their decision to enter into an agreement to purchase the flat. Advocates must help and play constructive role in building of a just society and checking of malpractices by unscrupulous builders, developers and promoters who embark on misadventures to develop the land without any title. It is not required to be stated that under the law of torts professionals like Advocates, Attorneys, Solicitors, Doctors etc, are liable for negligence in case they do not take minimum care expected of them in discharge of their duties. It is not required to be stated that gross negligence amounts to misconduct. In a given case, large number of flat purchasers may enter into agreements for purchase of flats and advance large sums to the builder merely by relying on the name of a reputed Advocate or Attorney who has issued the certificate of title.
24. The Incorporated Law Society has invited my attention in its further written submissions to several anomalies in respect of various clauses of the model agreement prescribed by Rule 5 and has pointed out that some of the clauses of the model agreement are inconsistent with statutory provisions of the Act. An illustration is furnished. Section 4 of the Act provides that the promoter is permitted to collect advance or deposit amount to the extent of 20% of the price from the flat purchaser. The model agreement prescribed by the rules however provides that such advance shall not exceed 15%. The relevant portion of Section 4 of the Act reads as under:--
"4. (1) Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats, all or some of which are to be taken or are taken on ownership basis, shall, before he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent. of the sale price enter into a written agreement for sale with each of such persons....."
25. The relevant portion of the recitai in the model Form V prescribed by the rules reads as under:--
"AND WHEREAS prior to the execution of these presents the Flat Purchaser has paid to the Promoter a sum of Rs.....(Rupees.....) only, being part payment of the sale price of the flat agreed to be sold by the Promoter to the Flat Purchaser as advance payment or deposit (the payment and receipt whereof the Promoter doth hereby admit and acknowledge) which shall in no event exceed fifteen per cent of the sale price of the flat agreed to be sold to the Flat Purchaser....."
26. One of such anomalies is sufficient to invite the attention of the State Government to have a second look in the matter and revise the model form of the agreement to the extent necessary. It is not possible for me to examine the model form of agreement in detail. I had issued notice to the Incorporated Law Society for purpose of assistance on several aspects of issue of certificate of title to be issued by an Advocate or Attorney-at-law. This aspect is already discussed in detail. I hope that the legal profession will be alive to its obligations and assist the authorities in checking of growing malpractices.
27. One more question was raised by Mr. N. G. Thakkar during the course of his arguments. It was submitted by the learned counsel that the Advocate or the Attorney must revoke the certificate of title already issued by him if he discovers that he was defrauded or misled by someone at the stage when he had issued the certificate. Mr. Thakkar is undoubtedly right. None of us should feel shy of correcting our errors. The certificate of title continues to be relied upon till all the flats in question are sold by the promoter and perhaps even thereafter. If, therefore, an Advocate in his good conscience comes to the conclusion that he has committed any error while issuing the certificate of title, he should not hesitate to rectify the error and revoke the certificate of title. It all depends upon the totality of facts and the emergent situation.
28. In the conclusion, I hold as under:--
(1) A Certificate of Title need not necessarily be unconditional or unqualified. It can be qualified to the limited extent of implied statutory exception contained in Section 3(2)(b) of Maharashtra Ownerships Flats Act, 1963 as interpreted above. The Format of Certificate of Title prescribed by the rules is mandatory subject only to limited scope for adaptability as explained in the judgment. A qualified certificate of title must furnish all relevant information as set out in paragraph 19 of this judgment.
(2) The Promoter must fall in one of the several categories enumerated in paragraph 16 of this judgment. To the limited extent, the expression 'title of the promoter'is used in the Maharashtra Ownership Flats Act, 1963 in the special sense so as to permit particular class of developers to act as promoters although such promoters/developers are not the owners of freehold or leasehold land.
(3) In clearest cases, adverse possession can be considered as marketable title free from all encumbrances. If the claim of adverse possession is disputable and there is reasonable prospect of litigation, the Advocate is duty bound to refuse certificate of title.
(4) The Advocates must never certify doubtful titles as the unwary flat purchasers would thereby be prejudiced.
(5) Advocates owe statutory and professional duty to protect unwary flat purchasers and public interest and not merely their clients.
(6) Advocates and Solicitors, by their very training and background should be circumspect in their action and conduct and should follow the usual norms viz:--
(a) Peruse the title-deeds;
(b) Have searches taken in the office of the Sub-Registrar (and also of the Registrar of Companies in case the Vendor is a Limited Company);
(c) Issue Public Notices in at least two newspapers (one in vernacular and the other in English circulating in the area where the property is situated) inviting claims of any member of the public against or in respect of the property in question;
(d) Ask the Purchaser to require his Architect to ascerlain whether the land is under set-back or reservation;
(e) Administer Requisitions on title and be satisfied about the answers;
(f) Obtain Declaration on Oath from the relevant persons regarding the factual position before issuing a Certificate of Title.
(The Incorporated Law Society in its written submissions has recommended the above referred norms. I accept the submissions).
I have applied the above principles while holding that prima facie the certificate of title issued in this case is unsatisfactory.
29. I cannot part with this case without expressing my gratitude to all the learned counsel who have assisted me in this case and particularly to the Incorporated Law Soceity which took trouble of filing written submissions and appearing before the Court on several occasions in pursuance of the notice issued. I am also thankful to the learned Advocate General and all the learned counsel for their valuable assistance.
30. A copy of this order shall be forwarded by the Prothonotary and Senior Master to the President, Incorporated Law Society, Bar Council of Maharashtra and the Secretary, Housing Department, Government of Maharashtra, Mantralaya, Bombay.
31. Issue of certified copy expedited.
32. Order accordingly.
Print Page
(1) A Certificate of Title need not necessarily be unconditional or unqualified. It can be qualified to the limited extent of implied statutory exception contained in Section 3(2)(b) of Maharashtra Ownerships Flats Act, 1963 as interpreted above. The Format of Certificate of Title prescribed by the rules is mandatory subject only to limited scope for adaptability as explained in the judgment. A qualified certificate of title must furnish all relevant information as set out in paragraph 19 of this judgment.
(2) The Promoter must fall in one of the several categories enumerated in paragraph 16 of this judgment. To the limited extent, the expression 'title of the promoter'is used in the Maharashtra Ownership Flats Act, 1963 in the special sense so as to permit particular class of developers to act as promoters although such promoters/developers are not the owners of freehold or leasehold land.
(3) In clearest cases, adverse possession can be considered as marketable title free from all encumbrances. If the claim of adverse possession is disputable and there is reasonable prospect of litigation, the Advocate is duty bound to refuse certificate of title.
(4) The Advocates must never certify doubtful titles as the unwary flat purchasers would thereby be prejudiced.
(5) Advocates owe statutory and professional duty to protect unwary flat purchasers and public interest and not merely their clients.
(6) Advocates and Solicitors, by their very training and background should be circumspect in their action and conduct and should follow the usual norms viz:--
(a) Peruse the title-deeds;
(b) Have searches taken in the office of the Sub-Registrar (and also of the Registrar of Companies in case the Vendor is a Limited Company);
(c) Issue Public Notices in at least two newspapers (one in vernacular and the other in English circulating in the area where the property is situated) inviting claims of any member of the public against or in respect of the property in question;
(d) Ask the Purchaser to require his Architect to ascerlain whether the land is under set-back or reservation;
(e) Administer Requisitions on title and be satisfied about the answers;
(f) Obtain Declaration on Oath from the relevant persons regarding the factual position before issuing a Certificate of Title.
Bombay High Court
Ramniklal Tulsidas Kotak And ... vs Varsha Builders And Others on 26 August, 1991
Equivalent citations: AIR 1992 Bom 62
Bench: D Dhanuka
ORDER1. By my order dated 30th July 1991, I have granted injunctions, inter alia, in respect of flats and shops in the building under construction on the suit land or any part thereof and also passed a conditional order for appointment of receiver in respect of the suit land and all the structures standing on the suit land or any part thereof. The defendant No. 1 is constructing 51 flats and several shops after amalgamation of the suit plot with two other plots. I had therefore thought it proper to direct the parties to file affidavits so as to identify the flats and shops covered by the abovereferred order dated 30th July 1991. After considering the affidavit of defendant No. 2 dated 5th August 1991 and affidavit of plaintiff No. I dated 8th August 1991 and the
submissions of learned counsel for the plaintiffs and defendants Nos. 1 to 3, I pass this clarificatory order to the effect that the order dated 30th July 1991 shall be applicable to 39 flats and 4 shops particularised in Exhibits 1 and 2 to the affidavit of defendant No. 2 dated 5th August 1991 in addition to the same being applicable to the suit plot. On a prima facie view of the matter, I have decided to accept the identity of the flats and the shops constructed or being constructed on the suit plot or part thereof as set out in the affidavit of defendant No. 2.
2. I am not permitting defendants Nos. 1 to 3 to re-open the matter in respect of any of the matters already decided by me by may order dated 30th July 1991 and not covered by the liberty granted by the said order. Hence it is directed that paragraph 4 of the affidavit of defendant No. 2 dated 5th August 1991 and reply thereto shall be treated as deleted.
3. One of the questions which arose for consideration of the Court while deciding this notice of motition was about the validity of the certificate of title appended to the printed agreements of sale in respect of flats and shops on the suit plot relied upon by defend-ant No. 1 in support of its plea of bona fides. Having regard to the legal position enunciated in the later part of this order and overall view of the facts of this case, I have no hesitation in observing that prima facie the said certificate of title is unsatisfactory. The said certificate is based inter alia on the declaration of defendants Nos. 4 to 9 to the effect that the plaintiffs are not traceable and the plaintiffs are presumed to have died and that defendants Nos. 4 to 9 are in adverse possession of the suit land as against the plaintiffs. I have already commented on the said declaration in my order dated 30th July 1991. M/s Pravin Mehta & Mithi & Co. Advocates, are lawyers of repute. This fact however is of limited relevance. As Advocates of experience and repute, they have much larger responsibilities in the matter they handle. I express my unhappiness in respect of the said certificate of title. The matter will be examined in further depth at final hearing of the suit. At the stage of issuing of certificate of title, order dated 30th August 1968 cancelling Mutation Entry No. 3072 dated 27th September 1967 was in existence. The said order dated 30th August 1968 passed by the Tahsildar was set aside by the Sub-Divisional Officer much later. If the Advocates issuing the certificate of title inter alia had proceeded on the basis that the transaction of conveyance of September 1966 in favour of the plainliffs was vitiated by reason of the said order dated 30th August 1968 passed by the Tahsildar, it could be one of the possible views. Possibility of the said Advocates being misled by their clients cannot be ruled out. However it cannot be ignored that the registered Deed of Conveyance itself sets out that the Vendors had handed over vacant possession of the plot to the plaintiffs. This aspect is not even referred to in the certificate of title. Reliance on declaration of defendants Nos. 4 to 9 as one of the basis for certifying the title has disturbed me a lot. I am not going deeper into the matter. This aspect of the matter is interlinked with professional reputation of Advocates. I therefore do not wish to say anything more and leave this aspect open for further investigation at the trial of the suit. I am therefore refraining from making any adverse comments against the Advocates personally. However, in view of disturbing features of this case, it is necessary to consider the provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as 'the Act') and the rules made thereunder and formulate the principles of law governing the issue of certificate of title and apply the relevant principles to the impugned certificate of title for taking a prima facie view of the matter.
4. Having regard to the larger questions directly involved in the matter necessitating recording prima facie finding on the certificate of title issued in this case, I decided to issue notice to the Bombay Incorporated Law Society to assist the Court on three questions specifically formulated. After February 1977, the profession of Attorneys is statutorily abolished in India. Thus all the branches of legal profession were integrated into a single category known as Advocates. However, according to the usage of the profession, Advocates specialising inter alia in conveyancing continue to be guided by the Incorporated Law Society now a voluntary organisation. It is common knowledge that the profession of Attorneys/Solicitors is recognised in England and several commonwealth countries. In our court also, Incorporated Law Society is recognised as one of the Association of Advocates now organised on voluntary basis concerning itself with the task of specialisation in certain categories of legal work.
5. Before the three questions formulated by me concerning interpretation of the provisions of the Act are discussed, it is necessary to summarise the provisions of the Maharashtra Ownership Flats Act 1963 and the Rules made thereunder. On 16th December 1963, the said Act received the assent. The said Act was preceded by appointment of a Committee headed by Shri B. B. Paymaster, Secretary to the Government (Law and Judiciary Department). The Government Resolution dated 20th May 1960 in the Urban Development and Public Health Department reads as under:--
"It has come to the notice of the Government that many enterprising individuals are taking advantage of the prevailing acute shortage of housing accommodation in congested places like Greater Bombay and are carrying on, on a large scale, the business of constructing and selling residential flats on what is commonly known as 'ownership basis'. The prospective owners have to pay large sums of money towards the purchase of such flats, often in advance, but in many cases possession is not given in time and there is no clear title to the land. A number of such irregularities and malpractices connected with the ownership flats system have come to light. Government has therefore decided to appoint a Committee to examine the question in all its aspects and make suggestions for preventing or remedying such malpractices and irregularities and ensuring some measure of remedy for buyers of such ownership flats."
6. The preamble to the Act indicates that it was passed inter alia to regulate the promotion of construction and sale of ownership flats in view of increasing malpractices brought to the notice of the State Government in view of acute shortgage of housing in severa! areas of the State of Maharashtra. The shortage of housing accommodation has increased by leaps and bounds. In the same proportion, if not more, malpractices also have increased. It is the need of the hour that Judges and Advocates perform their duties to check the malpractices and do their bit towards the success of legislative mission.
7. Section 2(c) of the Act defines the expression 'promoter' as under:--
" 'Promoter' means a person who constructs or causes to be constructed a block or building of flats or apartments for the purpose of selling some or all of them to other persons, or to a company, co-operative Society or other association of persons, and includes his assignees; and where the person who builds and the person who sells are different persons; the term includes both."
8. Section 3(1) of the Act obligates the promoter to make full and true disclosure of the nature of his title to the land on which flats are constructed. The said Section obligates the promoter to furnish information and documents to the intending flat purchasers as set out therein. S. 3(2)(b) of the Act obligates the promoter to make full and true disclosure of ail encumbrances on such land including any rights, title, interest or claim of any party in or over such land.
9. Section 3(2)(a) of the said Act requires the promoter to make full and true disclosure of the nature of his title to ihe land on which the flats are constructed or are to be constructed which title must be duly certificated by an Advocate or an attorney of at least three years' standing. Advocates occupy a place of pride in our legal system and are known for their detachment and objectivity. Advocates are expected to act fairly, reasonably and justly and not to issue certificate of title as a matter of course merely to assist their clients. The legislature has obligated the promoter to obtain a certificate of title from an Attorney-at-Law or by an Advocate of not less than three years' standing before he can accept any deposit or amount from a flat-purchaser.
10. Section 4(1) of the said Act obligates the promoter to enter into a written agreement with a flat purchaser before the promoter accepts any sum of money as advance payment or deposit. Such amount of advance payment or deposit cannot exceed 20% of the sale price. The said Section also requires that the agreement shall be registered under the Registration Act, 1908.
11. Section 4(1A) of the said Act provides, as a matter of statutory compulsion, that the written agreement required to be entered into between the promoter and the flat purchaser shall contain the particulars as specified therein. S.4(1A)(b) of the Act requires the promotor to attach to such agreement, copies of the certificate of title which he has obtained from his Advocate under cl. (a) of sub-sec. (2) of S. 3, copy of the Property Card or extract of Village Forms VI or VII and XII or any other relevant revenue record showing the nature of the title of the promoter to the land on which the flats are constructed or are to be constructed, and copy of the pleas and specifications of the flat as approved by the concerned local authority.
12. Section 9 of the said Act prohibits the promoters from creating any mortgage or charge on the land after the agreement with the flat purchaser is registered except with the previous consent of the flat buyer. S. 11 of the said Act is directly relevant. The said section reads as under:--
"11. Promoter to convey title, etc., and execute documents according to agreement.-
A promoter shall take all necessary steps to complete his title and convey, to the organisation of persons who take flats, which is registered either at a co-operative society or as a company as aforesaid, or to an association of flat-takers or apartment owners his right, title and interest in the land and building, and execute all relevant document therefor in accordance with the agreement executed u/ S. 6 and if no period for the execution of the conveyance is agreed upon, he shall execute the conveyance within the prescribed period and also deliver all documents of title relating to the property which may be in his possession or power."
The said Section obligates the promoter to complete his title before the due date i.e. (1) remove the encumbrances and charges on the land and (2) obtain all statutory permissions and approvals required for conveying of title. The said Section does not mean that the Promoter need not possess any title on the date of agreement of sale of flats on ownership basis.
13. Section 15(1) of the said Act empowers the State Government to make rules for carrying into effect the provisions of the Act. S. 15(2) enumerates some of the specific heads in respect whereof the abovereferred rule-making power may be exercised without prejudice to the generality of the power conferred u/S. 15(1) of the said Act. Section 15(2)(b) and S. 15(2)(e) of the said Act confer ample powers on the State Government to prescribe the form of the agreement and the form of certificate of title. S. 15(3) provides that every rule made under the said Act shall be placed before each House of the State Legislature. S.16 provides that the provisions of the said Act shall be in addition to the provisions of the Transfer of Property Act, 1882 except where otherwise provided.
14. On 10th April 1987, the Government of Maharashtra made the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Rules, 1987. By R.3 of the said Rules, it was provided that the promoter shall, before accepting any advance payment or deposit, enter into an agreement with the flat purchaser in Form V containing the particulars specified in clause (a) of sub-sec. (1 A) of S. 4 and shall attach thereto the copies of the documents specified in cl. (b) of the said sub-sec. (1A). The said amended rule replaced the pre-existing Rule 5 Rule 5 of the said rules replaced by'the abovereferred amending rules is relevant. Model Form V is directly relevant as the draft of a certificate of title required to be issued by an Advocate or attorney is now prescribed by the rule-making authority as part and parcel of the agreement required to be entered into between the promoter and the flat purchaser. Notes 1 and 2 (Explanatory Notes) forming part of Form V are also directly relevant for the purpose of considering the questions which arise in this case. By Note No. 1, it was provided that Form V was only a model form of agreement which will have to be modified and adapted in each case having regard to the facts and circumstances of each case. It was stated in the said note that the statutory and mandatory clauses will have to be retained in each and every agreement. Note No. 2 of the said Explanatory Notes reads as under:
"Clause (c) of S. 2 of the said Act defines a Promoter to mean, inter alia, a person who "causes to be constructed a block or building of flats" i.e. an owner of the land and building who engages a developer (also a promoter) as his agent to develop the land and building and authorises him to dispose of flats. In such a case the owner will have to be joined as Confirming Party to the tripartite agreement in model form of agreement to be executed between the Promoter, Flat Purchaser and the Owner, so that the Owner is bound by all the terms, conditions and covenants of the triparite agreement."
Note No. 2 is mandatory.
15. On 12th of January 1990, the Government of Maharashtra further amended the rules by issuing Notification No. FOB. 1085/7956(VI)-D.II specifically prescribing that Clauses 1 to 5, 8 to 13 and 22 in Form V were mandatory and statutory and the said clauses must be retained in every agreement. It is in dispute whether each of these clauses is consistent with the Act i.e. Maharashtra Ownership Flats Act, 1963.
16. It emerges from the scheme of the said Act read with the definition of the expression "Promoter" contained in S.2(c) of the said Act and Rule 5 of the statutory form referred to hereinabove that the Promoter must fall in either of the following categories:--
(1)The Promoter may be the owner of freehold land; or
(2) The Promoter may be the lessee of the land intended to be developed, provided the indenture of lease authorises the promoter to construct flats and sell the same on ownership basis;
(3) The promoter may have entered into an agreement to purchase the land from the lawful owner thereof. In such a case, the Vendor of the promoter must have a valid title to the said land and the agreement must not be terminable by the Vendor.
(4) The Promoter is an agent of the owner or of the authorised lessee duly entitled to construct and dispose of flats on ownership basis. In such a case, the promoter/developer must make the owner of freehold or leasehold interest as Confirming Party to the agreement of sale of flat on ownership basis so as to bind the owner with all the terms, conditions and covenants of third party agreement. When the Promoter falls in 3rd or 4th category, the promoter has no title to the land in the sense in which the word "title" is normally understood in the property law. To this limited extent the expression "promoter's title" is used in the Maharashtra Ownership Flats Act 1963 in the special wider sense.
17. It is clear from the scheme of the Act that the promoter need not necessarily be the absolute owner of the land or a long-term lessee thereof. At the same time, it is imperative that the promoter must have sufficient entitlement and right to construct on the land and dispose of the flats on ownership basis so as to bind the owner of the freehold and the leasehold interest. If the promoter is not the owner of the land or is not the duly authorised lessee of the property but is developing the same as a mere developer under an agreement, the owner or the authorised lessee must necessarily be made a Confirming Party to the transaction in respect of agreement to sell the flat with each of the flat buyers so as to bind the owner or the lessee with the transaction and not to leave the flat buyer in a lurch later on. If the promoter is developing the land as agent of the owner, such agency must be irrevocable. The above construction follows by necessary implication and is supported by the scheme of the Act and its objects to protect the flat purchasers and check the malpractices.
18. The first question which arises for consideration of the Court is whether a certificate of title to be issued by an Advocate or an Attorney must necessarily be unconditional or unqualified or whether it can be conditional or qualified? I have been well assisted in discharge of my duty to interpret the relevant provisions by Mr. A. S. Bobde, Advocate-General of State of Maharashtra, Mr. J. R. Gagrat, President, Incorporated law Society, and the experienced counsel of this Court Sarvashri A. N. Mody, M. H. Shah and N. G. Thakkar. After considering the various aspects of the matter, I hold that a certificate of title to be issued by an Advocate or an Attorney need not necessarily be unconditional or unqualified. A certificate of title to be issued by an Advocate or an Attorney can be qualified only to a limited extent i.e. to the extent of existing encumbrances and charges which must be redeemed or removed before the due date as contemplated by S. 3(2)(b) of the Act read with S. 11 thereof. S. 3(2)(b) of the Act provides that the land may be subject to encumbrances at the time when the agreement to sell the flat is entered into. Such encumbrances can be easily removed before the title to the land is conveyed in favour of the organisation of flat purchasers, whether a company or a society. Apart from statutory exception in terms of S.3(2)(b) of the Act and the provision for obtaining of statutory approvals, No Objections and permissions before execution or registration of conveyance, the title of the promoter or of the original owner or the vendor or the lessor or the lessee must be clear, marketable and free from any reasonable doubt. If any claims are made by any third party in pursuance of public notice, which may be issued by the Advocate or Attorney, the Advocate or Attorney must examine the claim and come to an impartial conclusion as to whether the title of the person concerned is affected by reason of such claim.
19. In my judgment, the Advocate must first address himself to the question as to whether the vendor, lessor, original owner or the promoter has clear marketable title or not. If a clean and clear certificate of title in the terms prescribed can be issued by the Advocate, so much the better. If it cannot be issued because of the land being subject to any preexisting encumbrances, the certificate of title can be adapted to a limited extent as explained hereinafter. In such a case the certificate of title must disclose at least the following:--
(1) Nature of the title of the promoter;
(2) Nature of the title of the vendor or the promoter or of the person through whom the promoter claims;
(3) Encumbrances and claims on the land;
(4) Steps required to be taken by the promoter for completing title as absolute, clear and marketable while conveying the property or causing the same to be conveyed to the organisation of flat purchasers on due date;
(5) Whether the agreement to sell the flat will bind the owner of the land?
(6) Whether the title of the promoter or his vendor or the person through whom the vendor claims is of doubtful nature in any manner? If so, the nature of doubt entertained.
(7) Whether the authorisation granted in favour of the promoter by the owner, lessee or the vendor is irrevocable so as to bind the owner with the agreements for sale of the flats? Whether an agreement to purchase the land by the promoter is revocable or irrevocable?
20. The legal profession is a noble profession. The Legislature has trusted the members of the legal profession to protect the unwary flat purchasers, assist the authorities in controlling the malpractices and safeguard the public interest. In case the title of the promoter or the person through whom the promoter claims his title is doubtful, the Advocate must clearly state in his certificate that the title of the person concerned is doubtful, without any hesitation. Duty to protect members of the public and unwary flat purchaser is of paramount importance and is as important as to assist his client. Members of the legal profession can assist their clients only lawfully and within the limits of law.
21. I am not prepared to hold that the format of the certificate of title prescribed by the State Government in exercise of its rule-making power is merely recommendatory. If I take such a view, the very object of the law would be endangered and defeated. I am not prepared to hold that the relevant rules are ultra vires the Act. The format of the certificate of title prescribed by the Government is subject to an implied statutory exception in respect of encumbrances on the date which must be disclosed by the promoter and which have got to be removed before the due date fixed by the agreement and the law for execution of conveyance in favour of organisation of flat buyers and obtaining of all necessary approvals, no objections and sanctions required at the stage of execution of conveyance and its registration and not earlier. To put it in other words, a certificate of title can be qualified only to a limited extent as explained above.
22. The next question which arises for my consideration is whether a certificate of title can be issued by an Advocate relying on the plea of the Builder that he has completed his title by adverse possession even though his plea is reasonably disputable. If the promoter or his vendor has clear title to the land by adverse possession supported by a decree of a Court or by unimpeachable documentary evidence and there is no scope whatsoever for entertaining a reasonable doubt in the matter, the certificate of title can undoubtedly be issued by the Advocate treating the title by adverse possession as marketable title. In a matter of this nature, the duty of an Advocate is too delicate. By and large, those who plead adverse possession do not have clear proof of adverse possession. By and large, the claim of adverse possession is disputable. The scheme of the Act provides that the promoter shall have to arrange for delivery of the tide deeds to the organisation of flat purchasers at the time when the sale is completed. If there is reasonable doubt about title of adverse possession and reasonable prospect of litigation in respect of title to the land in question, no certificate of title can be issued at all. If the Advocates issue certificate of title on basis of doubtful claim of adverse possession, they would be committing breach of their professional duty. Advocates are expected to apply skill and professional expertise while issuing certificate of title. If they take minimum care as expected of them under the law and apply their skill and act honestly, they have nothing to worry. In such a case no professional person can be personally held liable under the law of torts or before a disciplinary authority like the Bar Council. If the Advocates issue certificates of title indiscriminately and without due regard to their statutory duty, they must be held liable in damages to the damnified flat purchasers.
23. A question then arises as to whether an Advocate or an Attorney issuing certificate of title is under a duty towards unwary flat buyers and whether he is supposed to safeguard public interest while issuing such certificate. This question has necessarily to be answered in the affirmative. The certificate of title is required to be annexed to the agreement for sale of flat on ownership basis. It is required to be publicised. Every intending flat buyer is entitled to a copy of the certificate of title. There is acute shortage of accommodation now a days that people hardly go through the document like Agreements for Sale containing number of clauses. It is common knowledge that flat purchasers attach importance to the reputation of the Advocates issuing certificate of title. The reputation of the Advocate or Solicitor issuing the certificate of title is considered relevant by the flat buyers while making their decision to enter into an agreement to purchase the flat. Advocates must help and play constructive role in building of a just society and checking of malpractices by unscrupulous builders, developers and promoters who embark on misadventures to develop the land without any title. It is not required to be stated that under the law of torts professionals like Advocates, Attorneys, Solicitors, Doctors etc, are liable for negligence in case they do not take minimum care expected of them in discharge of their duties. It is not required to be stated that gross negligence amounts to misconduct. In a given case, large number of flat purchasers may enter into agreements for purchase of flats and advance large sums to the builder merely by relying on the name of a reputed Advocate or Attorney who has issued the certificate of title.
24. The Incorporated Law Society has invited my attention in its further written submissions to several anomalies in respect of various clauses of the model agreement prescribed by Rule 5 and has pointed out that some of the clauses of the model agreement are inconsistent with statutory provisions of the Act. An illustration is furnished. Section 4 of the Act provides that the promoter is permitted to collect advance or deposit amount to the extent of 20% of the price from the flat purchaser. The model agreement prescribed by the rules however provides that such advance shall not exceed 15%. The relevant portion of Section 4 of the Act reads as under:--
"4. (1) Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats, all or some of which are to be taken or are taken on ownership basis, shall, before he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent. of the sale price enter into a written agreement for sale with each of such persons....."
25. The relevant portion of the recitai in the model Form V prescribed by the rules reads as under:--
"AND WHEREAS prior to the execution of these presents the Flat Purchaser has paid to the Promoter a sum of Rs.....(Rupees.....) only, being part payment of the sale price of the flat agreed to be sold by the Promoter to the Flat Purchaser as advance payment or deposit (the payment and receipt whereof the Promoter doth hereby admit and acknowledge) which shall in no event exceed fifteen per cent of the sale price of the flat agreed to be sold to the Flat Purchaser....."
26. One of such anomalies is sufficient to invite the attention of the State Government to have a second look in the matter and revise the model form of the agreement to the extent necessary. It is not possible for me to examine the model form of agreement in detail. I had issued notice to the Incorporated Law Society for purpose of assistance on several aspects of issue of certificate of title to be issued by an Advocate or Attorney-at-law. This aspect is already discussed in detail. I hope that the legal profession will be alive to its obligations and assist the authorities in checking of growing malpractices.
27. One more question was raised by Mr. N. G. Thakkar during the course of his arguments. It was submitted by the learned counsel that the Advocate or the Attorney must revoke the certificate of title already issued by him if he discovers that he was defrauded or misled by someone at the stage when he had issued the certificate. Mr. Thakkar is undoubtedly right. None of us should feel shy of correcting our errors. The certificate of title continues to be relied upon till all the flats in question are sold by the promoter and perhaps even thereafter. If, therefore, an Advocate in his good conscience comes to the conclusion that he has committed any error while issuing the certificate of title, he should not hesitate to rectify the error and revoke the certificate of title. It all depends upon the totality of facts and the emergent situation.
28. In the conclusion, I hold as under:--
(1) A Certificate of Title need not necessarily be unconditional or unqualified. It can be qualified to the limited extent of implied statutory exception contained in Section 3(2)(b) of Maharashtra Ownerships Flats Act, 1963 as interpreted above. The Format of Certificate of Title prescribed by the rules is mandatory subject only to limited scope for adaptability as explained in the judgment. A qualified certificate of title must furnish all relevant information as set out in paragraph 19 of this judgment.
(2) The Promoter must fall in one of the several categories enumerated in paragraph 16 of this judgment. To the limited extent, the expression 'title of the promoter'is used in the Maharashtra Ownership Flats Act, 1963 in the special sense so as to permit particular class of developers to act as promoters although such promoters/developers are not the owners of freehold or leasehold land.
(3) In clearest cases, adverse possession can be considered as marketable title free from all encumbrances. If the claim of adverse possession is disputable and there is reasonable prospect of litigation, the Advocate is duty bound to refuse certificate of title.
(4) The Advocates must never certify doubtful titles as the unwary flat purchasers would thereby be prejudiced.
(5) Advocates owe statutory and professional duty to protect unwary flat purchasers and public interest and not merely their clients.
(6) Advocates and Solicitors, by their very training and background should be circumspect in their action and conduct and should follow the usual norms viz:--
(a) Peruse the title-deeds;
(b) Have searches taken in the office of the Sub-Registrar (and also of the Registrar of Companies in case the Vendor is a Limited Company);
(c) Issue Public Notices in at least two newspapers (one in vernacular and the other in English circulating in the area where the property is situated) inviting claims of any member of the public against or in respect of the property in question;
(d) Ask the Purchaser to require his Architect to ascerlain whether the land is under set-back or reservation;
(e) Administer Requisitions on title and be satisfied about the answers;
(f) Obtain Declaration on Oath from the relevant persons regarding the factual position before issuing a Certificate of Title.
(The Incorporated Law Society in its written submissions has recommended the above referred norms. I accept the submissions).
I have applied the above principles while holding that prima facie the certificate of title issued in this case is unsatisfactory.
29. I cannot part with this case without expressing my gratitude to all the learned counsel who have assisted me in this case and particularly to the Incorporated Law Soceity which took trouble of filing written submissions and appearing before the Court on several occasions in pursuance of the notice issued. I am also thankful to the learned Advocate General and all the learned counsel for their valuable assistance.
30. A copy of this order shall be forwarded by the Prothonotary and Senior Master to the President, Incorporated Law Society, Bar Council of Maharashtra and the Secretary, Housing Department, Government of Maharashtra, Mantralaya, Bombay.
31. Issue of certified copy expedited.
32. Order accordingly.
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