Chapter IV: Gaothan Plots through Tripartite Agreements

By Advocate S. R. Agarwal

There is a recent trend that the plots allotted by CIDCO to the Project Affected Persons under 12.5% Gaothan Scheme (GES) are transferred on the payment of the prescribed transfer charges to the third parties and these Transferees are mostly Builders or Developers and also Housing Co-Operative Societies.

It is usually argued on the basis of a mistaken belief that after the transfer of such plots by way of Tripartite Agreements, a Transfer acquires clear, legal and marketable title with the authority to sell or transfer the Flats, Offices, Shops, referred to herein as the Units to the prospective purchasers without prior written permission from CIDCO.

I have opined in my previous Article that when such allottees have formed a Co-Operative Housing Society, the Purchaser of a Unit in such a Project will have a legal and valid title on the approval of his membership by CIDCO to the Society on payment of transfer charges.

But in case of transfer of such plots to the Transferees, other than the Co-Operative Housing Societies, any further transfer or sale of a Unit in such a Property would need CIDCO approval on payment of transfer charges. It would to pertinent to reproduce the relevant clause appearing in such Tripartite Agreements executed amongst CIDCO, original Licensees and the new Licensee, which is as under:-

“The new Licence shall be substituted for the original Licensee in the said Agreement and shall have all the rights, obligations, liabilities, benefits and equities accordingly thereunder”.

In fact, in the case of transfer of such Plots to the Transferee, other than the Co-Operative Housing Societies, there is a change in the name of the allottee, but the category of the plot remains the same, with the restrictive condition that no further transfer or assignment is valid without the approval of CIDCO. On the transfer of such plots by way of even Tripartite Agreement, these plots do not become TENDER PLOTS, wherein an Allottee i.e. a Builder or a Developer is permitted by CIDCO to sell the Flats, Offices etc, and obtain a direct lease in favour of a Society or a Company or an Association of Purchasers, as the case may be, and in all other types of transfer or sale of the Flats in the Properties, CIDCO approval, on payment of transfer charges, is essential. It has to be kept in view that the plots in Navi Mumbai are not freehold, but on leasehold basis from CIDCO and the terms and conditions of the allotment of such plots and the Lease Deeds have to be complied with to acquire a valid legal title and to avoid the possibility of re-entry or cancellation or allotment by the Lessor on the ground of breach of such condition.

Therefore, in case of purchase of Unit in a Property constructed on a plot allotted under 12.5% GES to a Transferee, other than Co-Operative Housing Society, who may be builder or a Developer, the Purchaser will have the legal valid title only on receipt of Transfer NOC from CIDCO on payment of transfer charges and as pointed out earlier, such approval is available from CIDCO only on the completion of the construction, issuance of Occupancy Certificate and execution of the Lease Deed, because till the execution of the Lease Deed, an Allottee or a Transferee has the licence only by way of an Agreement to Lease to take possession of the plot and to raise the construction thereon and it is, specifically, mentioned therein that the Agreement to Lease shall not be deemed as a demise in law in favour of an Allottee so as to give to the Licensee any legal interest therein until the Lease, as provided therein, execute.

In the ultimate analysis, a clear, legal and valid title is available to a Purchaser of Unit in such properties in the following cases:-

  1. In a case of resale with the approval of CIDCO on payment of transfer charges.
  2. In a case where a Co-Operative Housing Society has been formed and the membership of the purchaser to the Society has been approved by CIDCO on payment of transfer charges.

Only in these cases if finance is required to purchase a Unit, Mortgage NOC will be available from CIDCO in favour of the lending institution. Nevertheless, an Allottee or a Transferee himself will have a valid legal title and the Mortgage NOC will be available from CIDCO, if such allottee or the Transferee of such Plots need finance from a financial institution to put up the construction thereon, but for the sale of the units, Cidco transfer NOC will be essential to acquire a valid legal title to the unit so purchased.

Credits: Legal Aspects of Property Transactions in Maharashtra (Book)

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