Introduction

The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter "MOFA") was enacted as a seminal piece of legislation aimed at curbing malpractices prevalent in the real estate sector, particularly concerning the sale and transfer of flats on an ownership basis. Central to this regulatory framework is Section 4, which imposes specific pre-contractual and contractual obligations on promoters. This provision mandates the execution and registration of a written agreement before a promoter can accept any advance payment or deposit exceeding twenty per cent of the sale price. Section 4 serves as a cornerstone for protecting the interests of flat purchasers by ensuring transparency, formalizing commitments, and providing a legal basis for the transaction. This article undertakes a comprehensive analysis of Section 4 of MOFA, examining its statutory requirements, judicial interpretations regarding its mandatory nature, the consequences of non-compliance, and its interplay with other provisions of MOFA and subsequent enactments like the Real Estate (Regulation and Development) Act, 2016 (RERA).

The Statutory Mandate of Section 4 of MOFA

Section 4(1) of MOFA stipulates that 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 an ownership basis, shall, before accepting 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 who are to take or have taken such flats. Crucially, the provision mandates that "the agreement shall be registered under the Registration Act, 1908."^{[1] (referring to the general understanding of Sec 4(1) as per *Axis Bank* and *MILAN*)}

Furthermore, Section 4(1A), introduced by amendment, elaborates that the agreement for sale referred to in sub-section (1) shall be in the prescribed form, if any, and shall contain such particulars as are specified in clause (a) thereof, and to such agreement shall be attached the copies of the documents specified in clause (b).^{[2] (*Axis Bank Limited v. Madhav Prasad Aggarwal & Ors.*, 2018)} These requirements include full and true disclosure of the nature of title to the land, encumbrances, plans and specifications, date of possession, price, and the nature, extent, and description of common areas and facilities.^{[3] (*Nahalchand Laloochand Private Limited v. Panchali Cooperative Housing Society Limited*, 2010, para 18, discussing disclosure obligations linked to Sections 3 and 4)} The objective is to provide the flat purchaser with all material information before they commit financially.

Judicial Interpretation of Section 4

Mandatory Nature and Consequences of Non-Registration

The judiciary has consistently interpreted the requirement of registration under Section 4 as mandatory. The Bombay High Court, in The Association Of Commerce House Block Owners Ltd. v. Vishandas Samaldas And Others (1980), held that non-compliance with the mandatory provisions of Section 4, specifically the registration of the agreement, renders the agreement invalid and unenforceable.^[4] The court emphasized that the legislative intent behind Section 4 is paramount and that non-compliance makes the agreement void.

This position was reiterated in Axis Bank Limited v. Madhav Prasad Aggarwal & Ors. (2018), where the Bombay High Court, citing Hansa V. Gandhi, observed that in the absence of a registered document as required by Section 4, the purchaser would not get any right in respect of the flat intended to be purchased. The court stated, "In the context of the MOFA Act the non-registration of an agreement to purchase/sale of a flat in fact goes to the root of the matter."^[2] Similarly, in Harshal Developers Pvt. Ltd., Pune And Another v. Manohar Gopal Bavdekar And Another (2012), arguments were advanced based on Association of Commerce House that an unregistered agreement of sale is "altogether void and no rights are created between the parties."^{[5] (*Harshal Developers Pvt. Ltd., Pune And Another v. Manohar Gopal Bavdekar And Another*, 2012 SCC ONLINE BOM 1725, para 4)}

Purpose and Object: Protection of Flat Purchasers

The overarching purpose of Section 4, and indeed MOFA as a whole, is the protection of flat purchasers from exploitation and unfair practices by promoters. The Supreme Court in Nahalchand Laloochand Private Limited v. Panchali Cooperative Housing Society Limited (2010) noted that MOFA’s provisions are designed to protect flat purchasers, and Section 4, by mandating a prescribed form of agreement and disclosure, contributes to this protective framework.^{[3] (referring to the general protective aim discussed in the judgment)} The National Consumer Disputes Redressal Commission (NCDRC) in MILAN v. M/s Mahindra Lifespace Developers Limited & Anr. (2020) highlighted that Section 4(1) obligates the promoter to enter into a written, registered agreement *before* accepting more than 20% of the sale price, emphasizing the protective timeline embedded in the provision.^[1]

Procedural Aspects and Section 4-A

MOFA also provides mechanisms to address situations where an agreement, though executed, remains unregistered. The proviso to Section 4(2) (as discussed in Harshal Developers Pvt. Ltd., Pune And Another v. Manohar Gopal Bavdekar And Another, 2012, though the specific text refers to proviso-2 of sub-section (4) of section 2 of MOFA Act in one provided snippet and proviso 2 of Sub-section (2) of section 4 in another, the context implies a procedural aspect for registration) outlines a procedure if one party does not cooperate with registration.^{[6] (*Harshal Developers Pvt. Ltd., Pune And Another v. Manohar Gopal Bavdekar And Another*, Bombay High Court, 2012 - Snippet 1)}

Section 4-A of MOFA, enacted in 1984, provides a remedy for unregistered agreements. It states, "notwithstanding anything contained in any law for the time being in force," an unregistered agreement for sale entered into under Section 4(1) can be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1963, or as evidence of part performance of a contract for the purposes of Section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be effected by a registered instrument.^{[6] (*Harshal Developers Pvt. Ltd., Pune And Another v. Manohar Gopal Bavdekar And Another*, Bombay High Court, 2012 - Snippet 1, discussing Section 4-A's purpose)} This provision carves out an exception to the general rule of inadmissibility of unregistered documents requiring registration, thereby mitigating some of the harshness of non-registration for specific legal remedies.

Interplay with Other MOFA Provisions

The agreement executed under Section 4 forms the bedrock of the relationship between the promoter and the flat purchaser and has implications for other obligations under MOFA. For instance, in Laxman Narayan Zagade And Ors v. Competent Authority And District Deputy Registrar And Ors (Bombay High Court, assumed 2015 or prior based on typical citation patterns, though dated 2025 in prompt), it was held that if the entire land is subjected to an agreement under Section 4 of MOFA, the promoter is under a statutory obligation under Section 11 of MOFA to convey their right, title, and interest in respect of the entire land in favour of the collective body of flat purchasers.^[7] This underscores how compliance with Section 4 is linked to the ultimate transfer of title.

The question of whether an agreement under Section 4 ceases to exist or is novated upon the execution of subsequent documents like a Deed of Apartment and Deed of Declaration was considered in Mrs. Snehal Prabodh Kelkar And Ors. v. Mr. Avinash Madhukarrao Yekhande And Ors. (Bombay High Court, 2016). The argument was made that the MOFA agreement ceased to exist, potentially impacting arbitration clauses contained therein.^[8] This highlights the enduring nature and potential complexities arising from the initial Section 4 agreement.

Furthermore, in Mrs. Jyoti K. Narang,Mr. Kishore L. Narang v. CCI Projects Pvt. Ltd. (MahaRERA, 2020), it was observed that while Section 4 of MOFA refers to a "written and registered agreement," Section 8 of MOFA (dealing with refunds) does not explicitly state that the agreement must be registered. The authority, citing G. Swaminathan v/s. Shivram Co-operative Housing Society and Ors., suggested that registration might not be a strict condition precedent to seek remedies like refund under Section 8 of MOFA, thus giving a wider scope and liberal interpretation in such contexts.^[9] This indicates a nuanced approach where the consequences of non-registration under Section 4 might vary depending on the specific relief sought under other MOFA provisions.

Section 4 in the Context of Broader Consumer Protection and RERA

The principles underlying Section 4 of MOFA, particularly the emphasis on a registered agreement and limitations on advance payments, find resonance in the Real Estate (Regulation and Development) Act, 2016 (RERA). Section 13 of RERA similarly prohibits promoters from accepting more than ten per cent of the cost of the apartment, plot, or building, as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and registering the said agreement for sale.

The NCDRC's decision in MILAN v. M/s Mahindra Lifespace Developers Limited & Anr. (2020) directly applied Section 4 of MOFA to find a deficiency in service where the promoter demanded more than 20% of the sale price without a registered agreement.^[1] This demonstrates the continued applicability of Section 4 even in the consumer protection forum. The Supreme Court's decision in Fortune Infrastructure v. Trevor D'Lima And Others (2018), while primarily about compensation under the Consumer Protection Act, reinforces the accountability of developers for deficiency in service, which can arise from breaches of statutory obligations like those under MOFA Section 4.^[10]

The Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. And Anr. Petitioners v. Union Of India And Ors. (2017), while upholding the constitutionality of RERA, underscored the legislative intent to protect consumer interests and ensure accountability in the real estate sector, an objective shared by MOFA.^[11] The regulatory scheme, from MOFA to RERA, consistently aims to formalize transactions and protect buyers, with provisions like Section 4 of MOFA playing a critical role.

Conclusion

Section 4 of the Maharashtra Ownership Flats Act, 1963, stands as a vital safeguard for flat purchasers in Maharashtra. Its mandate for a written, registered agreement prior to the acceptance of substantial advance payments, coupled with detailed disclosure requirements, aims to ensure transparency and prevent arbitrary actions by promoters. Judicial pronouncements have largely affirmed the mandatory nature of registration, treating unregistered agreements, in many contexts, as void or severely limited in their enforceability, thereby underscoring the provision's significance.

While Section 4-A provides some relief for unregistered agreements in specific circumstances, and interpretations under Section 8 suggest a more liberal approach for certain remedies, the fundamental importance of complying with Section 4 remains undiminished. It not only defines the initial terms of engagement but also has cascading effects on other statutory obligations of the promoter, including the eventual conveyance of title. The principles enshrined in Section 4 continue to be relevant, aligning with the broader objectives of consumer protection in real estate, as further reinforced by the RERA regime. Thus, Section 4 of MOFA remains a cornerstone of real estate regulation in Maharashtra, pivotal for fostering fair and transparent transactions.