Who gets the unused FSI after your society is registered? What the Supreme Court did and did not decide in Jayantilal Investments

Your society is registered. The builder still holds a few unsold flats and has started another wing years after possession, and nobody on the committee can say who the leftover FSI belongs to. The Supreme Court took up exactly this tension in Jayantilal Investments v. Madhuvihar Co-operative Housing Society, but it did not settle it. It set aside the High Court's judgment and sent the case back. What it did say is still useful, and so is what it left open.

The case in brief

A 1980 agreement covered land in CTS No. 1068, Kandivali, Mumbai. After a development plan road, the suit plot was 6071 sq m. The 1985 layout plan showed one building with 7 wings at FSI 0.75. In 1986 it was revised to 5 wings at FSI 1.00, and the plan was amended again several times up to 1994. Possession came with the occupation certificate of 12 April 1989, with some flats left unsold. The 1991 DC Regulations raised FSI from 1 to 1.8 through TDR, the society was registered on 20 January 1993, and slum TDR later took FSI to 2.

In 1997 the society and five flat takers sued for conveyance and an injunction, and challenged a plan sanctioned on 29 March 2001 for "5 + 2 wings". The City Civil Court let the promoter finish construction and convey within three years. The High Court reversed that: it ordered conveyance of the whole plot, barred further construction, and found an implied trust. The promoter appealed. The wing numbers above are the plan history as recited; the Court did not reconcile them.

What the court decided

The Supreme Court allowed the appeal only to set aside the High Court's judgment and remit the matter for reconsideration. It did not restore the trial decree, did not direct conveyance and did not refuse it. No final outcome was decided.

On the law, the Court held that after the 1986 Maharashtra Amending Act, MOFA section 7A means the promoter needs no prior flat-taker consent to build additional buildings that form part of a scheme or project in the layout plan. But the right to build arises only on approval of the plan by the competent authority, and the construction cannot exceed the development potentiality of the plot.

Sections 3 and 4 survive. The promoter's duty of full disclosure remains, strengthened by section 4(1A). The Court held clauses 3 and 4 of Form V statutory and mandatory, and said the promoter must disclose whether the plot can later carry additional FSI or TDR and must place the entire scheme before flat takers, whether one building or several. As the Court put it:

> "Once the entire project is placed before the flat takers at the time of the agreement, then the promoter is not required to obtain prior consent of the flat takers as long as the builder put up additional construction in accordance with the lay out plan, building rules and Development Control Regulations etc."

The Court also quoted Form V, clause 4, which says residual FSI is available to the promoter till the society is registered and to the society afterwards. Its own comment was only that clause 4 shows the effect of forming the society.

Why it matters for your society

The dispute often turns on one question of fact: was the later construction part of what was disclosed at the start, or something new? The Court framed it as whether the project was seven independent buildings or one building with seven wings, and said the answer decides whether section 7(1)(ii) applies and whether the time for conveyance has arrived. It also spoke of balancing the promoter's right to build under the layout plan against his duties under sections 10 and 11 to form the society and convey. Under Rules 8 and 9, the society is to be applied for within four months of the minimum number taking flats, and conveyance follows within four months of registration, subject to the right to sell remaining flats.

What your committee should do

1. 1Locate the original flat-purchase agreements and read clauses 3 and 4 of Form V in them. Check whether they were retained as required.
2. 2Get the layout plan and sanction history from the planning authority, and compare it with what the agreements disclosed about the scheme and the plot's potential FSI or TDR.
3. 3List the dates: registration, possession, each sanction, and start of each later construction. Note what was built after registration.
4. 4Inspect and copy the society's records on these points. Bye-law 23 gives members this right, with copying fees under bye-law 171.
5. 5Check the conveyance position. Bye-law 154 requires the committee, with General Body approval, to take steps for conveyance or deemed conveyance and to have the draft deed examined with the society's advocate.
6. 6If action is needed, call a special general body meeting. Bye-law 96 allows one on requisition by one-fifth of members. For redevelopment, note the stricter procedure in Rule 106C-13 of the 2026 rules.
7. 7Take advice from a lawyer before objecting or negotiating.

Limits of this ruling

The case was remitted, so nothing final was decided on these facts. The Court did not say in its own voice that unused FSI passes to the society on registration; it quoted Form V clause 4 and held it mandatory. It left open the promoter's claim that it cannot be made to convey until FSI of 2 is used, the validity of the 2001 plan, the implied-trust finding and the High Court’s direction under Rule 8. The society's concession that forming a society does not end the promoter's rights over remaining development and unsold flats was counsel's submission, not a holding. The Court neither approved nor disapproved Ravindra Mutneja v. Bhavan Corporation. This is 2007 law; the DC Regulations and the 2026 rules have moved since. Your society's position depends on what its own agreements disclosed.