Moratorium under Section 14 of IBC does not bar grant of deemed conveyance under MOFA.

The Petitioner, a cooperative housing society formed in 1991, sought a deemed conveyance of land and building after the original promoter (Respondent No. 3) failed to execute the transfer as required by Section 11 of the MOFA.

Respondent No. 4 subsequently purchased the land and assumed the promoter's obligations.

On 11 March 2024, the NCLT admitted a petition against Respondent No. 4 under Section 7 of the IBC, appointing an Interim Resolution Professional (Respondent No. 5) and imposing a moratorium under Section 14 of the IBC.

Based on this moratorium, the Competent Authority rejected the Petitioner’s application for deemed conveyance on 4 September 2025, granting liberty to re-file after the conclusion of the CIRP.

The Petitioner challenged this rejection via writ petition.

1. Whether the pendency of Corporate Insolvency Resolution Proceedings (CIRP) under the IBC against a promoter precludes the Competent Authority from exercising jurisdiction under Section 11(3) of the MOFA.

2. Whether the moratorium under Section 14 of the IBC creates a legal bar against the grant of a deemed conveyance in favor of a housing society.

The court applied Section 11 of the Maharashtra Ownership Flats Act (MOFA), 1963, which imposes a statutory obligation on promoters to convey title to the society.

It examined Section 14 of the Insolvency and Bankruptcy Code (IBC), 2016, which prohibits the institution of suits or transfer of assets of a corporate debtor during a moratorium.

The court relied on its own precedents in Santoshkumar Motilal Bhansali v. Competent Authority and Anudan Properties Pvt. Ltd. v. Mumbai Metropolitan Region, SRA, establishing that statutory duties under welfare legislations are not "claims" or "debts" extinguished by the IBC.

It further referenced the principle from Arunkumar H. Shah HUF v. Avon Arcade Premises CHSL that a deemed conveyance is not a final determination of title and can be challenged in a civil suit.

The Court reasoned that the Competent Authority performs a statutory function to perfect the title of flat purchasers, which is a non-monetary regulatory action rather than an enforcement of a debt or a "recovery action".

It held that Section 14 of the IBC does not bar authorities from discharging such statutory duties.

The Court observed that once a developer sells all flats, they are virtually divested of the title; thus, the deemed conveyance is not a transfer of an "asset" of the corporate debtor in the real sense, but a certification of a pre-existing statutory right belonging to the flat purchasers.

Furthermore, the Court noted that interpreting the IBC to stall conveyances would allow errant developers to use the moratorium to exploit additional development potential or endanger occupants of dilapidated buildings needing redevelopment.

The Court concluded there was no irreconcilable inconsistency between the MOFA and the IBC under Section 238, as the MOFA serves a distinct social welfare purpose.

The Court set aside the order dated 4 September 2025 and restored the Petitioner's application (No. 87 of 2025) before the Competent Authority. It directed the Authority to decide the application on its merits expeditiously, keeping all rights and contentions of the parties open. The petition was allowed with no order as to costs.