Rights Of Developer To Earn Profit In Redevelopment Project Not Above Society Members' Right To Safe Housing: Bombay High Court

The Bombay High Court recently while refusing interim relief to a developer, who did not 'move even a brick' in a redevelopment project for nearly 13 years, held that when the rights of a developer to earn profit by selling flats in a redevelopment project are pitted against the rights of the society members to live in safer and better homes, the rights of the latter must prevail. Single-judge Justice Sandeep Marne refused to grant an interim relief to M/s. Pioneer Constructions - a developer who challenged the termination of Development Agreement with Sahakarnagar Co-operative Housing Society Ltd - a proposed society comprising of nearly 46 buildings housing over 820 families since last 70 years in Wadala, Mumbai. The judge noted that the developer was initially appointed in January 2013 for redevelopment of the said 46 buildings. However, since there was no progress in the redevelopment project, the society decided to terminate the development agreement by passing a resolution initially in September 2023. Further, on request of the developer, the society decided to 'give one more chance' to it and withdrew its initial resolution (September 2023) and passed fresh resolution in April 2024. However, again since no progress was made further, the society once again resolved to finally terminate the development agreement in September 2024.Relying on the April 2024 resolution, the developer moved the Divisional Joint Registrar, seeking a 'no objection certificate' (NOC) for proceeding with the redevelopment project and was granted the same in February 2025. Aggrieved, the society challenged this NOC before the concerned Minister, who by passing an order in December 2025, quashed the NOC paving way for the society to appoint a new developer. Taking note of the facts of the case, Justice Marne in his order passed on 24, said, "Rights of a developer do not stand on same pedestal as that of purchaser of property under the Agreement for Sale. When Developer fails to complete redevelopment project or delays it indefinitely, I do not see any difficulty why the society cannot terminate the Development Agreement and get the redevelopment project implemented through another developer. In a redevelopment project, though a right is created in favour of the Developer to sell flats in sale component portion, he does not become owner of the land in question, nor the Development Agreement is intended to confer any ownership in the land taken up for development. The right of the developer to sell flats in sale component portion fructifies only after he completes obligation under the Development Agreement to put society members in possession of PAAs. The Developer, who fails to construct the building and put members in possession of PAAs does not hold any title even in respect of sale component flats."Justice Marne agreed with the submissions of the society through advocate Chaitanya Chavan, who highlighted that the members of the Society are languishing in old and dilapidated buildings constructed in the year 1957. "What is at stake for the members of the Society is far superior right to reside in safer and better homes as compared to right of the Petitioner-Developer to earn profits out of redevelopment project. Beyond paying the amount of Rs 1 crores towards earnest money deposit, the Petitioner has apparently not incurred any expenditure in the project. It has not taken any steps in the project during last 13 long years. He has not moved even a single brick. Prima facie it appears that the project is being used by the Petitioner only as a business venture with no intention of even commencing the project. The fact that Petitioner has negotiated with other developers (India Realtech Corporation LLP and JSW Group) indicates possible incapability on the part of the Petitioner to complete the project. Thus when rights of the society members to reside in safer and better homes is pitted against the right of the developer to make profits in the project, the former must prevail over the latter," Justice Marne held. If the stakes of the rival parties are weighed, the judge pointed out, it is clear that the stakes of the society members in respect of redevelopment project are way higher than as compared to the one for the Petitioner. "If the interim measures are granted in Petitioner's favour, the same would result in redevelopment project being delayed indefinitely. This would endanger the lives of the 826 members, who are residing in the buildings constructed in the year 1957. The members are waiting for safer, bigger and better homes for the last 13 long years and their wait cannot continue indefinitely. On the other hand, if interim measures are refused, the Petitioner may only lose opportunity of earning profits in the project. In case, Petitioner succeeds in its claims, it can be adequately compensated while passing the arbitral Award," the judge opined. With these observations, the judge while refusing any interim relief and...

Rights Of Developer To Earn Profit In Redevelopment Project Not Above Society Members' Right To Safe Housing: Bombay High Court

Narsi Benwal

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