Bombay HC to builder: Redevelopment not charity, lives matter – Times of India

MUMBAI: While restraining a builder from selling or creating third-party rights in a redevelopment project that came to a standstill in 2015, a recent Bombay high court order said, “The mere fact that the developer has put money into the project cannot and does not create equity in and of itself. After all, the objective of the developer is not to do this for a charitable purpose. It is to make large financial gains.” The original 28 residents had vacated their homes in 2013 after a March 2011 development agreement was signed.
Justice Gautam Patel said, “On one side, money; on the other side, lives. It is clear to any court which matters more.” He accepted a Borivli housing society’s plea to appoint an arbitrator to resolve its dispute with the developer. The court also passed several other interim orders against the builder, including appointing a court receiver and one on not to interfere with possession of the society, pending arbitration.
HC also did not accept the builder’s submissions that it had invested a large amount in this project and, therefore, there should be a restraint against the society.
Justice Patel said a builder puts money in a project for profit. “The expenditure on the project is not, therefore, a handout to the society members. It is very much in the nature of an investment. But that investment is clearly coupled with a contractual obligation that the developer is bound to discharge. Without discharging this obligation, it can claim no rights in equity or in law.”
The Borivli Anamika Niwas society had petitioned HC after terminating the development agreement last year. In February, HC sought final consent terms and asked the builder, Aditya Developers, to pay residents Rs 82 lakh in rent arrears.
In its December 15 order, though, HC did not accept the builder’s argument that he could not pay due to the lockdown. HC said “competing equities” of residents and builders are to be balanced. It added society members “are scattered throughout the city in temporary accommodation” for almost a decade.
HC said it is a builder’s pure money claim versus “a continually unfolding human tragedy of indescribable proportions”.
Justice Patel said, “For a very long time, these society members have been expected to fend for themselves and not even been provided the contractually due transit rent or displacement compensation…non-payment of transit rent not only has the effect of leaving the society members twisting in the wind, but is a material breach of a core obligation under the development agreement.”
An equitable relief is one where the court grants relief to an aggrieved party by directing the other side to do or not do certain actions, when ordinary legal remedies, including awarding damages, may be inadequate.
The builder said only the “free-sale eighteenth floor remains and all the rest has been completed”. HC said, “That may be inaccurate because a structure left partly built and incomplete for five years will undoubtedly have deteriorated. ” The builder said money cannot be paid until consent terms are signed. The HC order said, “That seems to me to be putting the cart before the horse. The money must be paid at the time of filing the consent terms or before, and then there must be some agreement for the rest. It is always open to the developer to negotiate the instalments.”