Mumbai, Feb 26: Granting major relief to members of a Mulund housing society who have remained displaced for over five years due to stalled redevelopment, the Bombay High Court has directed a defaulting developer to hand over “peaceful possession” of the project site to the society. The developer’s request to stay the order was rejected.
In an order dated February 16, Justice Somasekhar Sundaresan directed M/s Alag Property and Constructions Pvt Ltd to hand over possession of the redevelopment property to The Mulund Endeavour CHS Ltd, while appointing the court receiver to take charge of the land and transfer control of the project to the society.
The court passed the order while allowing the society’s petition filed under Section 9 of the Arbitration and Conciliation Act, seeking interim protection pending arbitration proceedings between the parties.
Nine-year delay, dues mount to crores
The dispute concerns redevelopment of the society’s property in Mulund East, comprising four residential buildings constructed on a plot measuring about 4,182 sq m. The society had executed a development agreement with the developer in July 2016 and handed over possession in January 2020 after members vacated their homes.
However, the society alleged that despite the passage of nearly nine years since execution of the agreement, redevelopment remained largely incomplete. According to the society, only about 30% of construction had been completed even though the revised deadline for completion expired in January 2025.
It further claimed that transit rent, brokerage, transportation charges and hardship compensation payable to members had remained unpaid since January 2023, with total arrears mounting to Rs 9.77 crore. Municipal tax dues of over Rs 1.13 crore had also allegedly remained unpaid, exposing the property to recovery action.
Advocate Mayur Khandeparkar, appearing for the society, submitted that members who vacated their homes in 2020 were continuing to suffer financial hardship due to non-payment of dues and indefinite delay.
Developer cites Covid, court finds serious default
The developer, represented by advocate Karl Tamboly, opposed the plea, contending that nearly 40–45% of construction had been completed and that delays were attributable to Covid, environmental restrictions and ongoing negotiations between the parties. It also argued that third-party rights had already been created in respect of sale flats and that termination of the agreement was unjustified.
After examining the material on record, the court held that the project was “way behind schedule” and that the developer was seeking to renegotiate the original redevelopment arrangement.
“In a nutshell, what is writ large on the face of the record is that the developer is seriously in default in the time and cost commitments owed under the development agreement,” the court observed.
The judge noted that society members had vacated their homes more than five years ago and continued to remain without permanent accommodation. Referring to earlier rulings on redevelopment disputes, the court emphasised that such agreements involve entrustment of a society’s sole asset — its homes — and that loss of faith due to contractual breaches justified intervention.
Rejecting concerns over third-party purchasers, the court held that buyers take commercial risks linked to the developer’s performance and that the society cannot be bound by interests created by a defaulting developer.
The court receiver has been authorised to take possession of the property, with police assistance if necessary, and hand over the redevelopment project to the society, which is now free to appoint a new developer or undertake self-redevelopment.
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The court clarified that interim protections will continue until the constitution of an arbitral tribunal, before which the dispute will now proceed.
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