The Bombay High Court, while directing two developers to pay transit arrears of ₹11 crore to a suburban SRA project, observed that the city is not for developers and the Slum Rehabilitation Act (SRA) is intended to serve the purpose of public welfare and not the developers.
A division bench of Justices Gautam Patel and Neela Gokhale on Monday directed Afcons Developers Ltd and Ameya Housing Private Ltd to clear the transit arrears by March 3. Teh court observed: “This city is not for developers. The Slum Rehabilitation Act 1995 (“SRA”) is not for developers. The Act is intended to serve a public welfare purpose. Developers are a means to that end.”
The HC was hearing a petition filed by Shree Sai Pawan SRA CHS Ltd claiming that the two developers appointed for redevelopment of their society had not paid them transit rent since 2019.
According to the petition, Afcons Developers Ltd and Ameya Housing Private Ltd were appointed as co-developers of the slum rehabilitation project at Jogeshwari in suburban Mumbai. More than 300 people, who were found to be eligible to get flats in the project, have not been getting any transit rent since 2019. Of these, 17 were not paid transit rent as they were put up in transit accommodations, however, these houses too were in a dilapidated condition.
Never-ending arbitration
The two co-developers are locked in a never-ending arbitration and there is no work being done at the site, the court noted in its order. It further added that if they were serious about this project, they will bring the entire amount of transit rent due to those entitled to transit rent from 2019.
In a detailed order, the judges said that the developers are entitled to a free sale component provided by the incentive Floor Space Index (FSI), but this is a consideration for fulfilling their obligations under the contract.
“They are entitled to a free sale component provided by the incentive Floor Space Index (“FSI”) but this is a consideration for their fulfilling their obligations under the contract (for there is always a development agreement)... Those obligations include not only the rebuilding or building of rehabilitation structures and tenements both commercial and residential, but also the payment of transit rent in the meantime or the providing of habitable transit accommodation,” added the court.
"Cannot take advantage own wrong and failure", says HC
It further added that a developer, who does not pay transit rent, does not provide habitable transit accommodation or otherwise is in default of his obligations, all of which have to be performed on a schedule and within a time frame, is not entitled to any of the benefits of the slum rehabilitation project, i.e., the free sale component.
“A party in default cannot be allowed to take advantage of its own wrong and failure. That would be profiteering and that too at public expense because many of these slum projects are on public lands — such as this one — and the developer is not being made to pay the cost of land,” the bench said.
The bench warned the developers that it will “compel a change of developer”, observing: “... the developer can always be changed. The beneficiaries of a SRA project cannot.”
“If these developers want their rights to continue and to be preserved, they must demonstrate their bona fides. They must prove their sincerity. To seek equity, they must do equity,” concluded the court while directing the developers to deposit the amount by March 3.
