A division bench of Justice G.S. Patel and Justice Neela Gokhale was hearing a
petition pertaining to the builder's default in payment of transit compensation
to the residents during the course of redevelopment.
Facts of the case
[i]The bench was hearing a petition concerning the payment of the transit
compensation which according to the petitioners, the builder's had defaulted on.
The said petition was filed by the residents of a composite redevelopment
project in South Mumbai who had vacated their old premises 7 (seven) years ago
and were aggrieved and traumatized at the builders failure and/or default in
paying the transit compensation to them.
Observation of the Hon'ble Bombay High Court
The Bombay High Court in its order dated 7th August, 2023 observed and stated
"We will not sit by and allow residents of this city to be treated as a
necessary evil, an irritant or a nuisance in developers' pursuit of profits or
their worship of Mammon. The rights of genuine and eligible residents are
primary. The developers' rights are distinctly secondary and will remain
subordinated to the rights of such residents."
To put it even more bluntly. Every developer will now realise that if there is
a default in meeting its obligations to residents, societies and tenants, we
will not even direct MHADA to cancel the No Objection Certificate ("NOC"). We
will terminate that NOC ourselves. Far too many of our citizens are being
subjected to this day in and day out. It is time that this Court said enough is
If the amount of Rs 3.50 crores is not brought to Court by Friday, 11th August
2023, we will direct MHADA to immediately cancel the NOC of the only Developer
it has on record namely Parekh Constructions."
Order of the Hon'ble Bombay High Court
The bench in its final order dated 11th August, 2023 stated that the developers
had failed and/or neglected to stand by their commitments under the No Objection
Certificate (for short, "NOC") and placing reliance upon the same it terminated
the NOC given to the builder and accordingly authorized the Maharashtra Housing
and Area Development Authority (for short, "MHADA") to issue a formal letter of
cancellation. It also directed the builders to remove themselves entirely from
the project site along with stating that "this includes all personnel, security
guards, equipment, machinery etc. It also further instructed MHADA to ensure
that they were completely off the site before the Independence Day.
The bench also directed the MHADA to go ahead with the appointment of another
developer following the due process of law along with certifying the actual
amount due by the builders, which as per the order of the bench would be payable
by the builders within a period of 30 (thirty) days from the date of the MHADA's
The bench lastly noted that the issue in the other writ petitions filed was
similar and therefore it disposed of the same.
Analysis of the order
The said order unravels the dark and bitter reality of the redevelopment process
of old and dilapidated buildings undertaken across the city of Mumbai. It
demands urgent attention and emphasizes upon the need to take necessary and
immediate steps and/or measures to curb the occurrence of such incidents in the
future by taking stringent action against the defaulting builders/developers
together with supporting the residents/tenants to combat the implications of
such default. It projects that the builders/developers cannot turn a blind eye
towards the discharge of any of its obligations/duties with respect to the
Agreements entered into by them for undertaking the redevelopment, including
timely payment of transit compensation to the residents/tenants.
In order to
further enable them to procure temporary transit accommodation during the period
of construction of the proposed new building. It further portrays that the
residents/tenants cannot be exploited and left unprotected at the mercy of the
builders/developers during the course of the redevelopment process. It unfolds
the loopholes embedded in the redevelopment process and calls for the
requirement of framing adequate laws and/or policies for the purpose of
streamlining the same.
The situation is alarming and therefore it is vital to regulate the attitude and
functioning of the builders/developers during the tenure of the redevelopment
undertaken by them along with further ensuring that the same does not give rise
to any kind of a failure or contravention on their part, of the terms and
conditions incorporated in the Agreements entered into by them.
of the transit compensation is one of the important obligations that the
builders/developers are expected to comply with and the failure and/or
non-compliance of which, would leave the residents/ tenants completely stranded
having nowhere to go and inflict social injustice upon them by subjecting them
to hardship and suffer mental agony coupled with creating a situation where fear
and distress is induced among the residents/tenants who are then eventually
compelled to lose their faith and confidence in the redevelopment process
undertaken by the builders/developers, in its entirety.
It would be unfair and
unethical to jeopardize the rights of the residents/tenants who have dreamt of
residing in their new homes post the successful completion of the redevelopment
of their respective buildings, by placing them in a dilemma due to the default
or breach on the part of the builders/developers with respect to the performance
of their obligations.
The said order has been passed in the better interest of
the residents/tenants of the buildings/societies going for redevelopment, as it
clearly establishes that they cannot be made to face the music of the default or
failure of the builders/developers to comply with their responsibility of paying
the transit compensation during the period of redevelopment.
Implications of the order:
The said order will help to ensure that the builders/developers do not hinder
the terms and conditions incorporated in the Agreements entered into by them for
redevelopment purpose, pertaining to the compliance/discharge of their
obligation of paying transit compensation to the residents/tenants during the
process of redevelopment, by communicating that tolerance shall not be shown
towards the builders/developers failing and/or avoiding to discharge their
The said order shall also make the residents/ tenants gain confidence in the
judicial system as it has projected that in matters of redevelopment, the
developers rights hold a secondary position and shall always remain subordinated
to the rights of the genuine residents/tenants accompanied with clearly
portraying that the rights of the eligible residents/tenants are of utmost
concern and the same shall not take a back seat or be compromised at any
- Writ Petition (L) No. 20423 of 2023 Sushila Gordhandas Parikh vs The
State of Maharashtra & Ors
Award Winning Article Is Written By: Mrs.Nirali Yash Desai
Authentication No: AG360923973570-31-0823