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Mumbai: June 19, 2010

In what comes as a relief to the handful of dissenting members of a Co-Operative Housing Society in Khar, the Bombay High Court refused to grant any interim relief to a Builder who wanted to have them evicted so that he could go ahead with redevelopment work on the building. A Division Bench headed by Justice F I Rebello admitted an appeal filed by M/s Acknur Constructions Pvt Limited against a December 2009 judgement of a Single Judge that held that even a single dissenting member of a Society cannot be thrown out by a Builder based on a mere Development Agreement executed with the society and a majority of the flat owners though agreeing for redevelopment of the building.

The Appeal Bench wondered in open court whether the said Builder had the locus standi to seek eviction of the members who were in minority and opposed to the redevelopment project. The Appeal Bench ruled that if anyone, it was the Society who had to file an application for eviction of dissenting member, the Judges remarked while denying the appointment of a Court Receiver over the prime property in Khar (W). But the Builder’s lawyer pointed out that a Division Bench headed by the Chief Justice of the Bombay High Court had held that a Builder did have the right to seek removal of the dissenting minority flat owners.

The judgment, which is under challenge by the Builder, had held that any redevelopment activity should not compromise the rights of members and must safeguard the existence of the Society. The 2009 judgment passed by Justice S C Dharmadhikari had also stated that Builder had no higher right than the Society and that the Builder is a mere contractor. While observing that any relief granted now would mean disposal of the plea, the High Court expedited the matter and granted liberty to the Builder to apply for an early date for the final hearing.

The case involves the Builder M/s Acknur Constructions Pvt Limited and Fardoon Apartment Co-operative Housing Society. The Builder, Deepak Rao, was seeking eviction of the owners of two shops and one flat as they were stalling the redevelopment work agreed to by the Society last January in a General Body Meeting.

Of the 12 members in the 39 years old four storey building, three opposed the redevelopment on the grounds that it was neither in their interest nor that of the Society.

AUTHOR’S COMMENTS : As per the law, the Builders cannot initiate process of evicting the dissenting members under the shelter of the Development Agreement as this Agreement never establishes privity of contract with any individual dissenting member/s and hence for getting peaceful possession of the Society’s property, it is the Society who shall take appropriate action against the dissenting member/s as the doctrine of privity in the common law of contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the Parties to it. The premise is that only parties to contracts should be able to sue to enforce their rights or claim damages i.e. the Society and the Builders.



Mumbai : March 12, 2015

The Bombay High Court has ordered 21 flat owners of a Housing Society in Oshiwara to vacate their apartments within 60 days to make way for the redevelopment of the building. Justice S C Gupte said that if the families refusing to vacate within the stipulated time, a Court Receiver would be appointed to take possession of the flats and even seek police assistance if needed.

The Court was hearing an application filed by M/s Supreme Mega Constructions which had been appointed by Symphony Co-operative Housing Society in Oshiwara to carry out redevelopment of its property. The Court rejected the plea of the 21 residents who had refused to move out, citing some shoddy clauses in the Development Agreement.

"The Balance of Convenience is in favour of the Developer as the Society and its overwhelming majority of members who want the building to be reconstructed," said the judge. The High Court pointed out that the Builder had spent substantial sums to start the project. It had paid Rs 1.00 crore towards Conveyance of the Land and existing building, Rs 50 lakhs to the Society towards Security Deposit and over Rs.5.31 crore to the Society’s members towards various compensations and spent various sums for preparing and having the plans of the new building approved. It was argued that the opposing flat owners do not oppose the redevelopment, but merely have reservations about certain clauses of the Development Agreement and the Permanent Alternative Accommodation Agreements, added the Court.

Symphony Co-operative Housing Society is spread over 2,997 Square Metres and its 68 residents own the 72 flats and 19 garages in the building. Society members had agreed to redevelop its property and appointed the Developers in 2011. Around 64 members signed and approved the Development Agreement. The Developers moved the High Court after the 21 members refused to vacate. The opposing residents disputed that the agreements had been approved in the Special General Meeting and produced video recordings claiming that the records of the meeting were fabricated. They alleged that the Development Agreement was not in accordance with the conditions of the Tender Document and that conditions had been violated. However, ignoring the challenger’s plea, the Judge ruled that merely on the basis of a purported video CD of the proceedings of Special General Meeting and the recorded minutes of the meeting which the society stands by, cannot be disregarded at this interim stage.

AUTHOR’S COMMENTS : Generally, the various drafts of redevelopment documents including the Development Agreement are sent by the Developers to the Society. These Drafts after methodically vetted, scanned and scrutinized theoretically by us and the gray areas/pitfalls and shortfalls are exposed and a detailed written report is given to our Client Society apprising them the areas of alerts and awareness and advise them that before its execution, the Society must impress upon the Developers to modify and improve all the legal documents of redevelopment in corporate interest and safety of the Society to achieve the desired results.

The Housing Societies must study, understand and try to forestall the weaknesses under Financial/Legal and Technical areas to be termed in Development Agreement benefiting the members as many of these areas are conveniently ignored/not documented by the Developers in the Development Agreement and we impress upon the Housing Societies to emphasize upon and compel the Developers to add those ignored conditions in Development Agreement in the corporate interest of the Society to protect their hard earned homes.

Please click on the link given below to understand the importance of vetting and scrutinizing of various legal documents related to the redevelopment.

We also recommend going through the following videos.

The Author is addressing the Seminar on Redevelopment sponsored by MSWA and Interview by M/s Legal Pundits on Fungible FSI: