HC clears decks for redevelopment of Bandra East society held up for 19 years

MUMBAI: The Bombay high court has cleared the decks for the redevelopment of a housing society in Bandra East that had been held up for over 19 years.
Sukhsadan Cooperative Housing Society in Kherwadi had approached the high court earlier this year after the resolution professional (RP) appointed by the National Company Law Tribunal (NCLT) for its erstwhile developer, AA Estates, had last year asked the Maharashtra Housing and Area Development Authority (MHADA) not to entertain any redevelopment proposal. This was because a moratorium had been imposed upon AA Estates in December 2022 until a corporate insolvency resolution process it was facing was completed.
The society, however, contended that it had ended its redevelopment agreement with AA Estates in December 2019 and appointed another developer, Tristar Development, in November 2021. It added that it had entrusted the redevelopment work to AA Estates in October 2005 and the developer was to complete the work in 24 months, but the firm did not take any steps except to obtain a no-objection certificate from MHADA till January 2012.
In the meantime, the Brihanmumbai Municipal Corporation (BMC) declared the building dangerously dilapidated in August 2017. Nineteen of the 60 families residing in the building had moved out to tenanted premises, but they too eventually returned to the society as the developer did not take any steps to redevelop the property. Eventually, Sukhsadan CHS terminated the agreement with AA Estates and appointed Tristar Development.
Tristar Development then obtained various permissions and approvals and spent around ₹11.80 crore on the society’s redevelopment. On December 6, 2022, the NCLT appointed the RP for AA Estates. Four months later, the RP issued letters to MHADA officials stalling the redevelopment work.
A division bench of justice MS Sonak and justice Kamal Khata accepted the arguments of Sukhsadan CHS that the development rights of their premises could not be considered AA Estates’ property as the firm failed to meet its obligations, such as paying transit rent and completing the construction within the specified timeline.
“Additionally, while AA Estates grinds its way through a CIRP, the result of which may be entirely uncertain and might well result in an order of liquidation rather than a successful resolution plan, these society members cannot be deprived of their basic and fundamental rights to shelter,” the court said.