The National Company Law Tribunal (NCLT) has granted a significant relief to the Maharashtra Housing and Area Development Board (MHADA) in the Patra Chawl redevelopment case. The NCLT allowed MHADA's plea to exclude its entire 47-acre property known as 'Siddharth Nagar' from the liquidation estate of Guruashish Construction. Under a Joint Development Agreement (JDA), Guruashish was supposed to construct permanent rehabilitation homes for 672 tenement holders and in lieu could build and sell free-sale component at its own risk. MHADA terminated the JDA in January 2018 due to the builder's default in completing construction within its stipulated timeline.
The National Company Law Tribunal (NCLT) has granted a significant relief to the Maharashtra Housing and Area Development Board (MHADA) in the Patra Chawl redevelopment case. The NCLT allowed MHADA's plea to exclude its entire 47-acre property known as 'Siddharth Nagar' from the liquidation estate of Guruashish Construction. The development agreement dates back to 2008 for the rehabilitation of 672 tenants of Patra chawl in Goregaon. Under the Joint Development Agreement (JDA), Guruashish was supposed to construct permanent rehabilitation homes for 672 tenement holders and in lieu could build and sell free-sale component at its own risk.
MHADA terminated the JDA in January 2018 due to the builder's default in completing construction within its stipulated timeline. The NCLT order noted that not a single tenant has been rehoused till date. The tribunal said that Guruashish "has violated the JDA," and MHADA was well within its rights to terminate the arrangement with the builder. The NCLT's order paved the way for redevelopment work to proceed through MHADA and contractors.
The NCLT allowed MHADA's plea, filed in December 2020, and dismissed one filed in November 2020 by R K Bhuta, the liquidator of Guruashish Construction Pt Ltd, seeking inclusion of the entire 47 acres of MHADA property in the liquidation estate. Senior counsel Janak Dwarkadas, with advocate Jaya Bagwe for MHADA, submitted that the JDA granted a license to Guruashish to enter its land to construct new homes for all 672 tenants and construct a huge area over 1 lakh sq metres and hand them over to MHADA free of cost and pay rent to the tenants during the transit period. MHADA said, without fulfilling its obligation, Guruashish sold away its entire FSI to nine developers.
An insolvency petition was filed by Union Bank of India against Guruashish before the NCLT Mumbai bench, which admitted it in July 2017, initiated a Corporate Insolvency Resolution Process (CIRP) against it, and declared a moratorium under the Insolvency and Bankruptcy Code. In February 2018, the Resolution Professional sought orders from NCLT to restrain MHADA from taking over possession of the land until the insolvency process is over. The NCLT dismissed such a plea on April 2, 2018, saying that since the land was not an asset of Guruashish, no moratorium or statutory freeze would apply to it.
The builder lost an appeal before the NCLAT in December 2018, which affirmed the NCLT's order. However, in February 2020, the Supreme Court held that since the builder was in occupation of the land under a license granted by MHADA, statutory freeze would continue until the CIRP process is complete, which MHADA said came to an end in September 2020.
The liquidator, through advocate D B Pereira, opposed MHADA's plea. However, the NCLT held that there were "no ownership rights" conferred on Guruashish, and hence the liquidator could not include the Patrachawl land as part of the liquidation asset. The NCLT's order said nearly 60 percent of the work on the project is yet to be completed. The Maharashtra government on July 9, 2021, decided to carry out the entire work through MHADA. Advocate Bagwe for MHADA on Friday said the authority has undertaken the redevelopment work through contractors, and almost 75 percent of the work is now complete.
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