The Bombay High Court has intervened in a dispute between Swashray CHS in Borivali (West) and developer Shanti Enterprises, emphasizing that a housing society should not be bound by a development agreement if the developer consistently defaults, leaving the project incomplete. The court restrained the builder from obstructing construction either through self-development or a new appointee. Swashray CHS terminated its 2018 agreement with Shanti Enterprises in March 2023, citing a lack of faith in completion and outstanding transit rent of Rs 90 lakh.
In a recent development, the Bombay High Court has ruled in favour of Swashray Cooperative Housing Society (CHS) in Borivli (West), restraining a builder, Shanti Enterprises, from interfering with construction activities through self-development or by appointing a new builder. The court observed that a housing society cannot be shackled in a development agreement in which the developer indulges in repeated defaults without any hope of the project actually being completed. The housing society, comprising 16 members, approached the High Court citing a loss of faith in Shanti Enterprises and the termination of their redevelopment agreement. The court acknowledged that the society is not expected to be at the mercy of the developer. Swashray CHS had terminated its 2018 development agreement with Shanti Enterprises in March 2023, citing a lack of faith in the builder's ability to complete the project. The society claimed that Rs 90 lakh was due in transit rent arrears and highlighted that the project, scheduled for completion by mid-2022, now stands as an empty shell constructed up to seven floors. The court noted that residents had been displaced from their homes since 2017, and none of the timelines specified in the development agreement or subsequent agreements were honoured by the builder. Despite the builder's claims that project delays were due to the Covid pandemic, the court found no evidence that the housing society obstructed the builder in executing or completing the redevelopment project. The dispute between the housing society and the builder escalated, leading to cross petitions filed in the High Court this year for interim relief pending resolution of the dispute through arbitration. The court emphasized that the disputes between housing societies and developers in Mumbai concerning redevelopment projects are typical. The builder's contention that the society's plea should not be granted was rejected by the court. The judge, having found a clear case made out by the society to permit its plea, rejected a separate petition filed by the builder to allow it to continue working on the project. The ruling underscores the importance of protecting housing societies from developers' repeated defaults and ensuring the completion of redevelopment projects.
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