The Bombay High Court recently provided interim relief to homeowners in a Wadala housing society after they hired a new builder for their redevelopment project, as the old builder had made no progress for 13 years since being appointed.
In the interim judgement, the Bombay High Court pointed out that the old builder did not ‘move even a brick’ in the 13 years since taking on the redevelopment task.
The court held that a builder’s right to profit from selling apartments in redevelopment projects is less important than rights of housing society members to live in safe and improved homes, especially considering that the building was built in 1957 and has been in a dilapidated condition since 70 years have elapsed.
What led to this dispute between the housing society and the old builder?
The housing society was formed by homeowners and others and has a total of 826 residential premises, 19 shops and 24 stalls in 46 buildings. It was constructed in 1957 on land belonging to the Municipal Corporation of Greater Mumbai at Wadala, Mumbai.
Since the buildings were old and dilapidated, the members decided to redevelop them and accordingly invited offers from developers. Subsequently on January 22, 2013, a builder was selected and Joint Development Agreement (JDA) was signed. On April 22, 2016, the members renegotiated the terms of the JDA and signed an amended JDA with the builder.
Under the revised JDA, the old builder agreed to offer earnest money deposit of Rs 1 crore to the society and increase the size of Permanent Alternate Accommodations (PAA) from 600 sq.ft. to 700 sq.ft. He also agreed to pay a corpus to each member of the society. However even after 13 years, beyond paying the Rs 1 crore money, nothing happened.
This builder was appointed to redevelop the buildings, but for reasons best known to him, did not do so for 13 long years. So the society members wanted to terminate his appointment and thus passed a resolution in their annual general meeting (AGM) in September 2023.
However, the old builder requested the society for one more chance and so the society withdrew its initial resolution (September 2023) and passed a fresh resolution in April 2024 for his interim appointment. However, since again no progress was made, the society once again passed the resolution to finally terminate the development agreement with the old builder in September 2024, reported LiveLaw.
However, the old builder allegedly hid the latest news about his termination, and used the April 2024 resolution of his interim appointment to file an NOC application with the Divisional Joint Registrar for proceeding with the redevelopment project. This NOC was given to the old builder in February 2025.
Unhappy with the NOC, the housing society challenged it and brought it to the notice of a Maharashtra state minister. The state minister cancelled the NOC and the society then appointed a new builder who offered them better terms.
However, the old builder felt aggrieved and filed a case under Section 9 of the Arbitration and Conciliation Act, 1996, for appointment of Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, arguing that in the absence of a termination clause in the Development Agreements, the Society had no right to terminate them.
The old builder relied on a related case: K.S. Majunath v. Moorasavirappa
On April 24, 2026, the old builder lost the case in Bombay High Court. Advocate Chaitanya Chavan with Mr. Nikhil Jayakar and Mr. Ankit Dubey represented the society in the high court.
Avikshit Moral, partner, S&R Associates, explained to ET Wealth Online: In this matter, the Hon’ble Court, while deciding a Section 9 petition filed under the Arbitration and Conciliation Act, 1996, reiterated two noteworthy points:
(1) Upon the developer’s failure to construct and hand over new houses to the members-his primary obligation under the redevelopment agreement-his right to earn profits by selling flats remains imperfect.
(2) The Court concluded that the stakes involved for the society were far higher than those of the developer. It undertook a succinct evaluation of the comparative risks: the society faced delayed development and a continuing threat to the safety of its members residing in an aging building, whereas the developer merely stood to lose the opportunity to earn profits.
Moral says: “Accordingly, the Court refused to grant any interim relief to the developer, who was challenging the society’s termination of the development agreement.”
Bombay High Court order and discussion
The Bombay High Court said that a builder’s rights aren’t equal to that of a property buyer under the Agreement for Sale.
The Bombay High Court said that if a builder doesn’t finish a redevelopment project or keeps delaying it, they see no reason why the society can’t terminate the Development Agreement and have another developer carry out the redevelopment project.
The Bombay High Court said: “In a redevelopment project, though a right is created in favour of the Developer to sell flats in sale component portion, he does not become owner of the land in question, nor the Development Agreement is intended to confer any ownership in the land taken up for development.”
The Bombay High Court said that the developer’s ability to sell flats in the sale component kicks off after they fulfill their duty under the Development Agreement to provide society members with Permanent Alternate Accommodations (PAAs).
The Bombay High Court said: “The developer, who fails to construct the building and put members in possession of PAAs, does not hold any title even in respect of sale component flats.”
The Bombay High Court pointed out that the members of the Society have a much stronger claim to live in safer and better homes than the Developer has to make profits from the redevelopment project.
The Bombay High Court said: “Beyond paying the amount of Rs 1 crore towards earnest money deposit, the Petitioner (old builder) has apparently not incurred any expenditure in the project. It has not taken any steps in the project during the last 13 long years. He has not moved even a single brick.”
Thus, the high court said, prima facie it appears that the redevelopment project is being used by the old builder only as a business venture with no intention of even commencing the project.
The Bombay High Court said the fact that the old builder has negotiated with other developers indicates possible incapability on the part of the Petitioner to complete the project.
The Bombay High Court thus said: “…when the rights of the society members to reside in safer and better homes is pitted against the right of the developer to make profits in the project, the former must prevail over the latter.”
The Bombay High Court said that if the interim measures are granted in the old builder’s favour, it would result in the redevelopment project being delayed indefinitely.
The Bombay High Court said: “This would endanger the lives of the 826 members, who are residing in the buildings constructed in the year 1957. The members have been waiting for safer, bigger and better homes for the last 13 long years and their wait cannot continue indefinitely.”
On the other hand, the Bombay High Court said that if interim measures are refused, the old builder may only lose the opportunity of earning profits in the project. In case, the old builder succeeds in its claims, it can be adequately compensated while passing the arbitral Award, reported Livelaw.
With these observations, Bombay High Court refused any interim relief and appointed Advocate Amrut Joshi as a sole arbitrator to adjudicate upon the contentions between the respective parties.
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