Court’s Decision
The Bombay High Court upheld the Appellate Court’s decision, which restrained the developer from proceeding with construction on Buildings No. 8 and 9 in the Vasant Lawns project. The Court observed that the developer violated the Maharashtra Ownership Flats Act, 1963 (MOFA) by not obtaining consent from flat purchasers in existing buildings and by altering the layout plan without adequate disclosure. It held that transparency and adherence to statutory obligations are crucial in phased real estate developments.
Facts
- Project Overview: The case concerned a residential project, “Vasant Lawns,” developed by the petitioner since 2005 in Thane. Initially, nine buildings were planned for the project in a phased manner.
- Amendments to Plans: The original plan, sanctioned in 2005, underwent multiple amendments over the years, notably in 2008, 2017, and 2022. These changes included adding floors and relocating Building No. 9. The Respondent Societies—representing Buildings Nos. 1 to 7—objected to the revised plans.
- Grievances of Respondent Societies:
- The amended plans affected amenities such as recreational spaces, open areas, and parking initially promised to existing flat purchasers.
- The relocation of Buildings No. 8 and 9 encroached on reserved green spaces.
- Amendments were undertaken without the consent of flat purchasers, allegedly violating MOFA.
- Developer’s Position: The developer argued that the amendments were lawful, necessary for optimal utilization of the project’s development potential, and disclosed to all purchasers in their sale agreements.
Issues
- Was the developer required to seek the consent of flat purchasers for amendments to the original sanctioned plans under MOFA?
- Did the Appellate Court exceed its jurisdiction by granting a blanket injunction against construction?
- Was there a failure to balance the interests of existing residents and purchasers of flats in Buildings No. 8 and 9?
Petitioner’s (Developer’s) Arguments
- Consent and Transparency:
- The developer argued that flat purchasers were informed of the phased nature of development and potential changes through clauses in their sale agreements.
- MOFA provisions, especially Sections 7 and 7A, allow amendments to sanctioned plans as long as they are approved by the planning authority, without requiring flat purchasers’ consent.
- The Societies’ objections were selectively aimed at protecting their interests while disregarding the rights of purchasers in Buildings No. 8 and 9.
- Delay in Challenge:
- The Societies raised objections only in 2022, despite amendments being approved and implemented since 2017. The delay demonstrated ulterior motives.
- Balance of Convenience:
- Halting construction would harm 126 flat purchasers of Building No. 8, many of whom had invested based on the revised 2017 plan.
- The project was nearly complete, and construction had been ongoing since 2006.
- Lawful Utilization of Development Potential:
- The amendments were made to maximize the development potential of the property, as permitted under applicable laws and planning regulations.
- No Impact on Recreational Spaces:
- The amended plans increased the reserved green space (RG) from 9,026.48 sq. m. in 2005 to 9,319.99 sq. m. in 2022, contrary to the Societies’ claims of reduced amenities.
Respondent’s (Societies’) Arguments
- Violation of MOFA:
- The Societies claimed that changes to the layout, including the relocation and addition of floors to Buildings No. 8 and 9, were undertaken without prior consent, violating Section 7 of MOFA.
- The developer failed to disclose details about additional construction, such as increased floors and the relocation of buildings.
- Misrepresentation:
- The Societies alleged that the developer misrepresented facts at the time of sale, leading purchasers to believe that open spaces and amenities would remain unaffected.
- Impact on Amenities:
- Relocation of Building No. 9 reduced common amenities and disrupted the layout of open spaces, affecting the quality of life for existing residents.
- Selective Protection for Certain Buildings:
- The Societies contended that the developer used technicalities to shield earlier amendments (affecting Buildings Nos. 1 to 7) while unilaterally making changes detrimental to new buildings.
Analysis of the Law
- Sections 7 and 7A of MOFA: The Court evaluated whether amendments to sanctioned plans require flat purchasers’ consent. While prior Supreme Court judgments clarify that consent is not mandatory when changes comply with local building regulations, the Court noted that MOFA imposes strict disclosure requirements to ensure transparency.
- Precedent Cases:
- Dalpat Kumar v. Prahlad Singh: Interim injunctions should be granted only when the balance of convenience and irreparable harm favor the plaintiff.
- Jayantilal Investments v. Madhuvihar Cooperative Society: MOFA’s amended provisions permit construction of additional structures without consent, provided plans are lawfully sanctioned.
- Union of India v. Raj Grow Impex LLP: Courts must weigh the risk of injustice when granting or refusing injunctions.
The Court noted that while MOFA allows developers to amend sanctioned plans, the principles of transparency and fair dealing remain paramount.
Court’s Reasoning
- Transparency and Consent:
- The Court found that the developer’s amendments, while sanctioned by the planning authority, were not adequately disclosed to flat purchasers.
- The relocation of Building No. 9 and changes to amenities violated purchasers’ legitimate expectations.
- Balance of Convenience:
- Although construction of Building No. 8 was nearly complete, the rights of existing flat purchasers to undisturbed enjoyment of their amenities outweighed the inconvenience caused to new purchasers.
- Selective Conduct:
- The Societies were selective in their objections, raising concerns only when the changes directly affected their interests. However, the Court emphasized that this did not absolve the developer of its obligations under MOFA.
Conclusion
The Bombay High Court upheld the injunction granted by the Appellate Court, emphasizing that the developer must adhere to MOFA’s requirements for transparency and fair dealing. The case highlights the need for developers to ensure informed consent from flat purchasers when making significant changes to sanctioned plans.
Implications
- For Developers: The judgment reinforces the importance of full disclosure and compliance with MOFA, even when amendments are lawfully sanctioned.
- For Flat Purchasers: It upholds their rights to transparency and protection against unilateral changes to project layouts and amenities.
- For Real Estate Projects: The ruling sets a precedent for balancing the interests of developers and purchasers in phased developments.