Court’s Decision
The Bombay High Court dismissed objections by a former developer and upheld the right of the co-operative housing society and its appointed developer to proceed with redevelopment of the Parekh Market property at Ghatkopar (East), Mumbai.
Justice Sandeep V. Marne held that the old developer’s rights had long expired and stood extinguished following the rejection of its counterclaim up to the Supreme Court. The Court observed that the residents’ right to safe and dignified housing outweighed the outdated contractual claims of the old builder.
Accordingly, the Court allowed the interim application, directing Defendant Nos. 2 and 3 (the old developers) and their tenants to vacate the premises and authorised the Court Receiver to take possession, ensuring redevelopment work resumes immediately.
Facts
The dispute stemmed from the redevelopment of the property known as “Parekh Market,” originally owned by Kanji Khatau Trust and later conveyed to Shri Padmanabh Builders in 1979. The property comprised five wings (A–E). Over the years, various developers built separate wings, and purchasers formed the Parekh Market Premises Co-operative Society (Defendant No. 1).
In 1989, Padmanabh granted limited development rights to another developer (Defendant No. 2) for FSI of 2455 sq. ft., who then constructed Wing E and acquired several shops in the old trust building (Wing D).
Disputes erupted when the old developer began claiming ownership of the entire development potential (FSI) of 3578 sq. mtrs, leading to extensive litigation. Padmanabh terminated the 1989 agreement and sued for injunction, while Defendant No. 2’s counterclaim seeking specific performance and declaration of ownership was rejected under Order 7 Rule 11 CPC in 2006 — a decision upheld by the Division Bench in 2010 and by the Supreme Court in 2014.
After obtaining deemed conveyance in 2015, the Society executed a registered Development Agreement dated 11 November 2022 with the new developer (plaintiff). The SRA granted Letter of Intent and Intimation of Approval. Of 88 units, 70 occupants vacated, and three out of five buildings were demolished. The remaining obstructionists were Defendant Nos. 2–16, largely controlled by the old developer.
The plaintiff filed an interim application seeking injunction and possession to begin construction.
Issues
- Whether Defendant Nos. 2 and 3, as former developers, retained any subsisting right to exploit further FSI despite the earlier dismissal of their counterclaim.
- Whether the Society’s Development Agreement of 2022 was valid in light of pending title disputes and writ petitions challenging deemed conveyance.
- Whether redevelopment could proceed when a small minority of occupants refused to vacate despite statutory approvals.
Petitioner’s (Developer’s) Arguments
The petitioner submitted that 77% of members had vacated and demolition was completed for most structures. The remaining few obstructionists were preventing over 70 families from obtaining new homes.
The developer emphasized that all statutory permissions were in place and the old developer’s petitions against the SRA’s LOI/IOA had already been withdrawn. The plaintiff had already paid ₹1.40 crore as hardship compensation and incurred ₹10.04 crore in project costs, with a continuing monthly liability of ₹27 lakh.
It was argued that Defendant Nos. 2–16 were bound by the society’s collective decision and stood to receive the same benefits, including 22% extra carpet area, under the new Development Agreement. The refusal to vacate was nothing more than “holding the society hostage” to an obsolete claim.
Respondent’s (Old Developer’s) Arguments
Defendants 2 and 3 contended that their rights to exploit the remaining FSI under agreements of 1989, 1991, and 1992 subsisted and were supported by correspondence from Padmanabh Builders in 1994 acknowledging their entitlement. They argued that the deemed conveyance order (2014) did not confer ownership on the society as long as title disputes remained unresolved.
They maintained that the Society could not proceed with redevelopment until those claims were adjudicated, and that the new Development Agreement violated their vested rights. The defendants also objected to their membership being granted belatedly in 2025 and accused the society of “reverse engineering” by signing the redevelopment deal first and regularising membership later.
Further, it was contended that since the Development Agreement contained an arbitration clause, the suit itself was not maintainable.
Analysis of the Law
The Court analysed the interplay between the Maharashtra Ownership of Flats Act (MOFA) and the Maharashtra Co-operative Societies Act, especially Section 11 of MOFA governing deemed conveyance.
Citing Arunkumar H. Shah HUF v. Avon Arcade Premises Co-op. Society Ltd. (2025) 7 SCC 249, Justice Marne acknowledged that deemed conveyance orders do not conclusively determine ownership or title. However, he noted that the defendants in this case had exhausted all legal remedies and could not re-litigate under a new guise.
The Court emphasized that the counterclaim filed in 2004 seeking ownership rights was rejected as time-barred, thereby foreclosing their claim forever. Once that decree attained finality up to the Supreme Court, the issue of residual FSI rights stood res judicata.
Precedent Analysis
- Padmanabh Builders v. Kanaiyalal Thakkar (Bombay HC, 2006; affirmed 2010 & 2014) — The counterclaim by the old developer was dismissed as barred by limitation, confirming that his rights were limited to 2455 sq. ft. and extinguished beyond that.
- Arunkumar H. Shah HUF v. Avon Arcade Premises Co-op. Society Ltd. (2025) 7 SCC 249) — The Supreme Court clarified that deemed conveyance under MOFA does not decide title, but the High Court noted that this principle could not rescue a party whose independent claim was already rejected.
- Shree Chamunda CHS v. State of Maharashtra (2021 SCC OnLine Bom 4321) — Cited for the proposition that redevelopment decisions approved by a lawful majority cannot be obstructed by a few dissenting members once statutory permissions exist.
Through these precedents, the Court reinforced that collective redevelopment cannot be stalled by a litigant whose individual rights have already been extinguished.
Court’s Reasoning
Justice Marne observed that this was a classic case of redevelopment being stalled by a minority, where “residents waiting for safe housing are pitted against an old developer clinging to long-expired entitlements.”
The Court found that Defendant Nos. 2 and 3 were estopped from claiming any further development rights since their counterclaim had been dismissed with finality. Their resistance to vacate amounted to abuse of process.
It further held that mere pendency of writ petitions challenging deemed conveyance does not prohibit redevelopment, particularly when 77% of members had vacated and statutory approvals were in place.
The judge observed that allowing such obstruction would set a dangerous precedent where “expired developers hold societies hostage under the guise of past agreements.”
The balance of convenience, the Court said, was “heavily tilted” in favour of the residents and the new developer, given the dilapidated state of the buildings and the humanitarian urgency involved.
Conclusion
The High Court allowed the interim application, directing Defendants 2 and 3 to vacate their remaining units and cooperate with redevelopment. It authorised the Court Receiver to take possession if they failed to comply, including with police assistance.
The judgment underscored that redevelopment represents “a collective public interest over private commercial ego.” All tenants were protected with directions to ensure transit rent and reinstatement into permanent alternate accommodation.
The Court thus reaffirmed the principle that finality of litigation cannot be undone by speculative redevelopment claims, and equity favours those awaiting safe and lawful housing.
Implications
This judgment is a significant reaffirmation of Bombay High Court’s pro-redevelopment stance:
- Old or former developers cannot revive extinguished FSI claims under expired agreements.
- Deemed conveyance enables societies to move forward despite pending title disputes.
- Courts will not tolerate obstruction by a minority when a majority supports redevelopment.
- The decision strengthens legal certainty for developers and societies, encouraging smoother urban renewal.
The ruling marks a shift towards prioritising residents’ safety and urban redevelopment efficiency over prolonged litigation.