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In a significant ruling on redevelopment disputes, the Bombay High Court, in Satish Murlidhar Inamdar & Anr. v. Maharashtra Housing Society & Ors. (Appeal from Order No. 362 of 2024), reaffirmed the settled principle that flat purchasers claiming through a terminated developer acquire no enforceable rights against the society or its newly appointed developer. While dismissing multiple appeals, the Court emphasised the binding nature of Development Agreements and arbitral awards under the Arbitration and Conciliation Act, 1996.
This ruling strengthens judicial consistency in redevelopment matters, particularly where third-party purchasers attempt to assert rights based on agreements executed by a developer whose authority has been lawfully terminated.
Appeals Challenging the Trial Court Order
These Appeals challenge the common order of the Trial Court dated 4 April 2024, which disposed of several connected Notices of Motion Nos. 282, 229, 234, 228, 233, 230, and 232 of 2024 filed in Short Cause Suits Nos. 98 of 2024, 97 of 2023, 3145 of 2023, 101 of 2023, 3146 of 2023, and 100 of 2023. By the impugned order, the Trial Court rejected the appellants' applications for interim relief. Through these Notices of Motion, the appellants sought injunctions restraining Respondent Nos. 2 to 5 from:
- demolishing or constructing upon the property without their consent;
- altering the sanctioned building plans; and
- selling, transferring, or creating any encumbrance over flats in the proposed new building.
Factual Background
The appellants are third-party purchasers of flats in a redevelopment project undertaken by Nehru Nagar Vidyut Vilas Co-operative Housing Society Ltd. ("Society", Respondent No. 2) through Mr. Amogh Sawant, sole proprietor of M/s. Amogh Sawant and M/s. Adit Enterprises, the original developer (Respondent No. 1).
The Society holds leasehold rights over land comprising Survey Nos. 229 and 267 and CTS No. 6 (part), Mauje Kurla (III), Nehru Nagar, Kurla (East), Mumbai–400024, in the Bandra Registration Sub-District, Bombay City District. The land measures 739.31 sq. m., with a building of 1019.47 sq. m., recorded in the conveyance deed. The land was leased to the Society by MHADA under a registered Indenture of Lease dated 24 June 1991.
Issue for Determination
The core issue for determination is whether purchasers claiming through a developer whose appointment has been lawfully terminated, and such termination affirmed by a final arbitral award, can assert any right, title, or interest in the property of the Society or in its redevelopment undertaken through a new developer
Joint Hearing of Appeals
With the consent of learned counsel for all parties, these appeals were heard together and have been disposed of by this common ruling after examining the record and considering the respective submissions.
Appellants' Contentions
1. Society as "Promoter" under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA)
The appellants contended that since the Society, as landowner, had entered into a Development Agreement with the original developer, it must be treated as a "Promoter" within the meaning of the MOFA and therefore equally responsible for obligations owed to flat purchasers.
2. Inapplicability of 1 Vaidehi Akash Housing Pvt. Ltd. v. New D.N. Nagar Co-operative Housing Society Ltd.
The appellants argued that the judgment in Vaidehi Akash Housing was not applicable. They submitted that the observations in that case were confined to an interim stage and primarily concerned excess sale of flats. The Court had not conclusively determined the Society's status as a promoter under MOFA. Reliance on Vaidehi Akash Housing to reject their claims was therefore misconceived.
3. Reliance on 2Farhat Co-operative Housing Society Ltd. and State of Assam v. Barak Upatyaka D.U. Karmachari Sanstha
The appellants contended that Farhat Co-operative Housing Society Ltd. was not considered in Vaidehi Akash Housing, and that Barak Upatyaka establishes that observations in interim orders without final adjudication do not constitute binding precedent. Since Vaidehi Akash is pending before the City Civil Court, Mumbai, its interim observations lack precedential value.
4. Distinction from 3 Goregaon Pearl CHSL v. Dr. Seema Mahadev Paryekar & Ors.
The appellants argued that Goregaon Pearl CHSL involved entirely different factual circumstances. Their case related to enforcement of MOFA obligations and rights under Memoranda of Understanding (MOUs) and allotment letters executed during the subsistence of the Development Agreement.
5. The appellants asserted that:
- The Society terminated the original developer's rights on 14 September 2015, and such termination was affirmed by a final arbitral award dated 7 November 2022.
- Despite acknowledging the existence of third-party purchasers in the Supplementary Agreement dated 8 September 2011, the Society failed to disclose these transactions before the arbitrator.
- Consequently, the arbitrator had no opportunity to consider or adjudicate upon the rights of these purchasers.
- The Society was aware that the developer had created third-party rights within the "free-sale component" permitted under the Development Agreement.
6. On these grounds, the appellants contended that their case is distinguishable and that they are entitled to possession of the flats allotted to them under valid sale agreements. They further distinguished4 Deepak Prabhakar Thakoor v. MHADA & Ors., submitting that, unlike that case, they were not challenging the redevelopment or MHADA's approval, but merely seeking enforcement of their contractual and statutory rights under MOFA.
Appellants' Evidence
The appellants relied on key documents, including the registered Development Agreement, Power of Attorney, Supplementary Agreement, and various sale agreements, MOUs, and allotment letters, to demonstrate that their transactions took place while the developer's authority was valid and subsisting.
Key Judicial References
The appellants placed reliance upon the following decisions:
- Vaidehi Akash Housing Pvt. Ltd. v. New D.N. Nagar CHSL
- Goregaon Pearl CHSL v. Dr. Seema Mahadev Paryekar & Ors.
- Rakhi Kamal Thakur v. Rustomjee Evershine Joint Venture
- Deepak Prabhakar Thakoor v. MHADA & Ors.
- 5 Kapilkunj CHS v. Atul B. Shah & Ors.
- 6 Tuvin Constructions LLP v. State of Maharashtra & Ors.
Upon analysing these decisions, the Court reiterated that purchasers claiming through a developer whose rights have been lawfully terminated cannot assert independent rights against the Society or its newly appointed developer. Their remedy, if any, lies only against the erstwhile developer in damages or compensation.
Binding Precedent
The Court observed that the principle in Vaidehi Akash Housing has been consistently affirmed by parallel and Division Benches, notably in Deepak Prabhakar Thakoor and Goregaon Pearl Co-operative Housing Society Ltd, and therefore constitutes binding precedent. It further clarified that under Section 35 of the Arbitration and Conciliation Act, 1996, an arbitral award is binding not only on the parties but also on all persons claiming through them, including the appellants.
Distinction from Farhat Co-operative Housing Society Ltd.
The Court distinguished Farhat Co-operative Housing Society Ltd., noting that it involved a deemed conveyance under MOFA, where the landowner and developer jointly sold flats. That ruling does not apply to redevelopment disputes involving the termination of the Development Agreement and appointment of a new developer.
Authority Coupled with Interest
The appellants relied on 7Amar Nath v. Gian Chand & Anr. to argue that an agent with an interest in the subject matter of the agency has irrevocable authority under Section 202 of the Indian Contract Act, 1872. The Court rejected this reliance, observing that in Amar Nath, the dispute involved a fraudulent sale by a power-of-attorney holder after revocation, with the purchaser having notice. By contrast, the sales in the present case were independent transactions by the developer in his own capacity, not as an agent of the Society.
Validity of Unregistered MOFA Agreements
The appellants relied on 8C. Radhakrishnan v. Richa Construction & Associates to argue that MOFA rights may be enforced through unregistered sale agreements. The Court rejected this, observing that Radhakrishnan concerned enforcement by a purchaser against a developer, not a dispute arising from redevelopment or termination of a Development Agreement.
No Enforceable Rights Against the Society
The Court reaffirmed that none of the authorities cited by the appellants supported their position. It upheld the principle in Deepak Prabhakar Thakoor v. Vaidehi Akash Housing Pvt. Ltd., confirming that once a developer's appointment is lawfully terminated, purchasers claiming through such a developer do not acquire enforceable rights against the Society. Their remedies are confined to damages or compensation against the erstwhile developer.
Consequently, the Court held that irrespective of whether the appellants possessed allotment letters, MOUs, or registered/unregistered agreements, they could not assert enforceable rights against the Society or its new developer after lawful termination of the Development Agreement.
Court's Final Orders and Dismissal of Appeals
After a comprehensive analysis of facts, documents, and settled legal principles, the Court determined that the Trial Court's order was well-reasoned, legally sound, and free from any irregularity or material error. Accordingly, all appeals arising from the order were dismissed, with no order as to costs. All connected interlocutory applications were also dismissed, thereby concluding the interim proceedings in this dispute.
The appellants' request for an extension of interim protection, originally granted on 7 May 2024, for an additional six weeks, was refused. The Court observed that the protection had been operative for over a year and had unduly prejudiced the rights of the Society's members. No further extension was justified, and the interim protection was directed to stand vacated forthwith.
Conclusion
This ruling reinforces the sanctity of Development Agreements and the finality of arbitral awards in redevelopment matters. It clarifies that flat purchasers, though recognized as stakeholders, cannot override the legal rights and remedies of societies once a developer's authority has been lawfully terminated.
By distinguishing prior precedents and upholding the principles in Vaidehi Akash and Deepak Thakoor, the Bombay High Court provides critical clarity and legal certainty for redevelopment projects, ensuring that statutory compliance and contractual discipline prevail over equitable claims unsupported by law.
Footnotes
1. 2014 SCC OnLine Bom 5068
2. 2009 (5) SCC 694
3. 2019 SCC OnLine Bom 1412
4. 2023 SCC OnLine Bom 2234
5. Decided on 12/13th December, 2023 in Writ Petition No. 2157 of 2021
6. Decided on 9 September 2025 in Writ Petition No. 1673 of 2025
7. 2022 INSC 106
8. Judgement dated 16 January, 2020 in First Appeal No. 514 of 2014
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