Mumbai is not for builders, says Bombay HC, pulls up 2 for default

This city is not for developers, and the Slum Rehabilitation Act (SRA) is intended to serve the purpose of public welfare and not the developers, the Bombay high court said, directing two developers to pay transit arrears of Rs 11 crore to a suburban SRA project.

A division bench of Justices Gautam Patel and Neela Gokhale made the observation on Monday while hearing a petition filed by Shree Sai Pawan SRA CHS Ltd claiming that the two developers appointed for redevelopment of their society had not paid them transit rent since 2019.

Afcons Developers Ltd and Ameya Housing Private Ltd were appointed as co-developers of the slum rehabilitation project at Jogeshwari in suburban Mumbai.

More than 300 people eligible to get flats in the project have not been getting any transit rent since 2019. Of the 300, 17 were put up in transit accommodations and were hence not receiving transit rent, but these houses were also in a dilapidated condition.

The remaining 230 persons have not received any transit rent since 2019 and have been left to fend for themselves. The two co-developers are locked in a never-ending arbitration and there is no work being done at the site, the court said.

”This city is not for developers. The Slum Rehabilitation Act is not for developers. The Act is intended to serve a public welfare purpose. Developers are a means to that end,” it observed.

The court further said that the developers are entitled to a free sale component provided by the incentive Floor Space Index (FSI), but this is a consideration for fulfilling their obligations under the contract.

”Those obligations include not only rebuilding or building of the rehabilitation structures and tenements both commercial and residential, but also the payment of transit rent or providing habitable transit accommodation,” it said.

A developer, who does not pay transit rent, does not provide habitable transit accommodation or otherwise is in default of his obligations, all of which have to be performed on a schedule and within a time frame, is not entitled to any of the benefits of the slum rehabilitation project, ie, the free sale component, the court said.

If there is a demonstrated default by the developers, then the privileges or entitlements are liable to be taken away, it said.

”A party in default cannot be allowed to take advantage of its own wrong and failure. That would be profiteering and that too at public expense because many of these slum projects are on public lands -- such as this one -- and the developer is not being made to pay the cost of land,” the bench said.

The court also warned of terminating the developers' contract and appointing a new one noting that ”the developer can always be changed, but the beneficiaries of a SRA project cannot”.

If the two co-developers are at all serious about the project and want their rights to continue, they must demonstrate their bona fides and pay around Rs 11 crore transit rent arrears to the petitioner society by March 3, it said.

”They (developers) must prove their sincerity. To seek equity, they must do equity,” the court said while posting the matter for further hearing on March 3.