In a significant judgment impacting delayed housing society redevelopment projects, the Bombay High Court has upheld the termination of a redevelopment agreement between Madhugiri Co-operative Housing Society Ltd. in Chembur and Heritage Lifestyles & Developers Pvt. Ltd., clearing the way for the society to appoint a new developer after over a decade of delay.
The ruling was passed by Justice Somasekhar Sundaresan on March 4, 2025, affirming an October 14, 2024, decision by an arbitral tribunal that had refused interim relief to Heritage. The tribunal found that Madhugiri Society’s termination of the Development Agreement (DA) and Supplemental Development Agreement (SDA) on January 21, 2024, was valid and justified due to prolonged delays and unresolved disputes.
Background: A Stalled Redevelopment Since 2013
The dispute traces back to 2013, when Madhugiri Society selected Heritage Developers to redevelop two buildings consisting of 84 flats spread over 7,340 sq. yards. The DA, signed in 2014, offered 62,700 sq. ft. to society members out of the total 1,09,220 sq. ft. of proposed redevelopment. The remaining area was to be retained by the developer.
However, redevelopment never began, and disagreements erupted over additional development entitlements arising from road setback benefits, which increased the total area to 1,63,620 sq. ft. Heritage claimed a larger share of 95,000 sq. ft., while offering 68,620 sq. ft. to the society.
Heritage argued that a revised proposal from March 2023 and subsequent communications amounted to an amendment of the original DA and SDA. The society, however, insisted that there was no finalized amended agreement, and the additional FSI (Floor Space Index) benefits from road setbacks rightfully belonged to them.
Legal Arguments: Binding Amendment or Prolonged Delay?
Appearing for Heritage, Senior Advocate Venkatesh Dhond contended that Madhugiri Society could not unilaterally terminate the agreement after nearly a decade of discussions and negotiations. He argued that there was no valid reason for withdrawal and that discussions implied a modification of earlier agreements.
In contrast, Senior Advocate Mukesh Vashi, representing Madhugiri, accused Heritage of deliberate delay and stringing the society along without any progress. He argued that all additional entitlements should benefit the society and highlighted that the developer was given an option: either execute the original agreement or agree to share additional area in a 54:46 ratio—a proposal the developer did not accept.
High Court Verdict: Termination Was Valid
Justice Sundaresan observed that no binding amendment had taken place and that negotiations were ongoing, with no finality achieved regarding the sharing of extra FSI. “An essential element of the agreement was elusive,” the court noted.
The court dismissed Heritage’s appeal for relief and injunction, allowing Madhugiri to proceed with appointing a new developer. The court also lifted any restraints on the society’s ability to seek new redevelopment partnerships and left the question of costs to be decided by the arbitral tribunal.
Impact on Mumbai’s Redevelopment Landscape
This verdict could serve as a significant precedent for other housing societies facing long-stalled redevelopment projects. It reaffirms that housing societies have the legal right to terminate non-performing developers and seek better options, especially when projects are held back for several years without progress.
It also clarifies that unless there is clear documentation of amendments, discussions or proposals between parties cannot override the terms of the original DA and SDA.
