After nearly 19 years, decks are cleared for redevelopment of Kher Nagar Sukhsadan Co-operative Housing Society in Bandra (East). The Bombay High Court has directed Maharashtra Housing and Area Development Authority (MHADA) and other authorities to grant permissions for the redevelopment by Tristar Development.
The high court has upheld the society’s rights in terminating the development agreement with AA Estates Private Limited (RNA Group Company) after it failed to start the redevelopment process.
The HC was hearing a petition filed by the society seeking direction to the authorities to grant no-objection certificate (NOC) to Tristar for redeveloping their society, which was categorised as C1 (dilapidated and beyond repair) by the BMC.
The society’s building was leased to it by MHADA under an agreement dated February 12, 1996. The society entered into a development agreement (DA) with AA Estates on October 16, 2005, granting them redevelopment rights. However, AA Estates failed to take any substantial steps for seven years, merely obtaining an NOC from MHADA by January 5, 2012.
As AA Estates failed to initiate the redevelopment, the society terminated the DA on June 9, 2019. Meanwhile, AA Estates was admitted into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code 2016 by an order of the National Company Law Tribunal (NCLT), Mumbai Bench, dated November 14, 2019.
The Interim Resolution Professional appointed for AA Estates informed the petitioner on December 24, 2019, that a moratorium was applicable to AA Estates’ assets under the CIRP, requesting no coercive action be taken against the developer. However, the NCLT vacated the CIRP order on June 12, 2020. Despite this, AA Estates requested the society to recall the termination of the DA. When the society refused the same, AA Estates initiated arbitration. However, it failed to get any favourable order.
On November 7, 2021, after considering several proposals, the petitioner appointed Tristar Development as its new developer, which subsequently spent Rs11.80 crore towards the project’s redevelopment.
However, in December 2022, the NCLT reappointed a Resolution Professional for AA Estates, who wrote to MHADA and other authorities, urging them not to grant redevelopment permissions for the society, thereby stalling the redevelopment process once again. Hence, the society approached the HC.
A bench of Justices MS Sonak and Kamal Khata noted that the society was “faced with a classic impasse yet again because of the infamous RNA Group company AA Estates Private Limited”. It underlined that AA Estates had failed to perform its obligations under the DA, and the redevelopment rights of the society’s property did not constitute an asset of AA Estates under the CIRP. It held that resolution professional’s letters were “ex-facie illegal”.
“These society members cannot be deprived of their basic and fundamental rights to shelter,” the bench remarked while directing the authorities to grant permissions for the redevelopment by Tristar.
