Supreme Court clarifies redevelopment rights in Mumbai property dispute: Jagdish Mavji Tank vs. Harresh Navnitrai Mehta (2022)

Introduction

Date of the Judgment: April 19, 2022

Citation: (2022) INSC 417

Judges: L. Nageswara Rao, J. and B.R. Gavai, J.

Can a developer be held in contempt for failing to complete a redevelopment project despite court orders? The Supreme Court of India recently addressed this question in a case involving a property in Mumbai, where a long-standing dispute over redevelopment had led to a contempt petition. The court examined the responsibilities of both the developer and the Maharashtra Housing and Area Development Authority (MHADA) in ensuring the project’s completion. This judgment clarifies the obligations of all parties involved in such projects and sets a precedent for future redevelopment disputes. The judgment was delivered by a two-judge bench comprising of Justice L. Nageswara Rao and Justice B.R. Gavai.

Case Background

The case revolves around the redevelopment of a property known as Jariwala Chawl, located in Mumbai. The tenants/occupants of the Chawl had initially filed a Writ Petition in the High Court of Bombay in 2006, seeking to compel the redevelopment of the property. The High Court, on 21st January 2016, directed MHADA to determine which developer had the consent of at least 70% of the tenants for the redevelopment. MHADA reported that neither of the two developers, M/s. Raj Doshi Exports Pvt. Ltd. nor M/s. Matoshree Infrastructure Private Limited, had the required consent.

Subsequently, the Supreme Court intervened, directing MBRRB to ascertain if M/s. Raj Doshi Exports Pvt. Ltd. had the necessary 70% consent. A report dated 03.09.2016 confirmed that M/s. Raj Doshi Exports Pvt. Ltd. had 78.89% consent, leading the Supreme Court to allow them to proceed with the redevelopment. The Supreme Court, on 29th September 2016, directed the tenants to vacate one of the buildings within eight weeks, and instructed MHADA and other authorities to issue necessary clearances. M/s. Raj Doshi Exports Pvt. Ltd. assured the court that the project would be completed within 42 months.

However, disputes arose regarding certain conditions imposed by MHADA in the No Objection Certificate (NOC), specifically concerning land costs and the area to be allotted to tenants. The Supreme Court, on 12th April 2017, clarified that MHADA was not entitled to land costs and that tenants were entitled to 425 sq. ft. of space. MHADA was directed to issue a fresh NOC, and the developer’s undertaking to complete the project within 42 months was recorded. Despite these orders, the project faced further delays, leading to the present contempt petition.

Timeline:

Course of Proceedings

The present proceedings arose from a Contempt Petition filed by the tenants/occupants of the Jariwala Chawl, alleging non-compliance with the Supreme Court’s orders dated 29.09.2016 and 12.04.2017. The tenants contended that the builder, M/s. Raj Doshi Exports Pvt. Ltd., had failed to commence construction despite the undertaking to complete the project within 42 months.

MHADA also filed a Miscellaneous Application seeking a direction to carry out the redevelopment themselves, citing the builder’s failure to commence construction even after 54 months. Conversely, M/s. Raj Doshi Exports Pvt. Ltd. filed a Miscellaneous Application seeking clarification on their ownership of a portion of the land and permission to redevelop all plots together.

During the proceedings, the Supreme Court noted that both the builder and MHADA were responsible for the delays. The builder had not adhered to the timelines, and MHADA had created hurdles by imposing unreasonable conditions in the NOCs. The court eventually directed the builder to file an undertaking to complete the project within a specific timeframe, which was done on 14.03.2022.

Legal Framework

The case references Development Control Regulations, 1991 (“DCR”). Specifically, Regulations 33(7) and 33(9) of the DCR are mentioned, which pertain to the redevelopment of cessed buildings and dilapidated buildings, respectively. These regulations provide the framework for redevelopment projects in Mumbai.

The judgment also mentions the Development Control Regulations, 2034 (“DCPR-2034”), which is the updated version of the DCR. The builder has undertaken to complete the redevelopment in accordance with regulation 33(7) and/or (9) DCPR-2034.

Arguments

Tenants/Occupants:

• The tenants argued that the builder had not commenced the construction/redevelopment of the subject property despite the undertaking given in the Supreme Court to complete the same in 42 months from 12.04.2017.
• They sought action against the builder for contempt of court due to non-compliance of the judgments of the Supreme Court.

MHADA:

• MHADA contended that the builder had failed to carry out the redevelopment even after 54 months.
• They asserted that MHADA is ready and willing to carry out the redevelopment of the four buildings themselves.
• MHADA claimed ownership of 2807.15 sq. meters of land, stating that it was acquired by MHADA and the builder was given the land only for construction and redevelopment.
• They argued that MHADA should execute the Lease Deed with the proposed Co-operative Housing Society for the 2807.15 sq. meters of land, while the builder can execute conveyance deeds for the remaining portion.

M/s. Raj Doshi Exports Pvt. Ltd. (Builder/Developer):

• The builder sought a clarification that it should continue to be the owner of the portion comprising of 2807.15 sq. meters of the subject property.
• They sought permission to redevelop all three plots together and to execute a deed of conveyance in favor of the proposed society for the entire plot.
• The builder alleged that there was a deliberate delay on the part of MHADA in not granting necessary approvals and by imposing unreasonable conditions in the NOCs.
• They contended that MHADA cannot insist on the condition for issuance of separate property cards and for sub-division of the subject property after the order passed by the Supreme Court on 12.04.2017.
• The builder filed an undertaking to complete the redevelopment within 36 months from the date of vacation of the premises by the tenants and to provide appropriate accommodation admeasuring minimum 508 sq. ft. carpet area (including fungible area) to the tenants.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the builder, M/s. Raj Doshi Exports Pvt. Ltd., and MHADA had complied with the directions given by the Court in its previous orders dated 29.09.2016 and 12.04.2017, regarding the redevelopment of the subject property.

A sub-issue that the court dealt with was regarding the ownership of the 2807.15 sq. mtrs of land.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

Previous Orders of the Supreme Court:

• Order dated 29.09.2016: This order directed the tenants to vacate one building and instructed MHADA to issue necessary clearances.
• Order dated 12.04.2017: This order clarified that MHADA was not entitled to land costs and that tenants were entitled to 425 sq. ft. of space. It also directed MHADA to issue a fresh NOC.

Decision of the Chief Minister of Maharashtra:

• Decision dated 02.08.2004: This decision was regarding handing over the entire subject property to M/s. Raj Doshi Exports Pvt. Ltd. for redevelopment in a joint venture with MHADA. The Supreme Court clarified that only the joint venture aspect of this decision was superseded by its order dated 29.09.2016.

Judgment

How each authority was viewed by the Court?

• The Supreme Court reiterated its previous order dated 29.09.2016, which allowed the builder to proceed with the redevelopment and set timelines for the same.
• The Supreme Court relied on its order dated 12.04.2017, wherein it had already clarified that MHADA was not entitled to land costs and that the tenants were entitled to 425 sq. ft. of space.
• The Court clarified that the decision of the Chief Minister dated 02.08.2004 was partially superseded by the order dated 29.09.2016, specifically regarding the joint venture aspect. However, the remaining portion of the decision was still binding on the parties.

What weighed in the mind of the Court?

The Supreme Court’s reasoning was primarily driven by the need to ensure the timely completion of the redevelopment project and to protect the interests of the tenants/occupants who had been waiting for a long time. The court emphasized that both the builder and MHADA had failed to comply with its previous orders, causing significant delays. The court’s decision to reject MHADA’s claim of ownership over a portion of the land was based on its earlier order, which had clarified that the entire property was to be handed over to the builder for redevelopment. The court also took into account the undertaking filed by the builder to complete the project within a specific timeframe.

Fact: Percentage of the consideration of the factual aspects of the case.

Law: Percentage of legal considerations.

The court’s reasoning was a mix of factual considerations (such as the delays in the project and the non-compliance of court orders) and legal considerations (such as the interpretation of its previous orders and the rights of the parties).

Logical Reasoning:

The court rejected any alternative interpretations that would have further delayed the project or undermined the rights of the tenants/occupants. The court’s final decision was aimed at ensuring the expeditious completion of the project and protecting the interests of the tenants/occupants.

The Supreme Court held that both the builder and MHADA were guilty of non-compliance of the directions of this Court. The Court warned that any further disobedience of the directions given by this Court shall be viewed seriously.

The Court took on record the undertaking filed by the builder/developer on 14.03.2022, which shall be scrupulously complied with by all concerned.

The court stated, “As mentioned above, the builder is guilty of delaying the construction by not taking suitable steps in complete disobedience of the orders passed by this Court based on its undertaking.”

The court also stated, “Equally, MHADA is also responsible for creating hurdles, initially by imposing unreasonable conditions of sub division of the plots and issuance of property cards in the NOC dated 22.11.2016 and later in insisting that MHADA still has ownership over 2807.15 sq. meters of land.”

The court also stated, “We are of the considered opinion that the builder as well as the concerned authorities of MHADA are guilty of non-compliance of the directions of this Court.”

Key Takeaways

• The builder, M/s. Raj Doshi Exports Pvt. Ltd., is obligated to complete the redevelopment project within 36 months from the date of vacation of the premises by the tenants/occupants.
• The builder must provide appropriate accommodation admeasuring a minimum of 508 sq. ft. carpet area (including fungible area) to the tenants/occupants.
• MHADA is required to cooperate with the builder and not create any further hurdles in the redevelopment process.
• MHADA cannot insist on the condition for issuance of separate property cards and for sub-division of the subject property.
• MHADA cannot claim ownership over 2807.15 sq. meters of land and is not entitled to execute Lease Deed for the same.
• The builder is entitled to execute conveyance deed of the entire land admeasuring 6067.96 sq. mtrs. in favour of the one or more Co-operative housing society/ies.
• Both the builder and MHADA are warned that any further disobedience of the directions given by the Supreme Court shall be viewed seriously.

Directions

The Supreme Court directed that the undertaking filed by the builder/developer on 14.03.2022 shall be scrupulously complied with by all concerned. The Court closed the Contempt Petition with liberty to the tenants/occupants to approach the Court in case of non-compliance of the directions given.

Development of Law

The ratio decidendi of this case is that both the builder and MHADA are obligated to comply with the orders of the Supreme Court and that any non-compliance will be viewed seriously. This case reinforces the importance of adhering to court orders and the responsibilities of all parties involved in redevelopment projects. There is no change in the previous position of law, but the court has emphasized the need for strict compliance with its directions.

Conclusion

In conclusion, the Supreme Court’s judgment in the case of Jagdish Mavji Tank vs. Harresh Navnitrai Mehta clarifies the obligations of both the builder and MHADA in the redevelopment of the Jariwala Chawl property. The court held both parties responsible for the delays and emphasized the need for strict compliance with its orders. The builder’s undertaking to complete the project within 36 months was taken on record, and MHADA was directed to cooperate in the process. The judgment serves as a warning to all parties involved in redevelopment projects, highlighting the importance of adhering to court orders and ensuring the timely completion of such projects.