HC paves way for the revamp of 13 buildings in Kannamwar Nagar

The Bombay High Court has directed Mhada to process the proposal for self-development of 500 dilapidated buildings in Kannamwar Nagar without insisting on a No Objection Certificate from the developer. The court also ordered Mhada to make adjustments in favor of the society for the deposit requirement.

MUMBAI: In a reprieve for 500 families from Kannamwar Nagar in Vikhroli East who have been waiting for the redevelopment of their dilapidated buildings for the past 18 years, the Bombay high court (HC) on Tuesday directed Mhada to process their proposal for self-development without insisting on a No Objection Certificate (NOC) from their developer.

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The relief, however, is not unconditional. The division bench of justices Gautam Patel and Kamal Khata said that Kannamwar Nagar Nagarpalika Bhadekaru Co-operative Housing Society will have to submit an affidavit-cum-indemnity to Mhada and a ratification to its April 8, 2021, resolution by which it decided to go for self-redevelopment of their 13 buildings.

While passing the resolution to undertake self-redevelopment, the society had in April 2021 also terminated its agreements with Excel Arcade Pvt. Ltd. in April 2021, which were to redevelop the entire property spread over 26,900 square meters.

The society had decided to redevelop its property way back in 2005 and had appointed Excel Arcade Pvt Ltd as its developer. Accordingly, Excel Arcade demolished 10 of the 13 society buildings between 2008 and 2011. However, only 84 of the 404 displaced families were rehabilitated, while 96 families continued to reside in the deteriorating buildings.

The developer had obtained the necessary NOCs during the process and even deposited ₹11,40,36,164 with Mhada toward redevelopment charges. Nevertheless, in June 2018, the developer defaulted in payment of transit rent to the affected families and abandoned the project.

After the developer abandoned the project halfway, in April 2021, the society terminated the agreements signed with him and decided to go for self-redevelopment. The society had prepared a plan for about 15,255.99 square meters and applied for an NOC from Mhada, which was refused due to a dispute over the deposit requirement. Mhada stipulated that an offer letter could not be issued without the society depositing 25% of the redevelopment costs as the first instalment, amounting to around ₹11.40 crore in the present instance.

The society argued that since the previous developer owed them ₹26,19,96,606 as per an unchallenged arbitral award, this amount already deposited by the developer for the purpose should be adjusted against the deposit requirement. However, Mhada was unable to make such an adjustment without an NOC from the developer allowing such credit to the society.

The court, recognising that the deposit amount is far less than the amount that is to be recovered in execution of the award by the society, directed Mhada to make such an adjustment in favour of the society. However, society must mark their arbitration award as partly satisfied once such credit was allowed, the court added.