Developer's delay costs dearly; Andheri society awarded Rs 82 lakh in damages

Not vacating their homes in haste and handing them over to a developer for redevelopment worked in favour of sixtyfour flat owners from an Andheribased cooperative housing society who last week won a landmark arbitration awardSaidarshan Coop Housing Society consists of 64 members each owning a flat measuring 205 sq ft carpet area a oneroom kitchen flat with shared washrooms The building situated on collector land was one of the first slum redevelopment projects from 1975 when a handful of members formed the society and constructed a groundplusthreefloor structure Over the last 30 years the building became dilapidated leading to a development agreement signed on April 28 2008 with a developer explained Sudhakar Sawant chairman of the societyldquoFor the next 16 years from 2008 the developer failed to fulfil the suburban collector and BMC building proposal conditions which delayed the commencement of the redevelopment work Fortunately the residents had not vacated their flats despite the developerrsquos pressure Otherwise like many other stalled projects we too would have been left without shelterrdquo explained Suryankant Varankar 58 the society secretaryThe caseAdvocate Shreeprasad Parab representing the society said ldquoEach of the 64 members were entitled to flats in the proposed new building of 360 sqft carpet area instead of 205 sqft The developer was to comply with the development agreement terms regarding the purchase of two or more floor space index FSI TDR transferable development rights IOD intimation of disapproval in the name of the society handover of possession temporary alternate accommodations brokerage charges bank guarantee etc They further agreed to complete the construction of the new building within 18 months with a fourmonth grace period from the date of the plinth commencement certificate PCCrdquoBank accounts frozenldquoOn March 3 2010 the developer obtained the IOD with only 073 FSI insufficient even for the 64 rehab flats for existing members The developer was then required to load TDR and procure additional FSI obtain NOC from the collector and commence construction by vacating existing members The developer breached the development agreementrsquos terms and the society decided to terminate the agreement during a special general body Meeting in 2015 Due to the nonpayment of the assessment premium to the suburban collector action was taken against the society by freezing its bank accounts placing a charge on the societyrsquos property and restricting thirdparty transfers of any flats in the societyrdquo said Advocate ParabldquoPromises made in a supplementary agreement on February 16 2016 were also not kept by the developer and the society terminated it on October 28 2018 after attempts by the developer to convince them failed in 2017rdquo Parab addedHigh court MoveThe society moved to Bombay High Court in February 2020 just before the COVID19 lockdown Two years later in 2022 the court after reviewing the casersquos merit appointed an arbitrator for early dispute adjudication Advocate Parab represented the society along with Advocate Niranjan Jagtap and Saiprasad SawantDeveloperrsquos defenceAdvocate Mayur Khandeparkar representing the developer argued that the development agreement was transactionally fluid with both parties altering terms over time the arbitrator overruled this argument by concluding that those clauses which were not altered in the Development Agreement stands enforced He claimed that the society was at fault for not vacating the flats even after intimation from the developer It was also argued that the original agreement lacked a termination clause making the termination invalidKhandeparkar highlighted that the developer had already paid a substantial amount to the suburban collector and BMC demonstrating his intent to begin the project which was delayed only because the society did not vacate Consequently he argued that society should compensate developers for their lossesAdvocate Parab countered stating that the developerrsquos claims were merely delaying tactics that left the society in limbo with no progress on the ground and continuous excuses from the developer for project delaysThe awardThe sole arbitrator Amrut Joshi after reviewing submissions from both parties ruled in favour of Saidarshan Cooperative Housing Society The termination of the development agreement dated April 28 2008 and a power of attorney dated April 30 2008 by the society was declared legal valid and binding on the developer The developer was ordered to pay a monetary award of Rs 8240 lakh with 10 per cent interest from the date of arbitration filing in 2022 along with an additional Rs 26 lakh for legal and overhead costsWhy a winwin for the societyAccording to Advocate Parab with the arbitration award in their favour the society has a free title to the property as it was before 2008 and they are now free to opt for selfredevelopment or appoint a new developer The society had already spent Rs 60 lakh on repairs due to the buildingrsquos poor condition since 2008 along with Rs 26 lakh in legal and other expenses which the developer is now liable to reimburseWhatrsquos nextThe society is eager to proceed with selfredevelopment and has a word of caution for others ldquoDo not hand over possession of your flats until the developer has obtained all statutory permissions and has shown proof of adequate funds to complete the project fulfilling all promises maderdquo