After a legal battle that continued for over a decade as the developer did not fulfil his promises, Tilak Nagar society terminates the contract, moves for self-redevelopment
Safalya CHS Ltd in Tilak Nagar went for redevelopment in 2007 and was demolished only in 2010
Residents of a lower-middle-class cooperative housing society in Tilak Nagar have managed to get rid of an errant developer whom they had appointed for redevelopment, by continued legal fight which started from arbitration and went on in the Bombay High Court and then the Supreme Court. The society members have now decided to go for self-redevelopment.
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Deal with the developer
Safalya CHS Ltd, spread over a 622.01 square metre land for which a MHADA lease deed was executed on June 28, 1996 for a period of 99 years with effect from April 1, 1980, appointed M/s Shrushti Raj Enterprises (India) Limited on May 9, 2007 for redevelopment of the MHADA building consisting of 24 units as the condition of the building was deteriorating. Subsequently all the flats were vacated, but no work was carried out on the ground for three years with the demolition taking place only in August 2010.
Ajay Gurao, aged 60 who was the then secretary of the society, said, “All 24 units were of 208 sq feet. The condition of our building worsened further with construction activity in and around our society. In fact, one day a portion of the ceiling fell on my mother Pramila, who is presently paralytic. Luckily, she escaped unhurt, but it raised concerns among the residents which led to an unanimous decision for redevelopment.”
Ajay Gurao, former society secretary, with his family members
“The developer had said he would provide us with flats measuring 325 sq feet (carpet) and an additional 50 sq feet flower bed area. He was also supposed to pay us a monthly rent of Rs 7,500, which would be increased by 10 per cent each year along with annual brokerage, for the period of construction,” he added.
‘Had to move far’
Like Gurao, most members in the society were salaried employees and preferred to live nearby, even at a higher rent, as their children, too, studied in schools in the area. Things went well till 2011 when the developer abruptly stopped paying the rent.
Confirming the same Gurao said, “I was drawing a salary of Rs 22,000, of which Rs 15,000 went towards paying rent after the developer stopped transferring the money to us. It was not possible to run the family, manage the education of a child and take care of an ailing mother, hence we shifted to a house in Ulwe where the monthly rent was Rs 10,000.”
Hemant Mandrulkar and his family too shifted from Tilaknagar to Navi Mumbai as they could not continue to pay exorbitant rent. Lata Mandrulkar, 45, said, “In 2006 the rent in Tilak Nagar was Rs 6,500 which increased to Rs 16,000 by 2011, making it impossible for us to manage the expenses on a salary of Rs 15,000. So, we moved to a flat in Sanpada with Rs 8,500 rent. I had to travel to Tilak Nagar every day for my daughter’s schooling and would spend my days loitering while they went to school and tuition.” “Today, my elder daughter is a graduate and my second daughter completed Std X, but we do not have the money to let them pursue higher studies. At least, we are hopeful we will soon get our own house back as the society has decided to go for self-redevelopment,” said Lata.
Fellow resident brings hope
Gurao said, “The only ray of hope for us is Advocate Shreeprasad Parab, who was born and brought up in our society. If not for him, we would have never won the case from arbitration to Bombay High court to Supreme Court. Today we are confident of going for self-redevelopment, only because of him and our senior counsel Advocate Niranjan Jaqtab, who even gave us extra time to pay his fees given our financial constraints.”
Advocate Parab, who is also expert director at State Cooperative Housing Federation Limited, said, “The redevelopment process is not a cakewalk for most housing societies as there are many hurdles such as ignorance about law, lack of transparency by the committee during selection of developer, one-sided development agreement as well as no transparency from the developer. And finally there is the scope of mismanagement of funds and not fulfilling the promises by the developer.”
“In case of Safalya CHS Ltd, the society, in 2014, terminated the development agreement along with the power of attorney executed in 2007, as the developer had not made any progress and had also stopped honouring the clauses in the agreement,” said Parab.
In view of the cancellation of the development agreement by the society by notice dated January 22, 2014, the developer in his prayer before the arbitration tribunal had quoted a statement of claim on February 13, 2016 for Rs 25.47 crore from the society for the expenses incurred so far.
The society also made a counter claim on April 1, 2016 against the developer for a total amount of Rs 18.46 crore which included arrears of rent along with corpus, compensation and damages. The society also demanded an annual interest of 21 per cent on the amount along with cost for proceedings.
Mohit Shah, (retired) chief justice of Bombay High Court, who was the sole arbitrator, in his order dated October 7, 2017 directed that the developer pay the society Rs 48.67 lakh with 9 per cent interest per annum from the date of the award till realisation along with Rs 17.91 lakh toward legal cost.
“I was the society associate member at the time and, as an advocate, I led the evidence, exposing the breaches. The arbitrator upheld the termination to be legal, and also imposed a penalty of Rs 66.58 lakh on the developer. However, the developer challenged it before the high court and then the SC. But at all stages, his petitions and appeals were dismissed. The society has now restarted the redevelopment process,” said Parab.
2007
Year society and developer got into an agreement
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