Bombay High Court: Flat Buyers of Terminated Developer Have No Claim Against Society or New Builder.

Headnote:

The Bombay High Court held that third-party purchasers who bought flats from a developer whose appointment has been validly terminated in a redevelopment project have no enforceable rights against the housing society or the new developer. The Court clarified that the society cannot be treated as a “promoter” under the Maharashtra Ownership Flats Act, 1963 (MOFA) in such cases, and that all derivative rights of purchasers extinguish upon termination of the original developer’s agreement.

Background:

• The appellants were purchasers of flats from Respondent No. 1 – Amogh Sawant, the erstwhile developer appointed by Nehru Nagar Vidyut Vilas Co-operative Housing Society Ltd. for redevelopment of its property at Kurla (East), Mumbai.

• The Society later terminated the developer’s appointment, and the termination was upheld by an arbitral award dated 7 November 2022.

• Subsequently, the Society appointed M/s Kabra Infrastructure LLP (Respondent No. 5) as the new developer.

• The appellants sought injunctions restraining the Society and new developer from carrying out demolition, modification, or redevelopment activities, claiming rights as bona fide purchasers under MOFA.

Court’s Observations:

• The Court reaffirmed that the issue is no longer res integra, being settled by precedents such as Vaidehi Akash Housing Pvt. Ltd. v. D.N. Nagar CHS (2014 SCC OnLine Bom 5068) and Goregaon Pearl CHS Ltd. v. Seema Paryekar (2019 SCC OnLine Bom 3274).

• Purchasers through a terminated developer derive their rights from the developer’s agreement, and once the developer’s appointment is validly terminated, their derivative rights cease to exist.

• The Society is not a promoter under MOFA in relation to such purchasers, as redevelopment primarily concerns the rehabilitation of society members, not third-party investors.

• The Court distinguished Farhat CHS Ltd. v. Malkani Enterprises (2014) 6 Mah LJ 358, noting that it dealt with joint development projects where both parties acted as promoters, unlike the present case.

• The Court emphasized that the purchasers’ remedy lies only against the erstwhile developer for damages or refund, and not against the Society or newly appointed developer.

Decision:

• The Appeal from Order was dismissed.

• The Court refused to grant any interim injunction restraining redevelopment.

• It reiterated that third-party purchasers cannot impede redevelopment proceedings merely on the basis of agreements with a terminated developer.

Legal Provisions Discussed:

• Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) – Definition and liability of “promoter”.

• Arbitration and Conciliation Act, 1996 – Effect of arbitral awards upholding termination of development agreements.

• Article 226 & 227, Constitution of India – Limited judicial interference in factual findings under settled law on redevelopment disputes.

Citation: 2025:BHC-AS:46802

Case: Satish Murlidhar Inamdar & Anr. v. Amogh Sawant & Ors.

Court: High Court of Bombay (Civil Appellate Jurisdiction)

Coram: Justice Kamal Khata

Date of Decision: 4 November 2025

Appeal From Order No.: 362 of 2024