IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. Kathawalla, R.I. Chagla, JJ.
Hanuman Nagar ( Jogeshwari) Sra Chs (prop) - Appellant
Versus
M/s Kanchi Builders And Developers - Respondent
Writ Petition No. 12156 of 2019; Interim Application (L) No. 96210 of 2020
Decided On : 29-04-2021
SLUM REHABILITATION SCHEME - TERMINATION OF DEVELOPER'S APPOINTMENT - AGRC ORDER SETTING ASIDE CEO-SRA ORDER - CHALLENGE - VALIDITY - SRA ACT, 1971, SEC. 13(2) - DCR REGULATION 33(10) - MAHARASHTRA SLUM AREAS (IMPROVEMENT, CLEARANCE AND REDEVELOPMENT) ACT, 1971 - DEVELOPMENT CONTROL REGULATIONS FOR GREATER MUMBAI, 1991.
Fact of the Case:
Petitioner Society, a slum dwellers' society, appointed Respondent Developers as developers for Slum Rehabilitation Scheme (SRS) in 2006. Developers obtained LOI in 2010 and revised LOI in 2011. They obtained amended IOD in 2011 and plinth CC in 2014. Developers constructed plinth level but failed to carry out further construction and pay agreed monthly compensation for alternate accommodation to slum dwellers. Society terminated Developers' appointment in 2016 and requested SRA to appoint new developer. CEO-SRA terminated Developers' appointment and granted liberty to Society to appoint new developer. Developers challenged the order before AGRC, which set aside the CEO-SRA order and granted Developers 2 months to clear arrears and 2 years to complete construction. Society challenged the AGRC order.
Finding of the Court:
1. AGRC erred in setting aside CEO-SRA order without considering Developers' failure to carry out construction beyond plinth level and pay agreed compensation. 2. AGRC failed to appreciate that blanket extension of time without monitoring compliance would cause further delay and hardship to slum dwellers. 3. AGRC's reliance on Awdesh Tiwari & Ors. (2006) SCCOnLineBom 481 was misplaced as it did not deal with a situation where a developer failed to implement the scheme to the satisfaction of SRA and let down the slum society. 4. Developers' submission that they needed to submit fresh plans due to increased area requirement was not tenable as the requirement was in force since 2018 and they had not taken any steps to obtain necessary permissions or submit plans. 5. Developers' financial incapacity to pay arrears and lack of progress in redevelopment project indicated their inability to complete the project within the extended timeline.
Issues: 1. Whether AGRC erred in setting aside CEO-SRA order terminating Developers' appointment without considering their failure to carry out construction beyond plinth level and pay agreed compensation? 2. Whether AGRC failed to appreciate that blanket extension of time without monitoring compliance would cause further delay and hardship to slum dwellers? 3. Whether AGRC's reliance on Awdesh Tiwari & Ors. (2006) SCCOnLineBom 481 was misplaced? 4. Whether Developers' submission that they needed to submit fresh plans due to increased area requirement was tenable? 5. Whether Developers' financial incapacity to pay arrears and lack of progress in redevelopment project indicated their inability to complete the project within the extended timeline?
Ratio Decidendi: 1. AGRC erred in setting aside CEO-SRA order without considering Developers' failure to carry out construction beyond plinth level and pay agreed compensation. 2. AGRC failed to appreciate that blanket extension of time without monitoring compliance would cause further delay and hardship to slum dwellers. 3. AGRC's reliance on Awdesh Tiwari & Ors. (2006) SCCOnLineBom 481 was misplaced as it did not deal with a situation where a developer failed to implement the scheme to the satisfaction of SRA and let down the slum society. 4. Developers' submission that they needed to submit fresh plans due to increased area requirement was not tenable as the requirement was in force since 2018 and they had not taken any steps to obtain necessary permissions or submit plans. 5. Developers' financial incapacity to pay arrears and lack of progress in redevelopment project indicated their inability to complete the project within the extended timeline.
Final Decision: Writ petition allowed. AGRC order set aside.
Invocation of Section 13(2) for termination of developer's appointment: Section 13(2) empowers the competent authority, such as CEO-SRA, to terminate a developer's appointment upon failure to implement the slum rehabilitation scheme diligently, including prolonged delays in construction beyond plinth level and non-payment of agreed compensation for transit accommodation. (!) (!) (!) (!) [4000673170025][4000673170026]
Procedure under Section 13(2) including show cause notice: Prior to termination, a show cause notice must be issued to the developer, requiring explanation as to why action under Section 13(2) should not be taken, followed by a hearing for both parties to present their cases. (!) (!) (!) [4000673170025][4000673170026]
Grounds justifying termination under Section 13(2): Termination is warranted when the scheme lingers for over a decade (e.g., 11 years), developer fails to progress construction despite obtaining plinth CC, defaults on transit rent payments causing hardship to slum dwellers, and offers to clear arrears only at the last moment, indicating lack of seriousness. (!) (!) (!) [4000673170026][4000673170027]
Consequences of termination under Section 13(2): Upon termination, the society gains liberty to appoint a new developer per SRA rules, with provisions for valuing and reimbursing the outgoing developer's legally incurred expenses by the new developer. (!) (!) (!) (!) (!) [4000673170026]
Limits on appellate interference with Section 13(2) orders: AGRC cannot set aside a CEO-SRA termination order under Section 13(2) merely to prioritize landowner-developers or avoid procedural delays, without addressing developer's defaults, financial incapacity, and lack of progress; such reversal must consider slum dwellers' hardships and include monitoring mechanisms. (!) (!) [4000673170027][4000673170028][4000673170029][4000673170031][4000673170034]
Developer's defenses against Section 13(2) action: Claims of external delays (e.g., height restrictions, metro work, or society interference) must be substantiated; vague excuses without particulars do not preclude termination, especially when developer admits ongoing rent arrears and inability to pay promptly. (!) (!) (!) [4000673170030]
Interplay of Section 13(2) with slum dwellers' rights: Section 13(2) protects slum dwellers from indefinite delays by erring developers, allowing society resolutions (with majority support) to seek termination when developers breach promises on construction timelines and rent, aligning with broader scheme objectives. (!) (!) (!) [4000673170023][4000673170024]
JUDGMENT
S.J. Kathawalla, J. - The Petitioner Hanuman Nagar ( Jogeshwari) SRA CHS [Proposed] (the 'Petitioner Society') is a Society formed by the slum dwellers residing on the plot of land bearing CTS No. 231 (part), 268 and 268(1) of Village Mogra, Hanuman Nagar, Jogeshwari (East), Mumbai - 400 060, admeasuring 2764.70 Sq. Mtrs. (the 'Subject Plot').
2. By the above Writ Petition, the Petitioner Society has impugned the Order dated 27th September, 2018, passed by the Apex Grievance Redressal Committee ('AGRC') setting aside the Order passed by the CEO - SRA dated 23rd November, 2017, terminating the appointment of the Respondent No. 1 - M/s Kanchi Builders and Developers ('Developers') as Developers of the subject Slum Rehabilitation Scheme ('S. R. Scheme') and allowing the Petitioner Society to appoint a new developer in accordance with the Rules, Regulations and Policy of the Slum Rehabilitation Authority ('SRA').
3. According to the Petitioner Society, most of its members (slum dwellers) who were residing on the Subject Plot are poor workers, working as daily wage earners and domestic workers (housemaids). In the year 2006 majority of the members of the Petitioner Society appointed the Developers who are also the owners of the Subject Plot, as Developers for the S. R. Scheme, pursuant to which the Developers submitted to the SRA a proposal on 22nd July, 2006 for redevelopment of the Subject Plot under Regulation 33 (10) of the Development Control Regulations for Greater Mumbai, 1991 ('DCR'). On 8th December, 2006 certified Annexure II was issued, wherein 124 slum dwellers were held to be eligible. 80 slum dwellers handed over their huts to the Developers in the year 2010. However, the Developers obtained the Letter of Intent ('LOI') only on 1st June, 2010 and the revised LOI on 15th September, 2011. The Developers obtained an Amended Intimation of Disapproval ('IOD') for a composite Building No. 1 ('Composite Building') only on 16th September, 2011 and obtained the plinth Commencement Certificate ('CC') for the Composite Building only on 7th June, 2014.
4. The Developers had agreed to complete the construction of the Composite Building within 24 months from the date of receipt of the CC. As stated earlier though the CC was received on 7th June, 2014, the Developers except for constructing the plinth of the Composite Building in the year 2014-15, not only failed to carry out any further construction, but also failed to regularly pay the agreed monthly compensation in lieu of temporary alternate accommodation to the members of the Petitioner Society, thereby putting the poor and the helpless members of the Petitioner Society who were waiting for a roof over their heads since the year 2006 and the 80 members who have handed over the possession of their respective huts to the Developers since the year 2010, into grave difficulty and inconvenience.
5. According to the Petitioner Society, they were therefore compelled to make a representation dated 12th August, 2016 before the SRA, setting out the harassment faced by them at the hands of the Developers. The Assistant Registrar C.S. (Eastern & Western Suburbs) / SRA heard the parties and gave directions to pay rent compensation to the eligible slum dwellers as per Circular No. 153 of the SRA and after payment of the rent due to the eligible slum dwellers, submit a self-declaration and to inform the SRA. Since the Developers violated the said direction and failed to clear the dues of the slum dwellers and were also responsible in causing inordinate delay in implementing the S. R. Scheme, the Petitioner Society in its General Body Meeting held on 18th December, 2016 terminated the appointment of the Developers of the subject S.R. Scheme and by their Letter / Application dated 12th April, 2017, requested the SRA to terminate the appointment of the Developers and to appoint new developers in their place.
6. On 30th April, 2017, a General Body Meeting of the Petitioner Society was once aga
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