2023:BHC-OS:11851-DB 912-OSWPL-1776-2023-F.

DOC
ARUNA
SANDEEP
TALWALKAR
Digitally signed by
ARUNA SANDEEP
TALWALKAR
Date: 2023.10.13
12:15:48 +0530
Talwalkar

REPORTABLE

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 1776 OF 2023

Deepak Prabhakar Thakoor & Ors …Petitioners

Versus
Maharashtra Housing and Area Development …Respondents
Authority (MHADA) & Ors

Mr Pradeep J Thorat, with Rohit Jain, Aniesh S Jadhav, GH

Rajpurohit, Rohit Shinde & Mayur Shinde, for the Petitioners.
Mr PG Lad, with Sayli Apte & Shreya Shah, for Respondent No. 1
MHADA.
Mr Nilesh Ojha, i/b Dipashri U Raorane, for Respondent No.2.
Mr Sharan Jagtiani, Senior Advocate, with Priyank Kapadia i/b
Mohanish Chaudhari, for Respondent No. 3.

CORAM G.S. Patel &

Kamal Khata, JJ.
DATED: 12th October 2023
ORDER (per GS Patel J):-

1. In our view, the Petition is thoroughly misconceived. The

Petitioners are not members of the 3rd Respondent Society. They

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are third-party flat purchasers in a redevelopment project that was

once being undertaken by the 2nd Respondent, M/s G.A. Builders
Pvt Ltd (“GABPL”), represented before us by Mr Ojha.

2. The principal reliefs sought in the Writ Petition are in prayer

clauses (a) and (b) at pages 13 and 14, which reads ::thus:
(a) This Honourable Court be pleased to issue Writ of
Certiorari or writ in the nature of Certiorari or any other
writ, directions, orders be passed calling upon the
Respondents Nos. 1 to call for the records and proceedings
in respect of the Intimation of Approval (IOA) No – EE/BP
Cell/GM/MHADA-29/1210/2022 dated 14.12.2022 issued
by Respondent No. 1 at Exhibit “D” and after going
through its validity, legality and propriety thereof, the said
impugned IOA be quashed and/or set aside.
(b) That this Honourable Court be pleased to restrain
the Respondents from demolishing the said building of the
Respondent No. 3 pursuant to Intimation of Approval
(IOA) No – EE/BP Cell/GM/MHADA-29/1210/2022
dated 14.12.2022 issued by Respondent No. 1.

3. Clearly, these third-party flat purchasers, all of whom have

transactions and agreements only with GABPL, claim substantive
rights in regard to the property of the Society and the proposal of
the Society for its own redevelopment.

4. We are given to understand that between the Society and the

developer, there are and were other proceedings in arbitration and
elsewhere. These will remain unaffected by the present order. All
other remedies between the builder GAPBL and the Society are also

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unaffected by the present order. The only question to which we

address ourselves is whether these third-party flat purchasers from
the developers can claim substantive rights as against the Society
itself.

5. The basis for this claim is an undertaking-cum-indemnity

given by the Society to MHADA, a copy of which is at Exhibit “D-
1” at pages 314 to 315. It reads ::thus:
UNDERTAKING CUM INDEMNITY BOND
To,
Executive Engineer Building Permission Cell,
MHADA,
Griha Nirman Bhavan,
Kala Nagar, Bandra (E),
Mumbai
We Mr Dharamaraj Ranga swamy, the Chairman, and Mr
Vijay C Sharma, the Secretary, both adult, Indian
Inhabitants, Presently Residing at Subhash Nagar,
Chembur (East), Mumbai No. 400071, do hereby are giving
undertaking cum indemnity bond on behalf of Chembur
Shivsmruti Co-operative Housing Society Ltd. Building
no.22, Subhash Nagar, Chembur (East), Mumbai-400071.
As per the Contempt Petition (L) 7362 of 2021 dated 11th
March 2022 physical possession of the said property was
handed over to the said society and now the existing old
structure standing thereon on the said plot will be
demolished by the appointed demolition contractor, who is
appointed by the society and if any claim or liabilities of the
terminated developer arises in present or in future then the
said claim or liability will be settled by the society alone.
Further the old structure will be completely demolished on
society’s own risk and we will indemnify the MHADA

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authority and its officers and all other staff against any
claim or legal consequences if arises thereof.
This undertaking will be binding on us.
Secretary Chairman

6. Then reference is invited by Mr Thorat for the Petitioner to

the permission granted by MHADA to Society at Exhibit “D” from
pages 305 to 309. Condition 16 of this permission is that any third-
party rights created are to be settled by the Society following the
undertaking submitted by the Society.

7. These two provisions read together are nothing more than an

indemnity. They do not and cannot be held to create substantive
rights in praesenti to the Society building and properties nor in
respect of the development rights of the Society in regard to the
property that the Society itself owns. At best, if there is a claim that
the Petitioners have against the developer, it may be open for the
developer to then claim that the developer is fully indemnified by
the undertaking given by the Society and which is Condition 16 of
the MHADA permission.

8. the next submission is that now the RERA has been

established, the rights of third-party flat purchasers are thus
protected even in regard to the property of the Society.

9. None of these issues are res integra. All of them are

comprehensively decided by the two decisions of this Court both by
SC Gupte J, sitting singly. The first of these is the decision in

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Vaidehi Akash Housing Pvt Ltd v New DN Nagar Cooperative Housing

Society Union Ltd & Ors1 and connected matters. There were
various contenders before the Court. Vaidehi Akash set out
submissions made on behalf of third-party flat purchasers. There
were other issues considered in that judgment with which we are not
immediately concerned. There are two issues however, that are
material to our discussion today. The first is the concept of the ‘rule
of majority’ in cooperative society matters. Individual members who
protest against society actions often describe this as the tyranny of a
brute-force majority. But whatever label that one may choose to
ascribe to it, the fact is that this is precisely the frame of law. Indeed,
there is sufficient authority to say that once a person becomes a
member of a Society, he literally loses his identity: see Aditya
Developers v Nirmal Anand Co-Operative Housing Society Ltd, 2 a
decision by a learned Single Judge of this Court (KK Tated J). This
has been consistently followed by coordinate benches, 3 and
reaffirmed by at least one Division Bench.4 In Vaidehi Akash, Gupte
J dealt with the concept of rule of majority in paragraphs 75

1 2014 SCC OnLine Bom 5068 : (2015) 3 AIR Bom R 270.

2 2016 SCC OnLine Bom 100: (2016) 3 Mah LJ 761 : (2016) 4 AIR Bom R
26 : (2017) 5 Arb LR 66.
3 Rajawadi Arunodaya CHSL v Value Projects Pvt Ltd, 2021 SCC OnLine
Bom 9572; Chirag Infra Projects Pvt Ltd v Vijay Jwala CHSL & Anr, 2021 SCC
OnLine Bom 364 : (2021) 3 Bom CR 271; Westin Sankalp Developers v Ajay
Sikandar Rana & Ors, 2021 SCC OnLine Bom 421.
4 Time Field Corporation v Sankalp CHSL & Ors, 2022 SCC OnLine Bom
1436.

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onwards 5 inter alia citing the Division Bench Judgment of this Court
in Girish Mulchand Mehta & Anr v Mahesh S Mehta & Anr. 6

10. Specifically on the question of the challenges to the

development canvassed on behalf of third parties, i.e., those third
party purchasers in whose favour rights are allegedly created by the
developer, the discussion is to be found in Vaidehi Akash in
paragraphs 80 to 93.7 These speak eloquently to a determination of
the issue. Rather than attempt a summarisation, and since the
discussion is not only exhaustive but is comprehensive from all
perspectives, we take liberty of reproducing the relevant portions of
these paragraphs.
80. This brings us to an important aspect of this
group of matters and which has engaged anxious
attention of this Court. During the subsistence of the
Society Development Agreement and in pursuance of
various rights conferred upon it thereunder with
reference to disposal of the free sale component of the
project, Vaidehi has created third party rights in favour
of various flat purchasers and others. These flat
purchasers and others themselves consist of different
categories. There are those who have come in between the
dates of the Society Development Agreement and the

5 Of the SCC OnLine report, corresponding to paragraph 15 of the

original.
6 2009 SCC OnLine Bom 1986 : (2010) 2 Mah LJ 657 : (2010) 1 Bom CR
31. Reaffirmed in Sarthak Developers v Bank of India Amrut-Tara Staff CHSL,
Appeal 24 of 2013, decided on 5th December 2012 (Dr DY Chandrachud J and
AA Sayed JJ (as they then were), per Dr DY Chandrachud J); unreported.
7 The paragraph numbering in the SCC OnLine report is completely
different from the original. These paragraphs of the SCC Report correspond to
paragraphs 16 (and its several sub-paragraphs) to 18 of the original.

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Rustomjee Agreement. During this period the entire free

sale component, i.e. nearly 2,53,500 sq.ft. of real estate, was
at the disposal of Vaidehi and it was free to deal with the
same the way it liked. Third party rights have been
created by it in favour of various parties during this
period. Then there are others who have come in after the
Rustomjee Agreement but before the Society Development
Agreement was terminated by the Society. During this
period Vaidehi had a limited right, namely, the right to deal
with an area of 37050 sq.ft. for residential use and 20000
sq.ft. for commercial use. Different considerations may
apply to those third parties whose rights have been created
within or beyond this limitation on Vaidehi’s rights, as the
case may be, for Vaidehi seems to have gone much beyond
its limitation during this period and oversold its position. It
purports to have created rights over an area far in excess of
this limited F.S.I. available to it for disposal. Another
distinction as between the various third parties is on the
basis of the kinds of arrangements entered into with them
by Vaidehi. There are purchasers who hold registered
agreements with Vaidehi, whilst there are those who have
unregistered agreements and there are others who have
simply allotment letters in their favour. The rights of these
various stakeholders vis-a-vis the entitlement of the Society
and through it of Rustomjee to go ahead with the
redevelopment project need an anxious thought. Whilst
some of these third parties appear to be investors, there
may certainly be those who are genuine buyers who have
staked their hard-earned money to obtain premises within
the project.
81. The flat purchasers’ main arguments are that
under the Society Development Agreement, which was
at any rate valid upto 16 April, 2010, Vaidehi had the
authority to deal with the entire free sale component, i.e.
nearly 2,53,500 sq.ft. of area; that even if such authority

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could be treated as having been divested by it under the

Rustomjee Agreement, between 4 April, 2007 (i.e. the date
of Rustomjee Agreement) and 16 April, 2010 (i.e. the date
of termination of the Society Development Agreement),
Vaidehi had the authority to deal with 57050 sq.ft of area as
shown above; that the agreements entered into by
Vaidehi during these periods were lawful and binding on
the Society, since during these periods Vaidehi was an
agent of the Society and the former’s acts within; its
authority were binding on the latter; and that at any rate,
the Society itself being a ‘promoter’ within the meaning
of MOFA, the rights of the purchasers under MOFA
were binding on the Society and the latter could not
enter into any agreement with Rustomjee in breach of
these rights.
82. The purchasers’ rights may, thus, be examined
from two angles, one from the standpoint of the contract
between the Society and Vaidehi (who was their
vendor) and the other from the standpoint of the
obligations of the Society, if any, under MOFA.
83. No doubt Vaidehi had been conferred with the
authority to deal with the free sale component of the project
by the Society under the Society Development Agreement,
but the question is whether such authority was to be
exercised by Vaidehi for its own sake or on its own account
as an independent contractor or as an agent of the Society.
Some of the important clauses of the Society Development
Agreement may be noted in this behalf. These are as
follows: … … …
84. The clauses quoted above, read together and in their
proper perspective to be gathered from the whole
agreement, clearly envisage the development and sale of the
free sale component of the project by Vaidehi on their own
account and as an independent contracting party and not as

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agents of the Society. The contract between Vaidehi and

the Society is on a principal to principal basis; it neither
constitutes a partnership nor a joint venture or agency
between the two. The third party purchasers with whom
Vaidehi might enter into agreements for sale would have
no privity of contract with the Society and the Society
would in no way be responsible for any claim made by
such purchasers against Vaidehi under their respective
agreements for sale.
85. There being no privity of contract between the
Society and the third party purchasers claiming under
Vaidehi, the third party purchasers cannot claim
specific performance of their respective agreements for
sale except through Vaidehi. They stand or fall by
Vaidehi. If the rights of Vaidehi are brought to an end
upon a lawful termination of the Society Development
Agreement, the third party purchasers cannot lay any
independent claim against the Society or anyone
claiming through the Society. The agreements with
third party purchasers are premised upon a valid,
subsisting and enforceable agreement between their
vendors, namely, Vaidehi and the owners, namely, the
Society and in fact refer to the Society Development
Agreement in this behalf. Admittedly, therefore, the
third party purchasers had, or at any rate, ought to
have, notice of the Society Development Agreement and
its terms and conditions and Vaidehi’s obligations to
perform the same. If Vaidehi fails to perform these
obligations, the purchasers cannot but suffer the
consequences. In other words, the purchaser’s rights
are subject to Vaidehi’s rights and not higher than
those. Therefore, from a contractual standpoint, the third
party purchasers have no case against the Society or
Rustomjee, who claim through the Society.
86. Let us now consider if these third party purchasers

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have any rights under MOFA against the Society. It is

submitted on their behalf that the Society is very much a
‘promoter’ within the meaning of MOFA as regards their
respective agreements for sale. Learned Counsel for the
purchasers rely upon the definition of “promoter”
contained in Section 2(c) of the MOFA. The definition is in
the following terms:
“promoter” means a person and includes a
partnership firm or a body or association of
persons, whether registered or not who
constructs or causes to be constructed a block
or building of flats, or apartments for the
purpose of selling some or all of them to other
persons, or to a company, co-operative society
or other association of persons and includes
his assignees; and where the person who
builds and the person who sells are different
persons, the term includes both.”
87. It is submitted that the Society can at any rate be said
to have caused the building of flats to be constructed for the
purpose of selling the same and as a person, who causes
such building to be built, is as much a promoter as a person
who sells premises in such building.
88. The Society is the owner of the property and has
entered into an agreement with the developers, i.e. Vaidehi,
for redevelopment of its property. The redevelopment
envisages construction of the Society’s building to
accommodate its members and also construction of
building/s of flats/premises to be sold to outsiders. The
agreement authorizes or entitles the developers to
construct such building/s and sell flats/premises therein to
outsiders. Such authority or entitlement is to the
developers’ account and in their own right and as an
independent contractor. If in exercise of such authority or

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entitlement, a building is constructed by the developers, it

cannot be said that such building is caused to be
constructed by the Society within the meaning of Section
2(c) of the MOFA.
89. Any other interpretation would lead to anomalous
consequences, which could never have been contemplated
by MOFA. The owners of lands entering into agreements
for sale or development agreements with
promoters/developers would be held as being subject to all
liabilities of a promoter, such as liability of disclosure of
plans and specifications, outgoings etc. under Section 3 of
the MOFA, entering into agreements in accordance with
Section 4, giving possession of flats and suffering the
consequences of Section 8, forming co-operative societies
of flat purchasers under Section 10 and so on. This would
be plainly inconceivable.
90. Prima facie, thus, there is no case to treat the
Society, who is merely in the position of an owner vis-a-
vis the third party purchasers, as a ‘promoter’ within
the meaning of MOFA and foist the obligations of a
promoter on the Society in relation to the purchasers.
91. Besides what is discussed above, there are many
other difficulties in the way of many of these third party
purchasers. In the first place, it now transpires from the
various proceedings that their vendor, Vaidehi, has
proceeded to allot an area far in excess of its entitlement,
which was merely 2,53,500 sq.ft. FSI to start with and
thereafter restricted to 57050 sq.ft. (i.e. after the Rustomjee
Agreement). In fact, what Vaidehi appears to have dealt
with is an area far in excess of even the total FSI (at the rate
of 2.4) available on the entire land. Secondly, the individual
transactions are evidenced only in a few cases by registered
agreements with Vaidehi. Many transactions are contained
in unregistered agreements or even allotment letters which

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are not even stamped. Many of these transactions appear to

be simply financial arrangements. Each individual case of a
third party purchaser would thus be subject to different
considerations based on the entitlement of Vaidehi at the
relevant point of time and the nature and incidents of the
individual transaction. But we are dealing here with the
rights of the individual purchasers vis-a-vis the Society
and Rustomjee claimed through Vaidehi and not their
rights qua Vaidehi. All these purchasers certainly have
independent rights to claim damages against Vaidehi,
peculiar to their individual cases, but they have prima
facie no right to claim anything from the Society and
Rustomjee, much less specific performance of their
individual agreements. In the premises, the individual
features of their respective cases, as noted above, have no
relevance to our discussion in this group of Motions and
need not be discussed any further. Even the best placed
amongst them have no leg to stand on as against the Society
or Rustomjee.
92. That brings us to sum up the result of the above
discussion on the prima facie case on merits of individual
stakeholders. Prima facie, it is clear that Vaidehi has
committed breaches of the Society Development
Agreement and that the termination of the Agreement by
the Society was legal and proper. Vaidehi has not made out
any case of its readiness and willingness to perform its
obligations under the Society Development Agreement.
Vaidehi is not entitled to specific performance of the
Society Development Agreement or restrain the
development of the suit property by the Society or
Rustomjee. The Rustomjee Agreement and its confirmation
by the Society by the Confirmation and Supplementary
Agreements as well as further Agreement dated 29 January,
2011 between the Society and Rustomjee are valid and
proper. Members of the Society opposing the development

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through Rustomjee are not entitled to any interim relief

either on the basis of the aforesaid agreements being in
breach of the Society Development Agreement or on the
basis of breach of bye-laws or contravention of the State
Government circular dated 3 January, 2009 or on account
of the alleged non-performance of the offer letter by
MHADA or the booklet or directives of MHADA or indeed
on account of any alleged FSI violation or usurpation. The
decisions of the Society in connection with the present
dispute are prima facie taken bona fide and none of the
challenges of the members opposing redevelopment are
prima facie sustainable. None of the third party purchasers,
who claim through Vaidehi under their respective
agreements for sale/allotment letters, have any case for
specific performance of their respective agreements against
the society or Rustomjee. None of these purchasers has
any enforceable right under MOFA against the Society
or Rustomjee.
93. Even the considerations of balance of
convenience and irreparable injury clearly weigh in
favour of the Society and its members, who support the
redevelopment project. The fundamental basis or rather
the very raison d’etre of the entire redevelopment
project is the need for housing of 480 members of the
Society. These members have already surrendered their
tenements to enable the Society to carry out the
redevelopment project first through Vaidehi and later
through Rustomjee, as noted above. Since 2006, these
members have been living in temporary alternative
accommodations. The buildings on the suit property
occupied by these members have since been demolished
and a rehab building for their permanent alternative
accommodation is under construction. The
development of the free sale component is inextricably
linked to the construction of the rehabilitation

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component. The cost of the construction of the

rehabilitation component has to be necessarily funded
from and out of the development and sale of the free sale
component. Any relief granted to either of the
stakeholders, namely, Vaidehi or the members opposing
the redevelopment project or the third party purchasers,
who claim through Vaidehi, will necessarily impact the
construction of the rehabilitation component adversely
and jeopardize the members’ right to their permanent
alternative accommodation. The members cannot be
asked to wait indefinitely for years for getting something
which they are legally entitled to and which legal
entitlement is not even questioned by any other
stakeholders.
(Emphasis added)

11. We are in respectful agreement with all these findings on law.

We emphatically reaffirm Vaidehi Akash.

12. The second decision also by Gupte J is of 14th October 2019

in Goregaon Pearl CHSL v Dr Seema Mahadev Paryekar & Ors. 8 This
dealt inter alia not only with the issue of third-party flat purchasers
but specifically from paragraph 7 onwards the question of whether
RERA gave them additional or superior rights. Goregaon Pearl
referenced the previous decision in Vaidehi Akash expressly. The
distinguishing feature of that case was set out in paragraph 8.
Ultimately, the learned Single Judge held on a careful consideration
of these provisions that the provisions of RERA do not make any
difference. RERA was introduced to set up a regulatory authority for

8 2019 SCC OnLine Bom 3274.

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the real estate sector and to ensure efficiency and transparency and
consumer protection in that sector. It defines promoter in a manner
similar to that in the Maharashtra Ownership Flats Act, 1969
(“MOFA”). Even Section 18 of RERA, on which considerable
emphasis was laid in Goregaon Pearl, requires promoters to discharge
obligations and provides remedies for purchasers without prejudice
to other rights if there is a default by the promoter. Section 19
entitles the allottee to obtain possession. Purchasers’ grievances are
redressed by the authority. None of these provisions, Gupte J held,
make the owner of the freehold or leasehold interest in the land (the
party who enters into a development agreement with a developer)
liable for compliance with and fulfilment of the developer’s
obligations.

13. in the present case, this is precisely the same distinction

between GABPL, (the developer) and the Society (the owner).
Therefore, the present case is on exactly the same footing as
Goregaon Pearl. Gupte J went on to hold that if there was any ground
regarding relative position of the land owners and developers in
regard to the development projects registered under RERA, and
particularly where the owners were entitled to a share in the total
revenue, this has now been clarified by MahaRERA that only such
individuals or organisations would meet the definition of promoter
in RERA on account of their being land owners as are specified at
the time of online registration with the Authority. In Goregaon Pearl
it was found that the Society in question there, the appellant before
Gupte J, was not a specified promoter in the online registration.
That is not even the case that is made in the present Petition before
us.

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14. We now reaffirm Goregaon Pearl as well.

15. Consequently, this Petition fails.

16. We have not examined the question of the validity of the

termination as between the Society and the developer, GABPL. We
are not called upon to do so in the present Petition. Any observation
that we might make in that regard would clearly be obiter and not
binding on any of the parties. All questions of termination, validity
of termination, and of continuation of the appointment of the
developer are left for decision in appropriate proceedings with all
contentions between the Society and the Developer being expressly
kept open or, at any rate, unaffected by the present order.

17. The Petition is rejected. No costs.

(Kamal Khata, J) (G. S. Patel, J)

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