Mumbai: The Heritage Group has appealed against the judgment of the Bombay high court with regard to the redevelopment of Madhugiri building with a plot area of 3,925 sq mtrs near Diamond Garden in Chembur.
The Group is engaged in a legal battle over the stalled redevelopment of the building. Heritage Lifestyles and Developers Pvt. Ltd (Heritage Group) has challenged the Bombay high court’s ruling, which dismissed its appeal against the termination of its Development Agreement (DA) and Supplemental Development Agreement (SDA).
In a press release, the group said the high court’s decision, based on claims that there was no binding contract to the original agreement, has raised serious legal and procedural concerns. Heritage Group maintains that the offer made by the developer was duly approved, and a resolution was passed by a majority of the society members signifying a concluded contract. Under the well-established legal principles, such an approval constitutes a binding contract/agreement between the parties. The ruling, therefore, disregards the fundamental premise of contractual obligations and majority consensus in cooperative society matters, the press release maintained.
The dispute traces back to 2013 when Heritage Group entered into a development agreement with Madhugiri Co-operative Housing Society to redevelop its property, which consisted of 84 flats across two buildings and paid 50% of the corpus fund which is more than Rs 5 crore to the members.
Over the years, negotiations took place regarding additional development entitlements due to road setbacks, changes in the development plan, implementation of the new DCPR etc which increased the total redevelopment potential of the plot but at a huge cost.
Work was delayed due to external factors such as area correction in the property registration card, Mumbai Metro alignment, school reservation, policy changes and the COVID-19 pandemic. Meanwhile there was a change in the management of the Society and the DA and SDA were terminated in August 2022, but did not invoke arbitration.
The new committee started renegotiating with Heritage Group on all the commercials again. Discussions with the new committee members, which led to the revised proposals from the existing additional 57% additional area to revised 62% additional area, revised rent for temporary alternative accommodation along with other commercials which were approved at a special general body meeting in March 2023, the press note added.
Heritage proposed the revised sharing ratio, offering Madhugiri residents 68,620 square feet while retaining 95,000 square feet. This proposal was subsequently discussed and approved in principle, paving the way for project execution. There after new SDA was prepared and sent to the society and it’s advocate which was approved by them and confirmed by email.
“However, despite Heritage’s continued engagement in negotiations and subsequent approvals, Madhugiri unilaterally terminated the agreement, citing delays and claiming that no final amendments were executed. The high court’s judgment, relying on these assertions, failed to consider that the mere absence of formalized agreement does not negate the validity of the agreement when an offer is made, approved, and a resolution is passed by the majority,” the group noted.
“If a developer’s negotiated offer, once approved by society members at a general body meeting or special general body meeting, is not considered binding, it would create legal uncertainty in future redevelopment projects. Heritage contends that the society, instead of adhering to the agreed upon terms, arbitrarily terminated the agreement despite continued negotiations and approvals,” the Group contended.
Heritage has now escalated the matter to the Supreme Court, asserting that the “high court’s ruling undermines contractual sanctity and majority decisions in cooperative housing societies.”
