Bombay HC – FSI Purchase Price Refundable Despiteid Termination of Development Agreement – Section 64 of the Contract Act
The petitioner – developer had purchased FSI in the name of the society for performance of the Development Agreement. It has become property of the Society. The question is whether the same can be treated as “benefit” under Section 64 of the Contract Act. It was held that the counter claim of the developer for return of all the three amounts would be clearly covered by the term “benefit” under Section 64 of the Contract Act. The respondent society has undoubtedly utilized the FSI purchased by the developer.
In my view therefore, the entire FSI purchased by the Petitioner-developer for carrying out redevelopment work of society’s building would clearly be a ‘benefit’ within the meaning of Section 64 of the Contract Act. Since the Society has decided to rescind the contract and even though rescission of contract by the Petitioner is found to be valid, the Society cannot retain the benefit of purchased FSI received under the rescinded contract and must return the same. Clause 9(h) ensures that the Society does not have to actually or physically return the FSI and can consume the same since the same is purchased in the name of the society. The clause also ensures that the construction already put up is not rendered illegal on account of termination of the DA.
However the concept of ‘non-return of FSI’ is different and distinct from the concept of ‘return of purchase price of FSI’. While the former would be protected under clause 9(h) of the DA, the latter is liable to be returned under Section 64 of the Contract Act.
Judgment dated 30.3.2026 of the High Court of Bombay in Commercial Arbitration Petition No.354 of 2024 of SSD Escatics Private Limited Vs. Goregaon Pearl Cooperative Housing Society Limited
