New Developer Not Liable for Liability of Erstwhile Developer
Judgment dated 5.11.2026 of the High Court of Bobay in Writ Petition No.7618 of 2022 with Interim Application No.10986 of 2024 of H. Rishabraj Developers Vs. State of Maharashtra and others with connected writ petition.
The Respondent No. 6 is a charitable Trust and the owner of a property comprising land and a tenanted building containing 44 tenements (“said property”). As the building was in a dilapidated condition, in 2011, the Respondent No.6 Trust had resolved to undertake redevelopment, jointly with Respondent No.5-erstwhile developer.
On 9th January 2014, Respondent No. 5 issued a Letter of Allotment in favour of Shri Sanjay Khandelwal in respect of Flat No. 902.
The Writ Petitioner in both the Petitions is the subsequent developer of a real estate redevelopment project known as ‘Samaj Darshan’. It has filed Writ Petition No.894 of 2024 under Articles 226 and 227 of the Constitution of India, challenging the order dated 21st March 2022 (“impugned order”) passed by Respondent No. 2–Maharashtra Real Estate Regulatory Authority (“MahaRERA”). By the impugned order, MahaRERA has allowed the Review-cum-Execution Application filed by Respondent Nos. 3 and 4, who claim to be the allottees of flats in the said project, and directed the Petitioner and Respondent No. 5-erstwhile developer, to pay interest on the principal amount of Rs. 37 lakhs paid by Respondent Nos. 3 and 4 to Respondent No. 5, from 17th May 2018 until actual realisation of the amount.
On 22nd January 2015, the Respondent No. 5 issued a Letter of Allotment (“LOA”) in favour of Respondent Nos. 3 and 4 for the same Flat No. 902 on the 9th floor of the proposed building.
On 15th July 2017, the Trust terminated the Development Agreement and invoked the arbitration agreement for resolution of their inter se disputes. The dispute culminated in an arbitral Award dated 12th May 2025, directing Respondent No.5 to pay Rs. 5,39,50,173/- to the Trust, together with interest at the rate of 10% per annum, from the date of the award until payment. Respondent No.5 has challenged the Award under Section 34 of the Arbitration and Conciliation Act, 1996 and the same is pending before this Court.
Meanwhile, on 31st August 2017, the Respondent No.5 had unilaterally registered the project with MahaRERA, by projecting itself and the Trust as co-promoters of the project although the Development Agreement entered with the Respondent No.5 itself was terminated on 15th July 2017. According to the Trust, this was done without its knowledge and that it did not execute any document relating to the registration of the said project. Nevertheless, MahaRERA on its website had reflected the Trust as a co-promoter of the project with a specified area share. (viii) On 6th March 2018, the Respondent Nos. 3 and 4, in their capacity as allottees of flat No.902, filed a complaint before MahaRERA against Respondent No.5 and the Trust, seeking refund of Rs. 37 lakhs paid towards the flat, together with interest and compensation. The Trust was impleaded as a party respondent in the said proceedings.
By an order dated 17th May 2018, MahaRERA disposed of the complaint after recording that Respondent Nos. 3 and 4 were seeking refund without interest and that Respondent No.5 had furnished an undertaking to refund Rs. 37 lakhs in accordance with an agreed schedule. The complaint was disposed of on the basis of an undertaking given by Respondent No.5.
In the meantime, Distraint Orders dated 23rd March 2022 and 30th May 2022 were passed by the Respondent No.3 Tahsildar under Section 180 of the MLRC in execution of the impugned order. The attachment imposed by these Distraint orders is the subject matter of challenge in the subsequent Writ Petition No. 7618 of 2022. On 29th June 2022, this Court ordered that no further steps shall be taken against the Petitioner in pursuance of the impugned Distraint Orders. Notwithstanding the stay order, on 26th November 2024, the Adjudicating Officer of MahaRERA issued a recovery warrant against the Petitioner and the Respondent No.5 for the principal and interest accrued till date. This order has also been stayed by this Court on 10th January 2025 qua the Petitioner.
