After more than a decade of stalled redevelopment, the Bombay High Court has cleared the way for Madhugiri Co-operative Housing Society Ltd. in Chembur to seek a new developer. The court dismissed an appeal by Heritage Lifestyles & Developers Pvt. Ltd., which had challenged the termination of its redevelopment agreement with the society.
Justice Somasekhar Sundaresan upheld an October 14, 2024, order of an arbitral tribunal that had refused interim relief to Heritage. The tribunal had ruled that Madhugiri’s decision to terminate the Development Agreement (DA) and Supplemental Development Agreement (SDA) on January 21, 2024, was valid.
The dispute began in 2013 when Heritage was selected to redevelop Madhugiri’s two buildings, comprising 84 flats over 7,340 sq. yards. The DA, signed in 2014, allocated 62,700 sq. ft. of the total 1,09,220 sq. ft. redevelopment area to society members, with Heritage retaining the rest. However, disagreements arose over additional development entitlements, particularly due to road setbacks, which increased the total redevelopment area to 1,63,620 sq. ft. Heritage proposed to retain 95,000 sq. ft., while Madhugiri would get 68,620 sq. ft.
Heritage argued that a revised proposal dated March 24, 2023, along with subsequent approvals and clarifications, effectively amended the DA and SDA. However, Madhugiri maintained that these discussions never resulted in a finalized agreement.
Senior Advocate Venkatesh Dhond, representing Heritage, contended that Madhugiri could not unilaterally terminate the agreement after years of negotiations. “The demand for sharing the benefit arising from the road setback and the comparison of retained areas is not supported by any amended contract,” he argued.
However, Senior Advocate Mukesh Vashi, appearing for Madhugiri, asserted that Heritage had delayed the project for a decade and failed to honor its commitments. “Any entitlement from the road setback belongs to the society. Heritage strung Madhugiri along without initiating redevelopment,” he said. He added that the society had given Heritage the choice to either proceed with the original DA and SDA or share the additional area in a 54:46 ratio.
Justice Sundaresan, in March 4, ruled that there was no binding amendment to the original agreement. “The material on record shows that the parties were still negotiating the development potential and entitlement sharing. An essential element of the agreement was elusive,” he noted.
Dismissing the appeal, the court also rejected Heritage’s plea to restrain Madhugiri from appointing a new developer, stating, “It would not be appropriate to continue such a restraint any further.” The question of costs was left to the arbitral tribunal.
