Bombay High Court: Non-payment of 'Transit Rent' for Months Signals 'Social Injustice'

Bombay High Court: Non-payment of 'Transit Rent' for Months Signals 'Social Injustice'

The Bombay High Court (HC) in the case titled Rajawadi Arunodaya Co-op Hsg Soc Ltd. (Petitioner) v. Value Projects Pvt. Ltd. (Respondent) ruled that the non-payment of dues, the delays in project completion, and not paying transit rent for months together speaks to an inherent, and constantly growing, social injustice.

The single-judge of the Bombay HC Justice Gautam Patel has noted that in matters of redevelopment, which are in the realm of private law, there is no such thing as 'substantial compliance'. The Court directed the builder to hand over the possession of the land, property, and the papers to the society possession for enabling it to undertake the project or appoint a new developer.

Justice Patel further observed and stated that "Development in a dryly-worded contract, does not tell us what has happened that this community has been literally splintered and torn apart. The contact that has persisted through generations has almost certainly been lost."

The Court remarked, "Receiving monthly rent is not a sop, not a matter of 'convenience'. It is a matter of survival."

The factual matrix of the case is that a petition was filed by Rajawadi Arunodaya Co-op Housing Society Ltd. from Ghatkopar, Mumbai under Section 9 of the Arbitration and Conciliation Act for interim reliefs.

The redevelopment project was delayed by six-years in completion of project and non-payment of rent by the developer. The original building with 20 residential and seven commercial units was built before 1985 on 1000 sq meters of land.

On 5 April 2013, the Society had entered into a deed of redevelopment and handed over vacant possession of the flats in 2015. The developer committed severe default in rent including the creation of third-party rights that compelled them to terminate the contract in 2019 and they had to approach the HC.

The HC ruled that the balance of convenience would lie in society's favour stating the reason that a development project is a money-making source for the developer but it is a matter of survival for a society. It added that the hardship to the members is real and immediate; the so-called hardship to the Developers is notional.

Justice Patel further remarked that "Receiving monthly rent is not aSOP, not a matter of 'convenience'. It is a matter of survival. Therefore, the non-payment of dues, the delays in project completion, and not paying transit rent for months together speaks to an inherent, and constantly growing, social injustice."

He further pointed out that there are different categories in re-development cases. It emphasized a situation where a developer leaves the job mid-way and the society members approach the Court for termination; in that case, the developer must bring forward a proposal covering-

- Accumulated arrears of transit rent and other dues;

- The obligation to pay ongoing transit rent until possession with an occupation certificate;

- Payment of statutory and corporation dues including property tax and

- A demonstration of the financial means to bring the project to completion.

The HC put reliance on the judgment of the case titled- Gopi Gorwani v. Ideal Cooperative Housing Society Ltd & Ors, 2013 SCC OnLine Bom 1967, wherein the Court held that loss of faith and confidence on account of contractual violations and breaches by a developer is sufficient grounds to find for the society and against the developer.

The Court while hearing a plea regarding redevelopment row over a six-year delay in completion of a project in Mumbai stated, "There is a very real human tragedy unfolding in case after case and it is tearing apart the social fabric of this city."

Justice Patel concluded, "The non-payment of dues, the delays in project completion, and not paying transit rent for months together speaks to an inherent, and constantly growing social injustice. It should not be allowed to continue."