HOUSING SOCIETY CAN DISMISS ERRING BUILDER FROM REDEVELOPMENT DEAL

A Housing Society cannot be forced to go with a Builder who has repeatedly failed to stick to the terms and delayed the redevelopment project, the Mumbai High Court ruled on Monday the 10th June, 2013.

In June 2009, Ideal Co-operative Housing Society in Juhu Scheme had invited Expressions of Interests from Builders interested in redevelopment of their building. In March 2010, the General Body of the Society selected Gorwani Builders for the work.

The Society had invited proposals for redevelopment and selected Gorwani Builders in March 2010. No MOU or Development Agreement was signed. The Builder had deposited Rs 50 lakh with the Society which asked it to go ahead with the redevelopment work on the basis of the terms of ‘Expression of Interest’.

Despite specific instructions that the new building should be a residential-plus-commercial structure with flats only for the existing 24 tenants, Gorwani proposed commercial space in the basement and the ground floor, two-level parking, seven floors for existing residents and flats on the 11th floor for sale in the open market.

The Society did not agree with the same as also had been waiting for the last four years for redevelopment of its property, but the Builder was not inclined to move in the matter. The Society had no other alternative but to start process afresh to select another Builder.

When Gorwani Builders learnt that Society was planning to invite fresh tenders for the redevelopment, it issued a notice to the Society. Subsequently, Gorwani filed a suit, asking the Court to order the Society to execute a Development Agreement or pay Rs 15 crore in damages. It also filed an application seeking to stop the Society from calling for fresh proposals. The Court dismissed the plea saying that Gorwani repeatedly deviated from EOI terms’.

It was opined by the Judge that the work of redevelopment of any Housing Society is such that a Society must have confidence in its Builders and that once the members of the Society have expressed loss of trust, faith and confidence in the Builder on account of various deviations and violations, the Society cannot be forced to get the redevelopment work done through that Builder.

 

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