Mumbai’s redevelopment saga has once again exposed the fragile position of homebuyers caught between stalled projects and shifting developer responsibilities. A recent Maharashtra Real Estate Appellate Tribunal ruling underscores how purchasers, despite investing substantial sums, often find themselves with limited protection when a developer defaults. While the tribunal upheld the society’s right to appoint a new promoter, it left buyers to pursue remedies against the original developer — a path that is long, uncertain, and fraught with legal hurdles.
Legal experts emphasise that this judgment is a wake-up call for homebuyers, highlighting the critical need for due diligence in redevelopment projects. Verifying a developer’s track record and understanding the society’s contractual arrangements are now vital, as buyers risk being sidelined when projects collapse.
The tribunal has delivered a landmark decision in the dispute surrounding the SBI Employees Prashant Co-operative Housing Society in Borivli. Dismissing multiple appeals filed by flat purchasers, it upheld the legality of a fresh project registration obtained by the new promoter, URNA Evolved Living Pvt Ltd, and ruled that neither the society nor the new promoter bears liability for obligations left behind by the erstwhile developer, Aditya Developers. The appellants must pursue arbitration against Aditya Developers, while the society and the new promoter proceed with a clean slate.
Redevelopment project and collapse
>> Society of 26 members signed a redevelopment agreement with Aditya Developers in Sept 2013
>> Project registered with MahaRERA in August 2017; completion deadline extended to May 2022
>> Construction stalled after four slabs; 12 flats sold to outside buyers
>> Society terminated Aditya Developers’ contract in April 2019; Bombay High Court confirmed termination in December 2019
Tribunal’s observations
Justice SS Shinde, chairperson of the tribunal, and Shrikant M Deshpande, member (A), observed that…
>> The termination of Aditya Developers had already been upheld by the HC in December 2019, which expressly permitted the society to appoint a new promoter
>> The fresh registration obtained by URNA was valid and not illegal, as the earlier project registration had lapsed in May 2022
>> Section 15 of the RERA Act, which requires consent of two-thirds of allottees before transfer of promoter rights, did not apply here because the change was effected through judicial orders rather than voluntary transfer
Core legal position
According to CA Ramesh Prabhu, the purchaser’s remedy depends on whether the society or the new developer can be treated as a successor, promoter, co promoter, or confirming party. “Courts have clarified that unless facts show consent, ratification, or benefit, buyers cannot automatically claim against the society or new developer,” he stated
The new promoter
>> URNA Evolved Living Pvt Ltd was appointed in August 2022
>> Fresh registration was obtained in June 2023 under MahaRERA
>> Earlier structures were razed, and the new project was launched
Appeals by flat purchasers
The appellants sought:
>> Cancellation of URNA’s registration
>> Application of Section 15 of RERA to old registration
>> Enforcement of agreements against the new promoter
Rights under RERA
Purchasers with registered agreements, allotment letters, or RERA recognised transactions can claim allottee status. Where societies have benefited from funds or confirmed sales, buyers may seek possession, alternative flats, or compensation. This places purchasers at significant risk in redevelopment projects, underscoring the need for caution and due diligence, according to CA Ramesh Prabhu
Broader Implications
>> The judgment highlights risks for homebuyers in redevelopment projects
>> Legal experts stress the importance of verifying developers’ track records and societies’ contractual arrangements
Expert View
CA Ramesh Prabhu, founder chairman of Maharashtra Societies Welfare Association (MahaSEWA), said
‘When a developer fails to fulfil obligations under a Development Agreement, the housing society may either terminate the contract and appoint a new developer, or allow the existing developer to bring in another. The rights of purchasers differ in each situation. Several Bombay High Court judgments have held that a society is not a “promoter.” Therefore, when a developer is terminated, buyers’ remedies lie against the terminated developer, not against the society or the new developer appointed to complete the project.”
