Developer’s Interests Cannot Stall Redevelopment of Dilapidated Housing Buildings – Bombay High Court Denies Injunction Despite Disputed Termination of Development Contract

“When rights of residents of dilapidated buildings to reside in safe houses is pitted against the rights of the developer to earn profits… the latter must yield to the former.” - Bombay High Court (Bench: Chief Justice Alok Aradhe and Justice Sandeep V. Marne) delivered a significant judgment  dealing with a contentious redevelopment dispute involving termination of a Development Agreement executed in 2011.

The Court dismissed the Plaintiff-Developer’s appeal for interim injunction, holding that the contract had not culminated into a concluded agreement after renegotiated offers. Simultaneously, it set aside the condition requiring the new developer to seek Plaintiff’s NOC, instead directing deposit of ₹5 crores to secure Plaintiff’s monetary claims. This ruling delicately balanced contractual rights with public interest in timely redevelopment.

Developer’s Long-standing Agreement and Termination

The case stemmed from a registered Development Agreement dated 16 December 2011 between the Plaintiff (Huges Real Estate Developers LLP) and the Defendant Society (Khernagar Adarsh CHS), for redevelopment of a building in Bandra (East), Mumbai. Over time, delays occurred, partly due to changes in Development Control Regulations (DCR 1991) and introduction of DCPR 2034, and also administrative shifts within the Society.

Although revised offers were submitted by the Plaintiff (notably in November 2022, increasing RERA carpet area to 520 sq. ft.), the Society terminated the agreement in January 2023, and subsequently appointed Defendant No.2 (Kumar Vibes LLP) as the new developer. This led to cross-appeals—one by the Plaintiff challenging denial of interim injunction, and another by the Society challenging the direction to seek the Plaintiff’s NOC.

Whether Revised Commercial Terms Created a Concluded Contract

The central legal question was whether the revised offers, resolutions, and letters exchanged between November–December 2022 created a binding supplemental agreement, as claimed by the Plaintiff.

The Plaintiff’s case was based on the assertion that the original 2011 agreement, read with the revised offers (Offer-1 and Offer-2) and related correspondence, formed a valid and enforceable “Supplemental Agreement.”

However, the Court disagreed:

“It is here where the problem lies... the Plaintiff has not claimed that the contract stood concluded only on the basis of the acceptance... [they] proceeded to comply with some requisitions... and stated others would be complied with later.” [Para 21D]

Citing this, the Court held that no concluded contract had been arrived at, which weakened the Plaintiff’s claim for interim injunction.

Was the Termination Due to Delay Justified?

Interestingly, the Single Judge (whose order was under appeal) had previously held that delay by the Plaintiff was not solely responsible for the redevelopment not commencing:

“Not once has the Society (prior to issuance of the termination notice) complained of any delay on the part of the Plaintiff... omission of these facts in the notice of termination is most telling.” [Para 19A]

Still, the Appellate Bench noted that regardless of the flawed reasoning in the termination, prima facie absence of a binding contract post-2011 made the injunction unsustainable.

Refusal to Grant Interim Injunction

The Court upheld the denial of injunction and observed that public interest in timely redevelopment overrides commercial disputes of developers:

“The rights of a developer to earn profits through redevelopment contracts would always remain subservient to the rights of the society to have its building reconstructed.” [Para 33]

The Court applied established principles of Order XXXIX Rule 2 of the CPC, holding that:

• No irreparable harm would be caused to the Plaintiff, as monetary compensation is available.

• The balance of convenience strongly favoured the Society and its members, who were stuck in a 14-year-long delay.

• The suit raised serious triable issues—especially whether the 2011 Agreement survived renegotiation.

“If redevelopment of buildings is halted till decision of suit filed by the developer, the loss caused to the residents... cannot be undone.” [Para 33]

Condition of Plaintiff's NOC Set Aside

While upholding the rejection of injunction, the Court set aside the requirement that the new developer (Defendant No.2) obtain NOC from Plaintiff, imposed by the Single Judge:

“This would be like indirect securing of temporary injunction, which is expressly not granted in Plaintiff’s favour.” [Para 41]

Instead, it directed the Defendants to deposit ₹5 crores, partly compensating the Plaintiff’s claimed expenditure.

Monetary Security in Lieu of Injunction

The Court acknowledged Plaintiff’s claim of ₹8.09 crores as expenditure and an alternative claim of ₹40.03 crores in damages. It held that:

• ₹2.60 crores was already offered by Defendant No.2.

• Additional ₹2.40 crores to be deposited by the Society.

• Plaintiff may withdraw the ₹5 crores upon filing an undertaking to return if the suit fails.

“This course of action would balance the equities... While reconstruction would not be halted, the Society does not go absolutely scot-free.” [Para 39]

Developer’s Rights Acknowledged, But Public Safety and Continuity of Redevelopment Prevail

The Bombay High Court’s decision in Huges Real Estate Developers LLP v. Khernagar Adarsh CHS sets a notable precedent in redevelopment litigation. Even where disputes over termination exist, Courts may refuse to halt projects, especially when the underlying buildings are unsafe and redevelopment is stalled for years.

While the Plaintiff's claim of a concluded contract was found unsubstantiated, the Court took equitable steps to secure the Plaintiff’s potential financial interests without impeding public interest in safe housing.

Date of Decision: 19 August 2025