Bombay High Court Cancels NOC Of Builder Over Default In Payment Of Transit Rent

A division bench of Justice GS Patel and Justice Neela Gokhale ordered Parekh Constructions, Parekh Constructions LLP, and Nishcon Realty Pvt Ltd to entirely vacate the site, including removing personnel, security guards, equipment, and machinery, by Monday, August 14, 2023.

“It is about time that a message went out to every developer that if a developer takes on a development project in the city, the developer assumes a significant responsibility and the financial element or aspect of it is not one that will be overlooked or ignored. It is one that this Court will ensure is entirely fulfilled. That is why we have made the order that we have made above”, the court observed.

The court directed Maharashtra Housing and Area Development Authority (MHADA) to issue a formal letter for cancellation of NOC without giving any opportunity of hearing to the developers. The court added that it is open for MHADA to proceed in accordance with law for the appointment of another developer.

The court was dealing with a batch of writ petitions which highlighted the plight of numerous residents, including senior citizens, regarding default in payment of transit rent by the builder. The developers had failed to honour their financial obligations, resulting in immense suffering for the occupants of the Parvati building.

The court on August 7, 2023, had declared that developers cannot be allowed to default on their obligations and escape consequences. The court had ordered the defaulting developers to deposit Rs. 3.5 Crores, i.e., 50 percent of the due amount with the court by August 11, 2023, which they failed to do.

The court noted that the old buildings were brought down in 2016 and 2017. The project and the residents entitled to benefit have been abandoned for the last seven years, the court observed.

The court ordered MHADA to supervise the developers' evacuation from the premises and ensure their compliance before Independence Day.

The court also addressed the issue of accumulated arrears of transit rent, instructing MHADA to certify the exact amount due. Once certified, the developers are obligated to pay the amount within 30 days, with further interest at 6% per annum until payment or realization.

The court noted that it gave a chance to the developers to deposit part of the amount they themselves admitted was due, but they failed to do so. Thus, the amount as finally certified and found due by MHADA will be executable as an order of the court if necessary, as an order passed in this Writ Petition, the court held.

The court disposed of the writ petition with the aforementioned directions.

Case no. – Writ Petition (L) No. 20423 of 2023

Case Title – Sushila Gordhandas Parikh v. State of Maharashtra

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