Shri Sai Vishram Co-Operative Housing Society Ltd. and Ors. vs Ninad Padmakar Paralkar

The learned Counsel for the respondents submits that the said affidavit-in-reply be treated as an affidavit-in-reply in the interim applications for stay in the rest of the appeals.

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Heard Ms. Kashmira Bharucha, the learned Counsel for the Appellants, and Mr. Mohit Khanna, the learned Counsel for the Respondents.

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These appeals are directed against a common order dated 18^th December, 2024 passed by the Maharashtra Real Estate Appellate Tribunal in the miscellaneous applications preferred by the appellants in the appeals assailing the common order dated 20^th March, 2025 passed by the Maharashtra Real Estate Regulatory Authority (“the Authority”), in the complaints filed by the respondents allottees.

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By a common order dated 20^th March, 2025, the Authority directed the appellant-society (Respondent No.3 therein) and the

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promoters (Respondent Nos.1 and 2 therein) to pay interest under the provisions of Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“RERA 2016”), construing the appellant also as a promoter.

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Being aggrieved, the appellant preferred the appeal before the Appellate Tribunal. By the impugned order, the Appellate Tribunal directed the appellant to deposit the amount in terms of the proviso to Sub-section (5) of Section 43 of the RERA 2016. The Appellate Tribunal repelled the contention of the appellant-society that it was not a promoter within the meaning of Section 2(zk) of the RERA 2016 and, thus, could not have been saddled with the liability to pay interest under Section 18 of the RERA 2016.

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Ms. Kashmira Bharucha, the learned Counsel for the appellant, would urge that the Appellate Tribunal has committed a manifest error in law in holding that the appellant is a promoter within the meaning of Section 2(zk) of the RERA 2016. The Appellate Tribunal, according to Ms. Bharucha, has completely misconstrued the ratio of the binding decisions of this Court in the cases of Vaidehi Akash Housing Pvt. Ltd. vs. New D.N. Nagar Co-op. Housing Society Union Ltd. and Others¹ , Goregaon Pearl CHSL vs. Dr. Seem Mahadev Paryekar & Ors.² and

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1 2014 SCC Online Bom.5068.

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2 2019 SCC Online Bam 3274.

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Deepak Prabhakar Thakoor & Ors Vis. MHADA & Ors.³ , that the allottees of the erstwhile developer, the development agreement with whom stands terminated, have no right against the Society and their remedy is against the erstwhile developer with whom they had privity of contract. Ms. Bharucha would urge, despite noticing the ratio in the aforesaid judgments, the Appellate Tribunal committed a grave error in law in basing its finding on the Circular issued by the MahaRERA dated 4^th December 2017. Thus, a substantial question of law as to whether the Appellate Tribunal could have returned the finding that the appellant-society is a promoter on the basis of the said Circular in the face of binding decisions of this Court, arises for consideration.

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Mr. Mohit Khanna, the learned Counsel for the respondents, submitted that the appeals do not deserve to be entertained for the reason that the appellants have already complied with the impugned order, in part, and had sought time to deposit the balance amount. Even otherwise, the facts of the case at hand indicate that the appellant Society has not only ratified the agreement between the erstwhile developer and new developer but even obtained consideration in the form of enhanced constructed portion in the project and a substantial monetary consideration of Rs.3 Crore, in addition thereto. If the recitals in all the agreements are read in the correct perspective, Mr. Khanna

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would urge, it cannot be said that the appellant is not a promoter.

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3 2023 SCC Online Bom. 2234.

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Mr Khanna invited attention of the Court to the Development Agreement between the appellant-society and M/s SAAGA Infraprojects Ltd, the erstwhile developer; Memorandum of Understanding between M/s SAAGA Infraprojects and M/s AARYADEEP Builders and Developers, the new developer; the Development Agreement between the appellant-society and new developers, dated 26^th September 2016; Supplementary Agreement dated 27^th July 2019 executed by and between the appellant-society and the new developer, and the consent terms executed between the Plaintiff-society and new developer in Commercial Suit(L) No. 24609 of 2023, to buttress the submission that the appellant-society has received a share in the constructed area and a sum of Rs. 3 Crores by way of corpus funds for the additional area.

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Taking the Court through the aforesaid ageements, Mr. Khanna submitted that the appellant-society clearly falls within the definition of “Promoter” under Section 2(zk) of the RERA 2016.

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There can be no quarrel with the proposition that the persons who had entered into Agreement with the erstwhile developer, the development agreement with whom stands terminated, do not have privity of contract with the society. The agreements executed by the terminated developer during the subsisting Development Agreement do not bind the society. Such persons would be required to enforce their rights and, workout their remedies, qua the erstwhile developer.

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However, where it is demonstrated that under the Development Agreement, the society has a share in the constructed area or revenue to be generated out of the sale of the Units in the project, slightly different considerations come into play. In that case, an investigation into the nature of the development agreement and the recitals therein to appreciate the true character of the benefit derived by the society becomes necessary.

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In the instant case, the Appellate Tribunal after considering the terms of the Development Agreement with the erstwhile developer, especially Clause 12(p) has drawn an inference that since the additional constructed area has been agreed to be distributed between the appellant-society and the developer in the ratio of 50% : 50% there was an area sharing agreement between the appellant and the erstwhile developer. Co-relating the said stipulations with the Circular No. 12 of 2017, the Appellate Tribunal has declared that the appellant-society was a Promoter within the meaning of Section 2(zk) of the RERA 2016.

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The aforesaid finding is, in a sense, tentative in nature and made for the purpose of determination of the question as to whether the appellant-society was also required to make the pre-deposit under Section 43(5) of the RERA 2016, in its capacity as a promoter. At the stage of final decision of the Appeals, the said question may be examined in the fullness it deserves. Thus, at this stage, this Court need

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not elaborately delve into the said question lest it would amount to prejudging the Appeals sub-judice before the Appellate Tribunal.

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Suffice to note that, the definition of “Promoter” under Section 2(zk) is of widest amplitude. Under Clauses (i) to (iv), specified categories of persons are designated as Promoter. Under Clause (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale, is also a Promoter. Under Clause (vi) of Section 2(zk), Promoter is such other person who constructs any building or apartment for sale to the general public. The Explanation to Clause (vi) further expands the scope of the definition of Promoter. It provides that, where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly libale as such for the discharge of the functions and responsibilities specified under the Act 2016 and the rule thereunder.

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In the instant case, the documents executed by and between the appellant-society and erstwhile developer, between the appellant and new developer and between the erstwhile developer and new new deveoper, cannot be read in isolation. There is an element of continuity

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and nexus in these documents. Thus, all these documents may be required to be read in conjuction with each other to appreciate the real nature of the bargain among the three alleged promoters.

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If the recitals in the Develop Agreement between the appellantsociety and the erstwhile developer and between the appellant-society and the new Developer are construed as a whole it can hardly be disputed that the appellant-society is entitled to a share in the additional construction. Under the Supplementary MoU executed between the appellant-society and the new developer, in consideration for allowing the developers to utilize the society’s 25% share of the additional carpet area of constructed flats beyond sancitoned 16 floors, the society is entitled to corpus amount to be computed as per formula prescribed therein. It further appears that in the wake of the dispute between the appellant-society and the new develper, the appellantsociety has agreed to accept a corpus fund of Rs. 3 Crores for the additonal area as allowed under the Supplementary Agreement dated 27^th July 2019.

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If all these documents are read cumulatively, the view of the Appellate Tribunal that, in the peculiar facts of the case, the appellantsociety satisfies the definition of the Promoter, albeit for the purpose of the compliance of the proviso to Section 43(5) of the RERA 2016, cannot be said to be legally infirm.

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Thus, no substantial question of law arises for consideration.

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I also find substance in the submission of Mr. Khanna that the appellant-soceity has deposited part of the amount, directed to be deposited by the Appellate Tribunal, wihtout any demur. A Compliance Affidavit was filed on behalf of the appellant -society affirming that since it was directed to make the pre-deposit along with the erstwhile developer and new developer, its liability was only to the extent of 1/3 of the amount of pre-deposit. By an order dated 26^th March 2026, the Appellate Tribunal repelled the aforesaid contention and directed appellant-society to deposit the balance amount holding that, the appeellant-society was also severally liable to make the pre-deposit along with the erstwhile and new developer. For this reason also, the Appeals do not deserve to be entertained.

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The Appeals thus stand dismissed.

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In view of the dismissal of the Appeals, all Interim Applications also stand disposed.

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[N. J. JAMADAR, J.]

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Shri Sai Vishram Co-Operative Housing Society Ltd. and Ors. v. Ninad Padmakar Paralkar

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Shri Sai Vishram Co-Operative Housing Society Ltd. and Ors. v. Ninad Padmakar Paralkar

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