A Dispute Over Redevelopment: The Huges Real Estate v. Khernagar Adarsh Co-operative Housing Society Case.


19 August 2025 Commercial Suit >> Civil & Consumer Law  

On August 19, 2025, the High Court of Judicature at Bombay delivered a judgment in the cross-appeals filed by Huges Real Estate Developers LLP and Khernagar Adarsh Co-operative Housing Society Limited. The case, heard by Chief Justice Alok Aradhe and Justice Sandeep V. Marne, centered on a long-standing dispute over a building redevelopment project in Mumbai.

The dispute originated from a Development Agreement and Power of Attorney executed on December 16, 2011, between Huges Real Estate, the developer (Plaintiff), and Khernagar Adarsh Co-operative Housing Society (Defendant No. 1) for the redevelopment of the society's building. After several years of delays and renegotiations of the commercial terms, the Society terminated the agreement on January 31, 2023. The Society subsequently sought a new developer, Defendant No. 2, through a tender floated on February 20, 2023.

 
 

Huges Real Estate challenged the termination, filing a commercial suit seeking a declaration that the original Development Agreement, along with subsequent offers and letters, was "valid, binding and subsisting". The developer also sought an injunction to stop the Society from appointing another developer and a decree for specific performance. The single judge, in an order dated October 24, 2024, refused to grant the temporary injunction in the developer's favor. However, the judge noted a condition in the Society's new tender requiring the new developer to obtain an NOC (No Objection Certificate) from Huges Real Estate, and accordingly directed the new developer to secure it.

Both parties appealed this decision. Huges Real Estate appealed the refusal of the temporary injunction, while the Society challenged the condition to obtain the developer's NOC.

Arguments Presented in Court:

Huges Real Estate's Position: The developer argued that the single judge erred in not granting the injunction, especially after finding that the Society's reason for termination—delay on the developer's part—was "erroneous". The developer's counsel, Mr. Kamat, contended that the original agreement was a "concluded contract" and the subsequent discussions were merely "variation in commercial terms". He also highlighted the "arbitrary" conduct of the Society's managing committee in terminating the agreement shortly after the members had accepted the developer's revised offer.

Khernagar Adarsh Co-operative Housing Society's Position: The Society's counsel, Mr. Khandeparkar, defended the single judge's decision to deny the injunction, asserting there was "no concluded contract" based on the revised offers. He pointed out that the building was in a "dilapidated condition," and the developer had already caused a delay of 14 years. He argued that allowing the redevelopment to proceed through a new developer who offered better terms and was willing to reimburse the previous developer would be in the best interest of the society members. He also appealed the NOC condition, stating it would frustrate the project and allow the developer to "create obstacles" despite the injunction being denied.

The Court's Ruling:

The High Court observed that the core issue of whether the various offers and letters constituted a "concluded contract" was a "serious triable issue" that should be decided at the conclusion of the trial.

The court upheld the single judge's decision to deny the temporary injunction in the developer's favor. The court emphasized that the rights of a developer to earn profits must be "subservient" to the rights of a housing society to have its building reconstructed, especially when the building is in a "dilapidated condition". The court's approach, therefore, was to permit the redevelopment to proceed while protecting the developer's monetary claims. The developer's claim for damages was noted, which included an expenditure of Rs. 8,09,51,502 and an additional Rs. 40,03,69,328.42.

The court ruled that the condition of securing the developer's NOC should be set aside, as it would indefinitely delay the project. As a result, the court directed the Society to deposit Rs. 5 crore with the Prothonotary and Senior Master of the High Court to secure the developer's monetary claim. The developer would be allowed to withdraw this amount after submitting an undertaking.

The court concluded that this order "would ensure that the redevelopment process is not delayed any further" while also protecting the developer's interests. The judgment also stated that the suit should be decided "uninfluenced by any of the observations made" in the judgment.