Builders challenge MHADA’s move to retake Mumbai land leased out to original developer
Builders developing the plot on sub-contracts have asked the Bombay HC to prevent the MHADA from retaking the land from the original developer Guruashish Construction
Mumbai: A Maharashtra government move asking a Mumbai builder to return a large plot it had leased out in the city’s western suburbs for redevelopment a decade ago has been challenged by several other builders developing the plot on sub-contracts as well as the interim resolution professional (IRP) supervising insolvency proceedings of the original developer.
While subsidiaries of Kalpataru, Ekta World and RNA NG Corp Pvt Ltd, along with KBJ Developers Ltd and Sangam Lifespace Ltd, have asked the Bombay high court to prevent the Maharashtra Housing and Area Development Authority (MHADA) from retaking the land from Guruashish Construction Pvt. Ltd, separately, the IRP supervising Guruashish’s bankruptcy proceedings has made the same request before the National Company Law Tribunal (NCLT).
MHADA is a state government body that undertakes construction and maintenance of residential buildings under various schemes. In 2008, it had given around 47 acres in suburban Goregaon to a subsidiary of HDIL Ltd for redevelopment.
The 47-acre Patrawal Chawl owned by MHADA had around 672 tenants under the Goregaon Sidharth Nagar Sahakari Griha Nirman Sanstha Ltd. Under a three-party agreement between MHADA, Guruashish and the society, the builder could develop the land in lieu of constructing flats for the 672 tenants in 36 months. Guruashish informed MHADA the plot was large and would take time to develop on its own; so it wanted to let other builders in through sub-development agreements. Between 2010 and 2014, Guruashish signed such agreements with the other builders.
Trouble started in July 2017 when Union Bank of India, secured lender to Guruashish moved the Mumbai bench of NCLT to recover around Rs254 crore of dues. NCLT admitted the winding-up petition, and appointed Rajendra Bhutta as IRP. Under IBC rules, if a resolution plan is not found within 270 days, the company heads for liquidation. Interestingly, in January 2018, MHADA decided to terminate its agreement with Guruashish and the society, and asked it to return the land.
This prompted the IRP to file an application before the NCLT challenging the MHADA move. It will be heard on 27 February.
Meanwhile, the developers who have moved the high court are seeking an order directing authorities to issue occupation certificates on completed work, and to restrain MHADA from dealing, transferring or creating any third party rights on the land. According to the Bombay high court website, the case was filed on 8 February, and will be heard by Justice S.J. Kathawala on on 28 February.
In four separate petitions filed by Kiyana Ventures LLP, a subsidiary of Kalpataru Ltd, Ekta Everglade Homes Pvt Ltd, a subsidiary of Ekta World, KBJ Developers Pvt Ltd and RNA NG Infrastructure & Development Pvt Ltd, the builders claimed that Guruashish had informed the MHADA that since the development of land is of large magnitude and the development would take time, it was interested in transferring development rights of some of the land to other developers. MHADA had also approved the plans.
The builders claim they are bonafide purchasers of the said portions of the land, and have abided by the agreements.
When contacted, Nishit Dhruva, managing partner of law firm MDP & Partners, who is the representing IRP confirmed the development but refused to divulge any details, since the matter is sub-judice.
An email query and several phone calls to vice chairman and chief officer S.D. Lakhe as well as joint chief officer Sanjay Bhagwat as well as Guruashish and HDIL were not answered. Senior counsels Janak Dwarkadas representing MHADA, along with S.U. Kamdar confirmed the filing of the case, but refused to divulge any details since the matter is sub-judice.
Emails to Ekta World, RNA NG, Kalpataru and KBJ Developers were not answered.
Law firm Makarand Gandhi & Co. is representing HDIL Ltd in the case. Law firm Wadia Gandy & Associates is representing Kalpataru, Ekta World and KBJ Developers Pvt Ltd. RNA NG Infrastructure & Development Pvt. Ltd is being represented by Devang Lakhotia in the dispute.
Ekta Everglade says in its court petition that under development rights, it has paid around Rs302 crore to Guruashish and till date, it has spent an additional Rs663 crore to further develop the land. Similarly, Kalpataru’s subsidiary says it has had paid Rs448 crore towards acquiring development rights and spent Rs795 crore on construction.
According to the petition filed by KBJ Developers, it had acquired development rights by paying Rs135 crore and had spent Rs135 crore to acquire the development rights and borrowed an additional Rs81 crore from various banks. RNA NG says it had paid Rs82 crore to Guruashish. The developers claim that in several correspondences, MHADA had accepted the rights of these builders to develop the property.
Ekta-Group subsidiary Ekta Everglade in its petition has claimed that Guruashish is a subsidiary of HDIL, and the HDIL needs to be liable for the default.