Developer Gets Partial Relief in Landmark MREAT Ruling on Society’s Self-Redevelopment Move
Tribunal Balances Society’s Autonomy and Developer’s Right to Restitution in Dadar Project Dispute
In a significant ruling that may reshape how Mumbai’s aging housing societies handle redevelopment disputes, the Maharashtra Real Estate Appellate Tribunal (MREAT) has delivered a nuanced verdict in M/s. Urban Living Developers Pvt. Ltd. vs. Adarsh Co-operative Housing Society Ltd. & Ors. (Appeal No. AT006000000094821, October 28, 2025).
The tribunal upheld the society’s decision to terminate its redevelopment agreement with the developer and pursue self-redevelopment, but also directed payment of ₹6.2 crore as restitution and compensation for the developer’s verified investments and groundwork.
Background of the Case
Adarsh Co-operative Housing Society, a 48-year-old Dadar property, had obtained deemed conveyance in 2021 under Section 11 of MOFA, following a 17-year default by the original promoter. In 2023, the society entered into a RERA-registered redevelopment agreement with M/s. Urban Living Developers, promising new flats, a ₹4 crore corpus, and project completion by December 2025.
The developer invested ₹8.5 crore in site mobilization, approvals, and demolition before facing BMC stop-work notices due to FSI disputes (2.4 vs. 2.7). With only 28% of the project completed and rent arrears amounting to ₹60 lakh, the society terminated the agreement in September 2025 — supported by 73% of members — and opted for self-redevelopment backed by a ₹22 crore bank loan.
When MahaRERA upheld the termination but denied the developer’s ₹8.5 crore compensation claim, the developer appealed to MREAT, arguing mala fide intent and unjust enrichment by the society.
Tribunal’s Findings
MREAT partly allowed the appeal, reaffirming the society’s termination rights under Section 7(1)(b) of RERA, referencing its own precedent — Jai Hind Co-operative Housing Society Ltd. vs. MahaRERA (Oct 2025) — that societies can terminate for material breach post-deemed conveyance.
However, the tribunal ruled that the developer’s sunk costs, verified through a CA audit, merited restitution under Section 70 of the Indian Contract Act, since the society benefited from the developer’s groundwork before pivoting to self-redevelopment.
It awarded ₹6.2 crore (₹5 crore principal + ₹1.2 crore as interest and compensation), rejecting the full ₹8.5 crore claim after deducting ₹2.3 crore for delays and non-compliance.
Directions and Impact
- Termination and self-redevelopment upheld under RERA.
- Society ordered to pay ₹6.2 crore within 90 days via escrow from its ₹22 crore loan.
- Developer’s approved plans to be transferable upon payment.
- Society fined ₹75,000 for failing to pursue mediation before termination.
Legal experts note this decision introduces a precedent-setting restitution principle in redevelopment law — ensuring developers are not left uncompensated after early termination, while still protecting residents’ right to control their property.
The ruling is expected to influence over 3,500 ongoing redevelopment projects in Maharashtra, providing a roadmap for financial fairness and transparency during society-developer disputes.
