New Developer Appointed Through Court Process Not Liable For Erstwhile Builder’s Interest On ₹37 Lakh Refund, Bombay HC Rules

Respondent No. 5, the erstwhile developer, allotted a flat to Respondent Nos. 3 and 4 and received ₹37 lakh from them. After Respondent No. 5 defaulted on its undertaking to refund the amount, MahaRERA initially disposed of the allottees’ complaint on the basis of that undertaking, then, following remand by the Appellate Tribunal, directed Respondent No. 5 and the Petitioner—the subsequently appointed developer—to pay interest on ₹37 lakh from 17 May 2018 until realisation.

The Petitioner had not been a party to the original complaint, review-cum-execution proceedings, or appeal; it had been appointed under a fresh development agreement after court-supervised steps following the termination of Respondent No. 5’s agreement with the Trust. The Petitioner challenged MahaRERA’s order and consequential orders attaching and freezing its bank accounts.

Section 2(zk) of RERA treats persons performing distinct promoter functions as promoters, and may make them jointly responsible for statutory functions; it does not automatically transfer every financial liability of an earlier promoter to a later developer.

Section 15 governs a promoter’s transfer or assignment of majority project rights and liabilities and requires the incoming promoter to comply with specified pending obligations; it does not apply where the new developer derives its rights through a fresh, court-supervised appointment rather than a transfer by the erstwhile promoter.

Section 18 provides an allottee with refund and interest remedies against the promoter responsible for the relevant failure; in the circumstances here, the Court held it did not impose liability on a later developer that had not received or retained the allottee’s money.

An order in adversarial proceedings cannot impose liability on a person who was not made a party and against whom no case was pleaded.

Section 180 of the Maharashtra Land Revenue Code, 1966 (“MLRC”) permits recovery measures, but consequential attachment cannot survive once the underlying liability against the person proceeded against is set aside.

The Court also held that the validity of Regulation 36 of the Maharashtra Real Estate Regulatory Authority (General) Regulations, 2017, and MahaRERA’s review power need not be decided without pleadings and a prayer challenging the regulation.

It distinguished Wadhwa Group Housing Pvt. Ltd. v. Vijay Choksi as not addressing a later developer appointed on a clean-slate basis.

The Petitioner had not been impleaded in the original complaint or the review-cum-execution proceedings; notice to attend the remand hearing and participation through counsel did not substitute for joinder or pleadings alleging its liability.

The original refund obligation arose from Respondent No. 5’s undertaking, and Respondent No. 5 repeatedly acknowledged that obligation. The Petitioner entered the project years later under a fresh development agreement following court-supervised proceedings, not by receiving an assignment from Respondent No. 5.

Nor did the Petitioner receive the ₹37 lakh, so Sections 2(zk), 15 and 18 did not transfer Respondent No. 5’s crystallised refund debt to it.

Since the liability order could not stand against the Petitioner, the related attachment and recovery measures against its property and accounts could not independently survive.

The Court clarified that Respondent No. 5 remained subject to its refund undertakings and that the allottees could pursue recovery, including interest, against Respondent No. 5 and, if maintainable, the Trust; the parties’ rights and contentions on those claims were left open.