Statutory Rights of Occupants in Redevelopment Transcend Private Agreements and Survive Inter Se Partner Disputes

The Appellants were identified as ‘occupants’ of a cessed building under the Maharashtra Housing and Area Development Act, 1976 (MHAD Act).

The 1st Respondent (Developer) undertook redevelopment under a No Objection Certificate (NOC) from the Maharashtra Housing and Area Development Authority (MHADA), promising alternate accommodation to original occupants.

A Permanent Alternate Accommodation Agreement (PAAA) was executed on 17.10.2019, but the Developer later refused to handover the agreed premises (3,336.92 sq. ft.), claiming the 1st Appellant’s status was a mistake and that inter-se partner disputes rendered the PAAA invalid.

MHADA issued orders on 28.05.2025 and 27.06.2025 directing the Developer to execute the PAAA and handover possession.

The High Court of Bombay set aside these orders, categorizing the PAAA as a "private arrangement" not amenable to writ jurisdiction and directing the parties to civil court.

Subsequent to the High Court judgment, the Developer filed a civil suit (CS No. 4579 of 2026) challenging the PAAA.

1. Whether a Permanent Alternate Accommodation Agreement (PAAA) executed under the MHAD Act and DC Regulations is a mere "private arrangement" or a statutory contract enforceable by MHADA.

2. Whether the Developer can resile from the PAAA and the certified list of occupants after obtaining possession and completing redevelopment based on those very documents.

Section 2(25) of the MHAD Act, which defines ‘occupier’ broadly to include rent-paying tenants, licensees, and even persons liable for damages for use/occupation.

Rule 33(7) of the Development Control Regulations for Greater Bombay, 1991 (DC Regulations), which mandates the rehabilitation of all certified occupants in redeveloped cessed buildings as a prerequisite for the Developer to obtain an Occupation Certificate (OC).

The doctrine of estoppel against the Developer regarding the certified list of occupants approved by the Mumbai Repairs and Reconstruction Board (MBRR Board).

The Court reasoned that the High Court erred in treating the PAAA as a private matter; the agreement is inextricably linked to a statutory scheme where MHADA exercises regulatory supervision over the rehabilitation of tenants.

The Court noted that the 1st Appellant was listed as an ‘occupant’ in the Developer’s own public notice in 2010 and the MHADA-certified list.

Since the Developer obtained vacant possession from the Appellants based on these representations and the PAAA, they cannot now challenge the Appellants’ status or the validity of the PAAA due to internal partnership changes or the non-utilization of fungible FSI.

The Court found the Developer’s attempt to resile from the agreement "mala fide," especially since the PAAA was validly executed by an authorized partner at the material time.

the court held that inter-se consent terms between partners cannot extinguish the rights of third-party beneficiaries like the Appellants.

The Court held that the PAAA is enforceable and the Appellants are entitled to the three apartments specified therein.

The 1st and 2nd Respondents were directed to execute the PAAA and handover possession within two months, failing which they must pay monthly rental damages.

The Court struck down the pending Civil Suit (No. 4579 of 2026) as misconceived and ordered the Developer to pay costs of Rs. 50,000 in both the High Court and the Supreme Court.