Bombay High Court lifts stay on additional construction after finding adequate disclosure of development potential

The Bombay High Court recently vacated its orders that had stayed construction activity by Sheth Shelters Private Limited over non-disclosure of development potential [Venus Vasant Valley Co-operative Housing Society Limited v Sheth Shelters Private Limited & Ors.]..Justice RI Chagla found that the developer had made adequate disclosures regarding the development potential in the Maharashtra Ownership of Flats Act (MOFA) Agreement.."I find that the Developer has made the adequate disclosure of the developable potentiality of the suit land and that is as per the requirement of extant law on the date of sanctioning of the 1997 layout plan and thus, there is no advantage being taken by the Developer of any change of law by constructing a building beyond the developable potentiality," the order dated April 5 stated..The Court was hearing an interim application by Sheth Shelters to vacate earlier orders of the High Court that had stayed its construction activity on a land that is being redeveloped.These orders were passed in response to concerns raised by the property owners (plaintiff) regarding the disclosure of development potential..The plaintiff contended that there was non-disclosure of the development potential, particularly concerning Transferable Development Rights (TDR). They argued that the developer had failed to provide adequate information about the utilization of TDR in the development plan. Additionally, the plaintiff raised concerns about the impact of additional construction on the overall scheme of the layout..On the other hand, the defendant asserted that they had fulfilled their obligation to disclose the development potential in the Agreement for Sale or MOFA Agreement. They emphasized that TDR was permissible and had been contemplated at the time of the layout plan's sanctioning by the Municipal Corporation of Greater Mumbai (MCGM). The defendant also argued that the plaintiff had accepted the developer's entitlement to use TDR..The Court, based on the statutory requirements under Clauses 3 and 4 of Form V of MOFA, emphasized the obligation of the developer to provide true and full disclosure of the development potentiality of the plot. It noted that such disclosure should encompass not only inherent Floor Space Index (FSI) but also the potential for additional FSI through TDR.In this specific case, the Court found that the developer had made adequate disclosures regarding the development potential in the MOFA Agreement. It further noted that the inclusion of TDR was permissible and had been contemplated at the time of the layout plan's sanctioning by the Municipal Corporation of Greater Mumbai (MCGM). The Court also addressed the issue of utilizing TDR for construction, stating that the plaintiff had accepted the developer's entitlement to use TDR.It concluded that there was no merit in the plaintiff's arguments and ruled in favor of the developer, vacating previous orders against construction activities..The plaintiff-society was represented Senior Advocate Sharan Jagtiani and advocates Priyank Kapadia, Kaustubh Patil, Amogh Singh and Roshan Sawant..The developer was represented by Senior Advocate Virag Tulzapurkar, and advocates Simil Purohit, Jasmine Kachalia, Deepu Jojo, Viren Mandhle, Sahil Singh instructed by Wadia Ghandy & Co..The managers of the developers were represented by advocates Karl Tamboly, Vatsal Shah and Yunus Vakharia..Bombay Municipal Corporation (BMC) was represented by advocate KH Mastakar..[Read Judgment]