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2026 INSC 737 • Supreme Court of India

Mahabanoo v. Kalikund Developers

“Developer Cannot Take Possession on a Promise of Alternate Flats and Then Disown the Occupant: Supreme Court Enforces Redevelopment Agreement in a Cessed Mumbai Building”

23 July 2026Justice J.B. Pardiwala, Justice K. Vinod Chandran
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TL;DR

The Supreme Court allowed the appeal of Mrs. Mahabanoo Contractor and another, who had given consent and vacated their room in a cessed Mumbai building for redevelopment on the promise of alternate premises. It set aside the Bombay High Court judgment which had treated the Permanent Alternate Accommodation Agreement (PAAA) dated 17.10.2019 as a private arrangement and restrained MHADA from enforcing its orders. The Court held that the developer, having obtained consent and possession from the first appellant as a certified occupant, could not turn around and challenge her status, revived MHADA's orders, and directed the developer to execute the PAAA and hand over three apartments within two months, failing which damages at monthly rental value would be payable. The developer's later Civil Suit No. 4579 of 2026 was called misconceived and mala fide, the High Court was directed not to proceed with it, and costs of Rs. 50,000 each (for the High Court and this Court) were imposed.

The Bottom Line

A developer who obtained consent, vacated the premises and took over possession from an occupant of a cessed building on the promise of alternate accommodation under a statutory redevelopment scheme cannot later disown that occupant after the new building is complete. The Supreme Court enforced the agreement, restored MHADA's orders, directed handing over of three flats within two months, and held the developer's fresh civil suit to be misconceived and mala fide.

Case Timeline

The journey from FIR to Supreme Court verdict

event
21 Apr 2010

Public Notice Issued by Developer

The developer's public notice for obtaining MHADA's NOC showed Ms. Gool Peshotan Unwalla as tenant and the first appellant as occupant of the premises, and invited claims within 15 days.

order
21 Sept 2010

MHADA Issues NOC

MHADA issued the NOC for redevelopment, requiring all occupants of the old building to be accommodated in the new building with equal carpet area. The NOC was revised on 21.08.2012.

event
21 Mar 2012

Original Tenant Passes Away

Ms. Gool Peshotan Unwalla, the original tenant of Room No. 5, died.

event
17 Oct 2019

PAAA Executed and Possession Handed Over

The developer executed the Permanent Alternate Accommodation Agreement in favour of the first appellant for 309.98 sq. mtrs. (three flats), and on the same day the first appellant handed over possession of the old premises.

order
30 Jan 2024

Probate Certificate Issued

A certificate of probate was issued in respect of the Will of Ms. Unwalla, recording the appellants as her legal heirs.

order
28 May 2025

MHADA Directs Execution of PAAA

MHADA directed the developer to execute and register the PAAA and hand over possession, followed by a further order dated 27.06.2025 and a Show Cause Notice dated 10.07.2025.

filing
6 Feb 2026

Developer Files Civil Suit

After the High Court judgment, the developer filed Civil Suit No. 4579 of 2026 challenging the PAAA and the appellants' claim to allotment.

judgment
23 Jul 2026

Supreme Court Delivers Judgment

The Supreme Court allowed the appeal, set aside the High Court judgment, revived MHADA's orders and directed execution of the PAAA and handing over of three flats within two months.

The Story

The respondent, M/s. Kalikund Developers, is the owner-developer of a cessed building at Wimbridge Compound, N.B. Marg, Grand Road (W), Mumbai, which was found unfit for human habitation by the local authority. Redevelopment proceeded under the Maharashtra Housing and Area Development Act, 1976 (MHAD Act) and Regulation 33(7) of the Development Control Regulations for Greater Bombay, 1991 on the basis of a No Objection Certificate (NOC) issued by the Maharashtra Housing and Area Development Authority (MHADA). The occupants consented to vacate on the assurance that all of them would be given alternate premises in the reconstructed building.

The first appellant, Mrs. Mahabanoo Contractor, was a joint occupant of Room No. 5 on the third floor with Ms. Gool Peshotan Unwalla, the original tenant, who died on 21.03.2012. The appellants claimed to be the sole legal heirs of Ms. Unwalla, relying on a probate certificate dated 30.01.2024. The developer's public notice of 21.04.2010, MHADA's NOC dated 21.09.2010 (revised on 21.08.2012) and the certified list all showed Ms. Unwalla as tenant and both her and the first appellant as occupants.

On 17.10.2019 the developer executed a Permanent Alternate Accommodation Agreement (PAAA) with the first appellant, agreeing to give her 219.81 sq. mtrs. plus 35% fungible area, in all 309.98 sq. mtrs., being one flat of 1227.42 sq. ft. and two flats of 1054.75 sq. ft. each, with three covered parking spaces. On the same day possession of the old premises was handed over by the first appellant to the developer.

After the building was redeveloped, the developer did not hand over the flats despite MHADA's communication of 22.11.2022 extending the time to 21.09.2023. The first appellant approached the MBRR Board on 10.06.2024. MHADA passed orders dated 28.05.2025 and 27.06.2025 directing the developer to execute and register the PAAA and hand over possession, followed by a Show Cause Notice dated 10.07.2025 threatening action under Section 91A of the MHAD Act. The developer challenged these in a writ petition before the High Court of Bombay, alleging that the PAAA was executed by a partner later expelled, that the first appellant was only an occupant and not a tenant, and that the Consent Terms of 09.03.2024 settling disputes between its partners made earlier agreements non-binding.

A Division Bench of the High Court found non-application of mind by MHADA (as the building was originally proposed at 34 floors but built to 30, leaving fungible FSI unused), held the PAAA to be a private arrangement not amenable to writ jurisdiction, recorded the developer's concession that two flats would be kept free of encumbrances until a civil court decides, and restrained MHADA from taking coercive steps. No civil case was then pending. The developer filed Civil Suit No. 4579 of 2026 only on 06.02.2026, seeking to challenge the PAAA in its entirety and the appellants' claim to the whole 3336.92 sq. ft. The appellants then approached the Supreme Court.

Legal Issues

Click each question to reveal the Supreme Court's answer

1Question

Whether the High Court was right in treating the PAAA as a purely private arrangement and restraining MHADA from enforcing its orders under the statutory redevelopment scheme?

Tap to reveal answer
1SC Answer

No. The Supreme Court held that the High Court erred in restraining MHADA from taking further proceedings on the orders requiring execution of the PAAA and handing over possession, and set aside the judgment. MHADA's orders dated 28.05.2025 and 27.06.2025 were held to be perfectly sustainable under the statutory scheme of reconstruction and redevelopment of cessed buildings.

Confirms that agreements for alternate accommodation made under the MHAD Act and DC Regulations framework are backed by the regulator's enforcement role, so occupants are not left to a civil suit alone.

2Question

Whether the first appellant had a valid claim to alternate premises as an "occupant", given that the original tenant had died and the probate was obtained only later?

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2SC Answer

Yes. The Court held that, even without the probate, the first appellant was entitled to the premises as an occupant as per the documents of MHADA and the developer, and that the consent and possession had been given specifically by her. The reference in the PAAA to a pending probate application, which was initiated later, did not vitiate the agreement.

An occupant who is consistently shown as such in the developer's and the authority's contemporaneous records can claim rehabilitation without depending on succession to the tenancy.

3Question

Whether the developer could avoid the PAAA because of internal disputes between its partners, the Consent Terms of 09.03.2024, or because fungible area was not fully utilised?

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3SC Answer

No. The Court held that a settlement between the partners, without the beneficiary of the PAAA being a party, cannot absolve the developer of its obligations under a validly executed agreement on the basis of which vacant possession was obtained. The mere fact that fungible area was not fully utilised cannot allow the developer to resile from its agreement to allot alternate premises.

Internal disputes of a developer do not defeat the rights of occupants who parted with possession on the strength of an agreement.

4Question

What relief should follow, and what is to be done about the developer's Civil Suit No. 4579 of 2026?

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4SC Answer

The Court directed the first and second respondents to execute the PAAA and hand over possession of three apartments within two months, failing which the appellants would be entitled to damages at the monthly rental value of the three flats. It held the civil suit to be misconceived and mala fide in view of the undertaking given before the High Court, directed the High Court not to proceed with it, and awarded costs.

Shows the Court's readiness to curb litigation that resiles from an undertaking recorded before a court.

Arguments

The battle of arguments before the Supreme Court

Petitioner

Vihaan Kumar

1

First appellant is an "occupant" under the MHAD Act and Regulation 33(7)

Mr. Shyam Divan, Senior Counsel for the appellants, emphasised the definition of "occupant" in the MHAD Act and Regulation 33(7) of the DC Regulations, and pointed to documents in which the first appellant was shown as joint occupant with Ms. Unwalla. He submitted that the appellants are the legal heirs of the original occupant as evidenced by the probate, and that the only dispute raised before MHADA was that the original occupant had died.

Regulation 33(7), DC Regulations for Greater Bombay, 1991Maharashtra Housing and Area Development Act, 1976
2

The PAAA is regulated by statute, not a private arrangement

The appellants argued that the High Court misconstrued the PAAA as a private arrangement, though it was entered into under a statutory scheme meant to let landlords benefit from additional space while ensuring tenants are not thrown onto the streets. Enforcement of the PAAA lies with MHADA, under whose NOC the project itself commenced, and the space delineated in the PAAA must be handed over.

MHAD Act, 1976Appendix III, DC Regulations

Respondent

State of Haryana

1

The PAAA is a concocted document executed by an expelled partner

Mr. Vinay Navare, Senior Counsel for the developer, submitted that the PAAA was entered into by a person expelled from the firm for misdemeanours, that the PAAA refers to a pending probate application although the probate petition was filed only in 2022, and that the first appellant's inclusion as occupant was by mistake. It was said she appears only in the "occupants" column and not as a "tenant", and that rent receipts, electricity and telephone bills and the notarised consent are in the sole name of the original tenant.

Testamentary Petition No. 1607 of 2022
2

Tenancy extinguished on death; area claimed is excessive; civil court is the remedy

The developer argued that the tenancy stood extinguished on the death of the original tenant on 21.03.2012, that the certified carpet area of 185.09 sq. mtrs. is far below the 219.81 sq. mtrs. in the PAAA, and that, without prejudice, the appellants could at most claim two flats of 1054 sq. ft. each (Flat Nos. 1403 and 1702), which had been offered and declined. It relied on the civil suit and the High Court's relegation of parties to the civil court.

3

MHADA defended its orders as statutory and judicious

Mr. Chirag M. Shroff, for MHADA, submitted that MHADA issues the NOC under Regulation 33(7) read with Appendix III for old cessed buildings, that a certified list of eligible occupants was prepared certifying Ms. Unwalla and the first appellant, and that the developer gets a right to seek an Occupation Certificate only if the PAAA is executed, registered and possession handed over to all certified occupants. MHADA stated it had exercised its statutory powers judiciously on records submitted by the developer itself.

Regulation 33(7) and Appendix III, DC RegulationsSection 91A MHAD Act

Court's Analysis

How the Court reasoned its decision

The Supreme Court began with the statutory scheme. It noted that the MHAD Act defines only "occupier" in Section 2(25), so an occupancy is not a statutory tenancy, and that Regulation 33(7) provides for redevelopment for landlords and/or occupiers of cessed buildings. It then examined the documentary record: the developer's own 2010 public notice, MHADA's NOC and its revision, and the certified list all showed the first appellant as an occupant alongside the original tenant, and no one else ever laid claim to the premises. The NOC provides that the developer receives its share of additional space only after all certified occupants are rehabilitated. The PAAA of 17.10.2019 conceded 309.98 sq. mtrs., and the area was broadly in line with the amended plan of 30.06.2021. On the same day possession was handed over by the first appellant, which the developer never disputed. The Court held that the developer could not after many years turn around and challenge the claim of the very person from whom it had obtained consent and possession. It found the probate anomaly immaterial, rejected the reliance on the partners' Consent Terms as the beneficiary was not a party to them, and rejected the unused fungible area as a ground to resile. The Court also noted that the developer, though represented before MHADA, had raised only the lack of proof of relationship with Ms. Unwalla. It therefore set aside the High Court judgment, revived MHADA's order, and, finding the developer's later suit contrary to its undertaking before the High Court, directed that the suit not proceed.

The developer cannot casually after all these years having obtained a consent, leading to vacation of premises and possession being handed over for the purpose of redevelopment, on the promise of allotment of premises as specified in the PAAA, turn around and challenge the very claim raised by the 1st appellant as an occupant.

Para 19

States the core equitable principle: a developer that benefited from the occupant's consent and possession cannot later deny her status.

The settlement of inter se disputes between the partners without the junction of the beneficiary of the PAAA, who has the right to seek a validly executed conveyance and handover of the premises, cannot absolve the developer from his obligations

Para 20

Internal settlements of a developer firm cannot extinguish third-party rights under an agreement already acted upon.

The mere fact that fungible area was not fully utilised cannot be a ground to allow the developer to resile from its agreement to redevelop and allot alternate premises to the occupants of the old building as agreed upon.

Para 21

Rejects the developer's commercial shortfall as a justification for non-performance.

We are of the opinion that the Civil Suit itself is misconceived and mala fide in the context of the undertaking given before the High Court which is sought to be resiled from

Para 24

Supports the direction that the High Court should not proceed with the developer's civil suit.

Allowed

The Verdict

Relief Granted

The appellants obtain enforcement of the Permanent Alternate Accommodation Agreement of 17.10.2019, with possession of three apartments in the redeveloped building, damages in case of default, and costs. MHADA's enforcement orders stand restored.

Directions Issued

  • The 1st and 2nd respondents shall execute the PAAA and hand over possession of the three apartments in the new building within two months from 23.07.2026
  • Failing compliance, the appellants shall be entitled to damages at the monthly rental value of the three flats in that location, recoverable from the 1st and 2nd respondents
  • The appellants are entitled to sue for damages for the delay in delivering the property, computed on that value
  • The High Court is directed not to proceed with Civil Suit No. 4579 of 2026
  • Costs of Rs. 50,000 each, before the High Court and before the Supreme Court, are payable by the 1st and 2nd respondents to the appellants
  • Pending applications stand disposed of

Key Legal Principles Established

1

A developer that obtains consent and possession from an occupant of a cessed building on the promise of alternate premises cannot later deny that occupant's status.

2

An occupant consistently shown as such in the developer's public notice, the authority's NOC and the certified list can enforce rehabilitation even if the original tenancy ended on the death of the tenant.

3

The MHAD Act speaks of "occupiers" (Section 2(25)), and occupancy is not the same as a statutory tenancy.

4

Under the NOC conditions, the developer's entitlement to its share of additional space follows complete rehabilitation of certified occupants.

5

A settlement between a developer's partners that does not involve the beneficiary of an agreement cannot extinguish the beneficiary's rights.

6

Non-utilisation of fungible FSI is not a ground for a developer to resile from an agreement to allot alternate premises.

7

A suit that goes against an undertaking given before a court can be treated as misconceived and mala fide.

Key Takeaways

What different people should know from this case

  • If you vacated your room in an old building for redevelopment on a written promise of a new flat, the developer cannot ignore that promise after the building is ready.
  • Being listed as an occupant in the developer's notice and the authority's certified list is strong proof of your claim to a new flat.
  • Disputes among the developer's own partners do not cancel your agreement.
  • The authority that issued the redevelopment permission can order the developer to execute the agreement and hand over possession.
  • If the developer delays, the Court allowed damages at the monthly rental value of the flats.

Frequently Asked Questions

The Supreme Court set aside the Bombay High Court judgment and held that the developer must execute the Permanent Alternate Accommodation Agreement of 17.10.2019 and hand over three flats in the redeveloped building within two months. The orders of MHADA were revived, and the developer was made to pay costs of Rs. 50,000 each for the High Court and the Supreme Court.
No. The Court held that a developer who obtained consent and possession from the occupant on the promise of alternate premises cannot casually turn around after many years and challenge the very claim of that occupant, especially when its own public notice and the MHADA records show her as an occupant.
The Court held that even without a probate, the first appellant was entitled to the premises as an occupant as per the documents of MHADA and the developer. The reference to a pending probate in the PAAA, which was initiated later, did not vitiate the agreement.
No. The developer relied on Consent Terms dated 09.03.2024 between its partners, but the Court held that a settlement without the beneficiary of the PAAA as a party cannot absolve the developer of its obligations under a validly executed agreement on which vacant possession was obtained.
If the first and second respondents fail to execute the PAAA and hand over the three apartments within two months, the appellants are entitled to damages at the monthly rental value of the three flats in that location, and may also sue for damages for the delay in delivery.

DISCLAIMER: This case summary is for educational and informational purposes only. It does not constitute legal advice. For advice on your specific situation, please consult a qualified advocate. JurisOptima is not responsible for any actions taken based on this information.

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