Bombay HC comes to aid of stranded flat purchasers, says brazen disregard for Orders by making false statements amounts to obstruction of justice entitling Court to take suo-moto action in contempt against Developers

Read Judgment: Sabhajit Ramyash Yadav & Another vs. State of Maharashtra & Others

Pankaj Bajpai

Mumbai, March 30, 2022:  While considering a case where the Developers despite collecting an approximate amount of Rs.178 Crores from the innocent flat purchasers (petitioners), have not provided to them a single flat till date, the Bombay High Court held that brazen and continuous disregard for orders of the Court including by making false and misleading statements would amount to a willful and deliberate breach, obstruction and interference with the administration of justice entitling this Court to take suo-moto action in contempt against the partners of the Developer viz. Hemendra Haridas Mapara and Chetan Haridas Mapara.  

The Developer has no intention of voluntarily repaying the admitted dues of the Petitioners and that the Petitioners are justified in their apprehension that if interim reliefs to protect the decreetal amounts of the Petitioners are not granted, it is very likely that the Developer shall deal with or further encumber all their assets and nothing will be left to the hands of the Petitioners despite having a decree in their favour, observed a Division Bench of Justice S.J. Kathawalla and Justice Milind N. Jadhav. 

The observation came pursuant to a petition seeking direction against the Collector, Mumbai and the Tahsildar, Mumbai respectively, mandating them to comply with and execute the Recovery Certificates issued by the Maharashtra RERA against the Developer – M/s. Reliance Enterprise and in favour of Sabhajit Ramyash Yadav & Another (Petitioners). 

Going by the background of the case, the petitioners – allottees) have purchased flats in a project known as ‘HILL VIEW’ being developed by M/s. Reliance Enterprise (the Developer) under registered Agreements for Sale. As the Developer failed to handover possession of their flats within the stipulated time, the Petitioners filed Complaints u/s 18 of the said Act before RERA, which directed the Developer to refund the amounts received by them from these Petitioners. 

Since the Developer failed to comply with the said orders passed by RERA, the Petitioners filed execution proceedings before RERA, which came to be allowed and RERA issued a Recovery Certificate u/s 40(1) of the said Act r/w Rule 3 of the Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine Payable, Forms of Complaints and Appeal, etc.), Rules, 2016 in favour of the Petitioners and against the Developer. 

RERA then forwarded these Recovery Certificates to the Collector and Tahsildar directing them to execute the same and recover the decreetal amounts which were payable to the Petitioners as arrears of land revenue. However, despite repeated reminders, the Collector and Tahsildar, have failed to execute or take any effective steps to execute the said Recovery Certificates till date. Hence, present petition. 

After considering the submissions, the High Court agreed that despite the directions from RERA, the Collector and Tahsildar have failed to exercise their powers u/s 263 to 267 of the Maharashtra Land Revenue Code, 1966 r/w Rule 17 of the Maharashtra Realization of Land Revenue Rules, 1967 to secure the recovery of the decretal amounts mentioned under the Recovery Certificates, which are payable to the Petitioners. 

The only person who has wrongly benefitted from such inaction of the Collector and Tahsildar are the Developer herein (being a private party), who have till date failed to comply with the Orders passed by RERA and failed to pay the decreetal amount to the Petitioners, which amounts are admittedly due and payable by the Developer to the Petitioners, added the Court. 

The Division Bench of the High Court found that out of the monies collected from the flat purchasers, huge amounts have been transferred by the partners of the Developers to themselves, their family members and even related entities while the innocent flat purchasers still await their dream homes or the refund of their hard-earned money. 

In fact, in teeth of the order of injunction passed by this Court, the Developer has transferred monies to the tune of Rs. 56 lakhs inter alia to itself and related parties, in complete disregard to the orders passed by this Court, added the Bench. 

Accordingly, by way of an interim relief, the High Court passed an order directing the developer to forthwith disclose the particulars of the bank account opened by it with a nationalized bank (the Designated Account) pursuant to Order of this Court dated Dec 03, 2021. 

In addition, the High Court also directed that the Developer shall continue to deposit all amount/s received by them and/or by their immediate family members, from any of the flat purchasers in respect of any of its projects including ‘Hill View’ and ‘Triveni and/or from their debtors in the said Designated Account, until further orders of this Court.