Maharashtra Consumer Commission Orders Builder to Pay ₹1.22 Crore to Mumbai Landowners

MUMBAI — A Mumbai property developer must pay over ₹1.22 crore to two landowners after seizing their development rights, pocketing enhanced construction incentives, and walking away from signed contractual pledges.

So ruled the Maharashtra State Consumer Disputes Redressal Commission. In a scathing ex parte order, the bench held that surrendering ancestral property rights constitutes valid consideration for housing services under consumer law, leaving errant builders fully answerable for breach of contract.

The dispute dates back to 2010. Two landowners, acting alongside their late mother, owned a one-third undivided share in a Mumbai parcel. They executed an Agreement to Assign, handing over development rights to the builder in exchange for a reconstructed home. On February 18, 2015, the parties signed both a Supplementary Agreement and an Agreement to Offer Permanent Alternate Accommodation (PAA). The terms were explicit: the developer would deliver a 1,395-square-foot flat, two car parking bays, monthly transit rent, delayed-possession penalties, and ₹88 lakh in compensation for utilizing higher Floor Space Index (FSI).

The builder breached nearly every clause.

While the family received physical possession of the apartment in May 2018, the developer never registered the permanent accommodation deed. Nor did it pay its agreed share of stamp duty or hand over the ₹88 lakh FSI windfall. The firm also withheld ₹6,60,000 in transit rent spanning December 2017 to April 2018, ₹16,50,000 in contractual delay penalties, and ₹10,00,000 spent by the owners on raw construction materials.

Then came the retaliation. In June 2022, the builder slapped the owners with a demand notice for ₹30,26,592, claiming inflated, unsubstantiated construction expenses.

Statutory Violations and Unfair Trade Practices

The state commission rejected the builder's demands outright, branding the ₹30.26 lakh counter-claim a blatant unfair trade practice designed to squeeze the rightful owners. When summoned, the builder refused to appear. The bench heard the matter ex parte.

The failure to register the deed struck at the heart of state tenancy protections. Under the Maharashtra Ownership Flats Act (MOFA), execution and registration of individual ownership agreements remain an absolute legal liability, not an optional convenience.

"The landowners established their entitlements through water-tight, signed pacts," said Bhargav KS, Managing Partner at K.S & B.K.S Law Associates. "The developer's refusal to honour covenants that were explicitly written down left the court with clear documentary proof of default."

The Commission gave the developer a strict 60-day deadline from the receipt of the order to execute and register the permanent accommodation agreement. The builder must also bear all stamp duty and registration charges for up to 1,000 square feet of carpet area, alongside disbursing the full ₹1.22 crore financial award with 8% accrued interest.