Bombay HC orders 3-month jail term to developer for failing to abide by undertaking for flat purchasers, stays sentence for 6 weeks

A single-judge bench of Justice Manish Pitale also directed the developer to pay a total Rs. 4 crore within six weeks to purge the contempt. The bench said that since the respondent developer had already deposited Rs. 1 crore with the High Court registry, the developer will have to pay the remaining Rs. 3 crore.

Justice Pitale was hearing a contempt petition filed by one Achyut Shridhar Godbole and another person who had urged the court through advocate Drupad S Patil to initiate contempt of court proceedings against Satra.

As per the plea, the Darshan Developers on January 7, 2004 had executed agreement for sale for flat measuring 765 square feet and another agreement for flat with 720 square feet area in favour of the petitioners. As per terms of agreements, the petitioners paid a total Rs. 59 lakhs out of total 67 lakhs, on various dates and approached the developer for possession of the said flats.

In 2008, the petitioners approached the developer for possession of flats, when the respondent developer stated that permission from the Civil Aviation Department was not received and another 6-month time may be required to obtain approval from the authority. On June 16, 2011, the developer sent a letter to Godbole stating that permission was obtained and possession of the flats will be handed over within a year.

However, the developer failed to do so, and as sufficient time had passed by, Godbole in May, 2014 sent notice to the developer seeking arbitration and later filed an arbitration plea before the HC. In the consent terms during the said proceedings, the developer gave specific undertaking to the HC pertaining to timelines within which the flats were to be completed and possession will be handed over to the petitioner, along with required permissions to occupy and use the said flats. The High Court had appointed a court receiver for monitoring the construction of the flats, which were to be handed over to the petitioners within nine months.

The petitioners had agreed to deposit Rs. 30 lakh with the court receiver by October 30, 2014, which included the balance amount to be paid to the developer. The HC had accepted the consent terms and disposed of the arbitration plea. The developer had deposited Rs. 1 crore with the court.

As the developer could not comply with the undertaking, petitioners filed the contempt plea.

Advocate Bhavesh Parmar for the developer claimed that the developer had brought back the amounts received towards construction of the said flats. Parmar emphasised that the two flats were constructed, however the process of construction was frustrated due to impossibility of obtaining occupation certificate, and therefore the lenience shall be granted towards the respondent developer. The developer also tendered an apology. However, the bench said the same was insufficient.

“The expression of apology on behalf of the respondent cannot be said to be sincere, in the light of the chronology of events. Merely because the respondent deposited the amount of Rs.1 crore, it cannot be said that the same can be a ground for showing any leniency towards the respondent. The conduct of the respondent has been dealt with in sufficient detail, while reaching the conclusion that the respondent is indeed guilty of having committed contempt of this Court,” Justice Pitale noted.

In January, last year, the HC had pulled up and warned of suo motu contempt proceedings to a developer, Orbit Ventures, which had violated court orders that restrained it from creating third party rights to sell flats that were claimed by Axis Finance Ltd, a Non-Banking Finance Company (NBFC) against over Rs 100 crore worth pending receivables from the developer.