In a detailed judgment that drew a packed courtroom’s attention, the Supreme Court on Wednesday refused to stall the redevelopment of a Bandra housing society, holding that the original developer, A A Estates Pvt Ltd, had no surviving rights after years of non-performance. The bench observed that invoking the Insolvency and Bankruptcy Code (IBC) to block a fresh developer was “not legally sustainable,” especially when the earlier agreement had already been terminated well before insolvency began.
The order brought some relief to nearly 60 lower-income families who had been waiting for rehabilitation for almost two decades.
Background
The dispute goes back to 2005, when A A Estates first signed a redevelopment agreement with Kher Nagar Sukhsadan Co-operative Housing Society, a modest community of tailors, drivers, stenographers and other working-class residents in Bandra (East), Mumbai. The building, declared structurally unsafe (C-1 category), needed urgent reconstruction.
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The developer was supposed to complete the project within 24 months, later extended to 40 months under a supplementary agreement in 2014. But the court noted that despite repeated notices, rent compensation delays, and long periods of inactivity, the project never really took off.
By 2019, the Society formally terminated the developer’s rights and later appointed a new firm, Tri Star Development LLP, to take over. All this occurred before the initiation of the second insolvency process against A A Estates in December 2022.
Court’s Observations
During the hearing, the bench repeatedly questioned whether a developer who “did nothing for years” could suddenly use the IBC moratorium as a legal shield.
The court remarked, “This was a chronic case of non-performance. Termination did not happen because of insolvency; it happened because nothing was moving on the ground.”
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The judges also noted that the so-called “development rights” claimed by A A Estates were not proprietary assets but merely a contractual permission-a licence that never matured into any ownership or possessory right. Since the Society and its members always retained possession of the property, Section 14 of the IBC (which protects assets of an insolvent company from interference) simply did not apply.
At one point, the bench observed, “You cannot revive a dead agreement through the backdoor of IBC. A terminated contract does not magically become an asset.”
The court also noted that the Society had acted after “prolonged silence and default” from the old developer. No rent was paid to 41 members despite contractual promises, forcing some residents to stay inside unsafe premises for years. “People cannot be made to wait indefinitely for a roof over their heads,” the bench added.
Regarding the High Court proceedings, the Supreme Court rejected the argument that A A Estates was denied natural justice. Their counsel was present, the court said, and no request for more time or filing a reply was made.
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Decision
The Supreme Court ultimately upheld the Bombay High Court’s decision directing authorities to process redevelopment permissions for the new developer. It ruled that the termination of A A Estates’ agreements was valid and effective, and no IBC protection could override it. With this, the court cleared the path for the Bandra society’s long-pending reconstruction to continue.
The matter ends with the Court affirming that redevelopment must proceed in accordance with the Society’s fresh agreement.
Case Title: A A Estates Private Limited & Anr. vs. Kher Nagar Sukhsadan Co-operative Housing Society Ltd. & Ors.
Case No.: Civil Appeal (Arising out of SLP (C) No. 10758 of 2025)
Case Type: Civil Appeal – Redevelopment & IBC Moratorium Dispute
Decision Date: 2025