In a significant setback for a Mumbai-based real estate developer, the Bombay High Court has upheld a mandatory pre-deposit requirement of ₹125 crore, effectively stalling Sunshine Builders and Developers’ appeal against the 2019 auction sale of a prime slum redevelopment site in Andheri East.
A Division Bench comprising Justices R.I. Chagla and Farhan P. Dubash dismissed Writ Petition No. 3929 of 2024 filed by M/s. Sunshine Builders and Developers (through its partner Mr. Shailesh Mehta) on Tuesday, February 4, 2026. The court refused to interfere with the Debts Recovery Appellate Tribunal’s (DRAT) order dated February 29, 2024, which directed the petitioner to deposit ₹125 crore (in three instalments) as a condition precedent for entertaining its appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The dispute centres on a large parcel of land in Village Gundavali, Taluka Andheri (CTS Nos. 78 and 79, corresponding to Survey Nos. 91/2 and 4/3), admeasuring approximately 30,501.60 square metres along the Western Express Highway in Andheri East, Mumbai. The property, declared a slum under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971, was originally earmarked for a slum rehabilitation scheme (SRA project). Sunshine Builders was appointed as the developer by the slum dwellers’ cooperative society.
In 2011, Sunshine Builders entered into co-development agreements with Gigaplex Developers Pvt. Ltd. (Respondent No. 3, now in liquidation), appointing Gigaplex as co-developer. Under these agreements (dated March 21, 2011; March 31, 2011; and later a third in December 2013), Sunshine Builders was entitled to a share of revenue or constructed area from the free-sale component. Powers of attorney were executed, allowing Gigaplex’s nominees to create encumbrances, though Sunshine Builders claims it never authorised mortgaging its share.
Gigaplex, however, executed two registered Deeds of Simple Mortgage (December 30, 2011, and March 12, 2013) in favour of HDFC Bank Ltd. (Respondent No. 1), mortgaging the property (excluding Sunshine’s alleged revenue share) along with another Bandra property owned by Kaveri Estate Pvt. Ltd. (Respondent No. 4) to secure loans extended to Gigaplex.
Following Gigaplex’s default, HDFC Bank issued notices under Section 13(2) of the SARFAESI Act in 2017, took symbolic possession, and later obtained physical possession via a Section 14 order in 2019. The bank auctioned the property, issuing a Sale Certificate on December 24, 2019, to Havemore Realty Pvt. Ltd. (Respondent No. 5, the auction purchaser) for ₹232 crore. Havemore later mortgaged it back to HDFC Bank and, on May 2, 2023, entered into a registered Development Agreement with Lodha Developers Ltd. (Respondent No. 6, represented in court).
Sunshine Builders challenged the bank’s actions by filing Securitisation Application No. 82 of 2019 before the Debts Recovery Tribunal (DRT), Mumbai, in September 2017 (initially challenging early measures). Upon learning of the 2019 sale (around February 2020), it sought to amend the application in January 2021 to implead Havemore Realty, add subsequent facts, challenge the sale, and seek condonation of delay.
The DRT dismissed both applications via a common order dated October 7, 2022, holding that the amendments were belated, unexplained, and would alter the nature of the lis, while noting Sunshine Builders’ delay despite knowledge and its parallel Commercial Suit No. 1003 of 2019 (still pending without interim relief).
Sunshine Builders appealed to DRAT, seeking waiver of the 50% pre-deposit under Section 18(1) SARFAESI Act, arguing it was not a “borrower” and the DRT order was merely procedural. DRAT rejected the waiver plea in February 2024, directing the ₹125 crore deposit.
The High Court, after detailed hearings (reserved on December 16, 2025), ruled that:
- Sunshine Builders qualifies as a “borrower” under Section 2(1)(f) SARFAESI Act, as it is a co-mortgagor in the registered mortgage deeds.
- The DRT’s common order was substantive — it effectively extinguished Sunshine Builders’ right to challenge the concluded auction sale post-limitation — not merely procedural.
- Section 18(1) mandates pre-deposit for “any order” under Section 17, including interlocutory ones, with no statutory exception for procedural refusals.
- Judicial precedents (e.g., Union Bank of India vs. Rajat Infrastructure, Raj Kumar Shivhare vs. ED) confirm the pre-deposit is absolute and non-waivable.
- Equities heavily favour third parties: Lodha Developers has spent over ₹80 crore on construction (four G+15 towers, 53% units sold, 8 rehab buildings completed and occupied by slum dwellers as of August 2025).
The court dismissed the petition with no costs, leaving Sunshine Builders to deposit ₹125 crore if it wishes to pursue the appeal on merits before DRAT.
This ruling underscores the strict pre-deposit regime under SARFAESI to deter delays in secured creditor recoveries, while protecting bona fide third-party rights in advanced redevelopment projects.
Also Read: Redevelopment Disputes Can’t Be Thrown Out Without Trial: Bombay High Court
