SELF-REDEVELOPMENT – A BETTER OPTION FOR
CO-OPERATIVE HOUSING SOCIETIES
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The redevelopment of old buildings has drastically undergone changes in Mumbai in the last 25 years. The traditional practice in vogue for redevelopment to be done through a Developer where the benefits of the additional Floor Space Index (FSI) accruing to the building, are not passed on to the members of the co-operative housing societies. Moreover, many buildings that went for redevelopment have been abandoned midway by the Developers leaving the original flat owners stranded.
The Developer-led-Redevelopment projects are stalled due to various reasons and have many disadvantages like indefinite delays or stalling of projects, lack of transparency in the process, mismanagement of funds, increased corruption allegations and underhand practices, modification in building plans without prior consent of the co-operative housing society, no rent payment to members after some months, inability to deliver 100% commitments and many more.
Self-Redevelopment is a type of redevelopment in which the co-operative housing society members themselves redevelop their existing building without appointing any Developer and earn profits from the sale of new additional flats. In self-redevelopment the entire redevelopment process is planned, executed and managed by the co-operative housing society members with assistance and guidance from Self Redevelopment Management Consultants.
The Maharashtra State Government has started giving various incentives and concessions in FSI, Taxes, TDR rates etc. for the Self Redevelopment of co-operative housing societies.
The Maharashtra State Government has authorized certain banks like the Mumbai District Central Co-operative Bank Ltd. to provide up to 95% funding for self-redevelopment Projects. The remaining margin amount is to be raised by the co-operative housing society members.
In order to ensure that the flat owners get the benefits of increased FSI and to let them have their participation in the redevelopment of their building, the cabinet of the Government of Maharashtra set up an expert committee on March 8, 2019 to examine the issues and give recommendations for self-redevelopment of old buildings by the co-operative housing societies in the State of Maharashtra. A Government Resolution (GR) dated 13th September, 2019 was issued to implement the suggestions of the High-Level Committee. Only registered cooperative housing societies of Maharashtra, are eligible to avail of the benefits offered under this GR.
The co-operative housing society shall appoint a skilled contractor for carrying out the reconstruction of the building from a panel of contractors approved by the approving authority. For empanelment, the contractors have to submit balance sheets for the last three years. This requirement will ensure that no fly-by-night contractor gets to carry out the work of redevelopment under this scheme. The contractor can be removed if the committee constituted for monitoring the progress of the project reports undue delay by the contractor in execution of the project. In such a situation, the contractor can also be black-listed to make him ineligible for any further projects. This requirement will ensure that the contractors so selected, are sincere in the execution of the projects undertaken.
The English version followed by Marathi version of the GR dated 23th September, 2019 issued by the Government of Maharashtra, Housing Department are appended below:
GOVERNMENT OF MAHARASHTRA
HOUSING DEPARTMENT
GOVERNMENT RESOLUTION NO. MISC. 2019/Case No. 10/Du Va Pu-1
Mantralaya, Mumbai – 400 032.
Date: 13th September, 2019.
Government Resolution, Housing Department No.: Misc. 2019/Case No.10/Du Va Pu – 1 Date – 08th March, 2019.
INTRODUCTION:
A Developer is appointed by the concerned co-operative housing societies according to the present prevalent procedure for making re-development of the old and dilapidated buildings in the State. The re-development of the of the co-operative housing societies is made according to the provisions in the Development Control Rules prepared by the concerned Planning Authority/Municipal Corporation/Local Self Government.
Since the benefit of increasing FSI is prominently goes to the Developer, the members of the concerned co-operative housing society do not get much benefit. Similarly, since the participation of the members of the co-operative housing societies in the process of re-development is very less, the entire project is implemented at the pleasure of the Developer and consequently, it has come to notice that many projects are lying in incomplete State due to umpteen reasons.
Likewise, since the purchasers who have invested by taking loan for the purchase of a flat in the said project, are facing financial difficulties since not getting possession of the flat within prescribed period. In such situation, if members of the concerned co-operative housing societies by coming together propose self-redevelopment, then entire control of the re-development project shall be of the concerned co-operative society.
Similarly, the benefit of the increased FSI can go to the members of the said co-operative society. Incidental to that, in view of offering incentives for making self-redevelopment of all registered co-operative housing societies on government/semi government/private land in the State, the decision to offer concessions has been taken in the meeting of the State Cabinet held on dated 08/03/2019.
Incidental to the decisions taken in the said meeting, High Power Committee under the Chairmanship of the Additional Chief Secretary (Housing) was formed by the Government Resolution dt. 08/03/2019 of the department for making recommendations to the Government regarding proportion and nature of the concession to be given to the registered co-operative housing societies for giving them incentive for making self-redevelopment of their buildings.
The report of the said committee is received by the Government and the Government has accepted the report of the committee. Incidental to the recommendations in this report, the matter to give concessions to all registered co-operative societies on the government/semi government/private land in the State for making self-redevelopment of their buildings which was under consideration of the government.
Government Resolution नदनांक: 13 सपà¥à¤Ÿà¥‡à¤‚बर, 2019
वाचााः - शासनननणणय, गृहननरà¥à¤®à¤¾à¤£à¤¨à¤µà¤à¤¾à¤—कà¥à¤°à¤°à¥à¤®à¤¾à¤‚क: संनकणण 2019/पà¥à¤°.कà¥à¤°. 10/दà¥à¤µà¤ªà¥-1 नद. 08 रà¥à¤®à¤¾à¤š, 2019:
In view to give incentive to all registered co-operative housing societies on the government/semi government/private land in the State for making self-redevelopment of their buildings, the High-Power Committee formed in this regard has made following recommendations:
1) Eligibility for Making Self-redevelopment– Those buildings in the co-operative housing societies in the State which are 30 years or more old that buildings are eligible for the self-redevelopment.
2) One Window Scheme – Various types of permissions are required from government/semi government scheme for the self-redevelopment of the co-operative housing societies in the State. For getting all these permissions, follow up is made separately to the various departments, thereby, more time consumed for the said process. If the said permissions are given in the prescribed period in one office, then, the process of the re-development become fast and the concerned scheme is completed earlier. Therefore, for getting various permissions for the self-redevelopment of the co-operative housing societies in the State at one place, one window scheme should be started.
3) Time limit for giving sanction to the Schame -Â It should be made binding to complete all permissions through the one window scheme within 6 months from the date of receiving the proposal of the self-redevelopment scheme of the co-operative housing societies.
4) Floor Space Index/incentive space -Â Those co-operative housing societies more than 30 years old in the State, who adopt the self-redevelopment and to such co-operative housing societies, 10% more floor space than the floor space index/incentive space due for the redevelopment according to the concerned Local Development Control Rules shall be made admissible. Similarly, if the rehab area for the residents in those buildings is more than the admissible F.S.I then in such situation, 10% more F.S.I should be made admissible than the Rehab Area. Similarly, in respect of the buildings on the road having less than 9.00 meters width, these buildings should be given 0.4 FSI without premium instead of the present due 0.2 FSI (with premium).
5) In Respect of the Roads Necessary for the Re-development – Those co-operative housing societies who are wishing to do collective self-redevelopment, for them by relaxing the condition of having two roads, the permission for re-development of the buildings on the 9.00-meter-wide road in the populous area and the buildings on road of 12.00 meter wide in the less populous area should be given. Similarly, the concerned co-operative should be made available the necessary land required for becoming 9.00-meter-wide road and accordingly the concession should be given in that proportion in the front margin of the building.
6) Transferable Development Rights (TDR) – Those Co-operative housing societies in the State who will adopt the self-redevelopment, if such co-operative housing societies want to buy the TDR, the society should buy TDR at the concessional rate of 50% of the Ready Reckoner Rate from the concerned Planning Authority.
7) Concession in the Premium Rate – While making self-redevelopment, various types of the premium are being charged from the concerned Planning Authority. The total expenses are increased due to the said premium rate. Therefore, to encourage the self-redevelopment of the registered co-operative housing societies in the State, it is necessary to give concessions in the rate of the said premium. Incidental to those concessions should be given in the rate of various premium charged by the Planning Authority.
8) To Decide the Stages for Making Payment of the Premium – It is inevitable to make payment of the various premium while sanctioning the plans by the concerned Planning Authority in the redevelopment process. If the amount of the said premium is paid lump-sum then its pressure falls on the project cost simultaneously. Thereby it may cause paucity of fund with the concerned Housing Society. Therefore, to overcome on it, the concerned Planning Authority should stipulate stages for the payment of that amount by not taking lump sum number of various types of taxes/premiums from the concerned necessary for the self-redevelopment.
9) Regarding various taxes/charges to the registered co-operative housing societies adopting self-redevelopment:
A)Â Land under Construction Assessment Tax (LUC Tax) - If the registered co-operative housing societies going to re-development have completed self-redevelopment in the prescribed period, then such co-operative housing societies should be given exemption from the LUC Tax. However, those co-operative housing societies, who do not complete the self-redevelopment within the prescribed period, from such co-operative housing societies, the LUC Tax should be recovered at present prevailing rate.
B) Stamp Duty – Since there is no third beneficiary other than the existent co-operative housing society in the self-redevelopment project, there is no need of executing any agreement. Thereby since the proposed flats to the existing tenements are available through self-redevelopment, the stamp duty should be charged like the stamp duty of Rs. 1000/- being charged from the beneficiaries in the projects implemented under the Prime Minister Awas Yojna. However, the stamp duty should be charged at the prevailing rate on the agreement of the tenements to be available for sale in the open market other than the flats of the original members in the new building to be ready after self-redevelopment.
C) Goods and Service Tax (GST) – The concession should be given in the Goods and Service Taxes to be paid by the registered co-operative housing societies going for self-redevelopment.
D) Open Space Deficiency Development Charges – The registered co-operative housing societies adopting self-redevelopment should be given concession in the Open Space Deficiency Development Charges.
10) Nodal Agency – It is necessary to have Nodal Agency for providing finance, guidelines to the registered co-operative housing societies adopting self-redevelopment in the State similarly to encourage from time to time for implementing the said scheme etc. In view of that, the State Co-operative Bank, which is Federal Bank in the Co-Operative Sector, shall work as a nodal agency through the District Central Co-operative Bank in the respective District for the self-redevelopment of the registered co-operative housing societies in the State, The said nodal agency through the various publicity media should publish detailed information about entire procedure, process regarding self-redevelopment for giving impetus to the self-redevelopment of the co-operative housing societies.
11) Period for Completion of the Self-redevelopmentscheme – Those registered co-operative housing societies in the State who will adopt the self-redevelopment, that co-operative housing societies after sanctioning of the scheme from the concerned Authority, should have to complete the entire re-development within 3 years which is binding on them.
12) Concession in the Rate of Interest of loan – A subsidy in the rate of interest of bank loan should be given to the registered co-operative housing societies adopting self-redevelopment. Accordingly, the subsidy of 4% in the rate of interest should be given from the Government. In a recent directive, the RBI has given permission to housing finance companies to finance self-redevelopment projects. Earlier, the RBI had restricted the banks from funding such projects as they fall under the ‘Commercial Real Estate’ category.
13)Â The registered co-operative housing societies have to obtain the written consent of 100% of the members, to proceed with self-redevelopment and for mortgaging the land property of the co-operative housing society to the Bank for the purpose of availing of the loan. The co-operative housing society has to pass a resolution in the Special General Body Meeting and forward the same to the Deputy Registrar of co-operative housing societies. The acknowledgement of the resolution as submitted to the Deputy Registrar has to be attached with the application form prescribed by the bank along with other documents such as;
 * Chain and Triangle Survey (CTS) plan
* 7/12 extract
* Development plan
* Registration certificate
* List of committee members
* List of amenities approved
* Setback area details
* Plot area measurements
* Approved plans for redevelopment
* Occupancy Certificate
* Audited Financial Statements for at least last three years
* Details of all society members, including their unit sizes as per the actual plan
14)Â The Maharashtra Government has started a Single-Window Clearance System for self-redevelopment projects. There are almost 55-60 clearances required for such projects including NOCs from Coastal Regulation Zone, Traffic, Fire, Defence, Aviation and other authorities. These documents include copies of the registration certificate, updated bye-laws of the housing society, audited financial statements for the last three years, list of committee members, etc. Additionally, the society will have to provide copies of documents evidencing ownership of the land and building which include the conveyance deed in case conveyance has been done, land purchase agreement where land was purchased by the society, copy of property card, 7/12 extract and original plan of the building. The application form should be accompanied with a copy of the project report of the proposed redevelopment along with a detailed budget and break-up of the cost of the project and copies of the approvals received from the authorities authorized to grant such permissions.
15)Â The housing society will also have to furnish details of all the members, with their business address, address of their native places, Aadhaar card and PAN cards. It will also have to furnish the copies of income tax returns (ITRs) and salary slips in case of the members who are not filing their ITRs. Before approaching the bank for funding, the society has to appoint an architect, legal advisor, project management consultant, chartered accountant etc., and furnish the copies of the agreements executed with them.
16) Authority for Self-redevelopment – The Authority giving approval for re-development of co-operative housing societies at present in the State shall work as Planning Authority for the self-redevelopment of the co-operative housing societies.
17) Tripartite Agreement – It shall be binding to execute Tri-partite Agreement with necessary terms and conditions regarding self-redevelopment between the finance providing institution to the co-operative housing societies going for self-redevelopment, concerned co-operative housing society and the contractor appointed by that society.
18) Self-redevelopment of the society under the Pradhan Mantri Awas Yojna – Pursuant to the guidelines in the Pradhan Mantri Awas Yojna, if the concerned registered co-operative housing societies are ready to build 35% flats in the sale unit for the beneficiaries in the Economical Weaker Section/Lower Income Group then like the Prime Minister Awas Yojna, the registered co-operative housing society will get 2.5 F.S.I., subsidy of Rs. 2,50,000/- to the eligible beneficiary and similar incidental benefits will be given.
19) Vigilance Committee – It is necessary that the self-redevelopment of the co-operative housing societies is to be completed within prescribed period. Similarly, it is necessary that the standard of the construction should be of good quality. In view of this, the concerned co-operative housing society shall have to formed a vigilance committee for controlling and supervising the self-redevelopment work comprising minimum two representatives from the concerned Society and minimum one representative from the finance institution providing financial assistance for the self-redevelopment. It is binding on the vigilance committee to submit progress report to the concerned co-operative housing society and similarly to the concerned planning authority by giving site visit in every three months at the site of the construction work of new building.
20) Grievance Redressal Committee – The possibility of arising varioustypes of difficulties/complaints/objections while making self-redevelopment to the registered co-operative housing societies in the State could not be denied. Incidental to that there shall be one Grievance Redressal Committee on every district level for solving the said difficulties. Following officers/office bearers shall be included in the said Committee:
1) District Dy. Registrar in the concerned district or representative Nominated by him.
2)Â Officer authorized from the Planning Authority in the concerned District.
Those co-operative housing societies’ complaints regarding the self-redevelopment received by the Committee, the Committee while redressing those complaints it shall be binding to call the members in the vigilance committee formed for controlling the working of the self-redevelopment with a minimum of two representatives from the concerned registered co-operative housing society for hearing.
21)Â Criterion and Registration of Contractor - The criterion of the contractors to be appointed for the self-redevelopment of the co-operative housing society should be determined by the concerned Planning Authority according to the local situation/necessity. Similarly, it shall be binding to register with the concerned Planning Authority by such contractors.
22) Appointment of Contractor for self-redevelopment – The concerned co-operative housing society shall be appointing the contractor for the self-redevelopment of the co-operative housing society. Therefore, it is necessary to appoint proper and competent contractor after seeing last three years financial balance sheet of the contractor whether he is competent technically/financially.
23) Action against the Contractor appointed for Self-Re-development – The vigilance committee shall put control on the progress of the construction work and similarly on the quality of the construction work after receiving the construction work proposal for the co-operative housing society regarding the stages of construction of the building/plan of the construction of the new building from the contractor for self-redevelopment. Accordingly, if the progress of the work is not satisfactory according to the report submitted to the co-operative housing society by the vigilance committee and if there is delay in completion of the project, then the concerned co-operative housing society can appoint new contractor by removing the guilty contractor. Similarly, the concerned Planning Authority should put the name of such guilty contractor in the black list and new project should not be sanctioned to such guilty contractor.
As the self-redevelopment of a building involves dealing with large sums of money and awarding contracts to various people, it is important for the members of the co-operative housing society to choose persons of integrity to be the members of managing committee. There have been numerous instances of allegations of malpractices by the managing committee members, leading to delays in the completion of the project and cost escalations.
By Order and in the name of the Governor of Maharashtra.
(R. K. Dhanawade)
Dy. Secretary, Government of Maharashta-
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NEW RULES FOR REDEVELOPMENT OF HOUSING SOCIETIES IN MAHARASHTRA FROM 4TH JULY, 2019
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GOVERNMENT OF MAHARASHTRA
Department of Co-operation, Marketing and Textiles
Government Resolution No: Sa. Gru.Yo-2018/Pra.Kra.85/14-Sa, Dt. 4th July, 2019.
Vide: -
Government Resolution No: Sa. Gru.Yo-2007/Pra.Kra.554/14-Sa, Dt. 3rd January, 2009.
Preface: -
The Redevelopment Schemes of the buildings belonging to Co-operative Housing Societies are extensively being undertaken in the State of Maharashtra. Several complaints are received from the Housing Societies, Housing Federation and individual members regarding the management of Co-operative Societies which are in the midst of redevelopment. By and large, the nature of complaints received in the matter of redevelopment of Co-operative Housing Societies is as follows:
1. Not taking members in confidence in the Redevelopment Process;
2. Non-transparency in the Tendering Process;
3. Arbitrary appointment of Developers;
4. Conducting business in violation of the Co-operative Law, Rules and Bye-Laws; Lack of co-ordination in the work to be done by the Architects and Project Consultants;
6. Non-Planning of Redevelopment Project Report;
7. Not adopting a fair procedure for the finalization of tenders;
8. Non-Parity in the Agreements to be executed with Developers.
The Government vide Government Resolution dt. 3rd January, 2009 has prescribed procedure for the Redevelopment of buildings belonging to the Co-Operative Housing Societies by giving directions under Section 79(A) of the Maharashtra Co-operative Societies Act, 1960. Taking into account the nature of complaints set out herein above and for accelerating the process of Redevelopment in the State, it has become imperative to modify the Government Directives dated 3rd January, 2009. In view of this fact, the Government contemplated the matter of issuing revised guidelines in this regard. In furtherance thereof, the Government in supersession of the Government Resolution dt. 3rd January, 2009, hereby proceeds to give the following Directives under Section 79(a) of the Maharashtra Co-operative Societies Act, 1960 w.e.f. 4th July,2019.
Government Resolution: -1.  If any Competent Authority has declared the building of a co-operative housing society as ruinous or dilapidated buildings or dangerous for inhabitation or as posing danger to the passers-by or any structure or place in the neighbourhood and the society is eligible to redevelop the building under the Development Control Regulations, then such society in its Special General Meeting can take a decision regarding redevelopment of the building.
 2.  These directions shall apply to all kinds of redevelopment such as redevelopment carried out by a Developer under an agreement, Self-redevelopment, cluster redevelopment in Federal Societies, redevelopment by a group of societies etc. All the procedure prescribed for the appointment of a Developer shall apply to all the afore stated kinds of redevelopment, the appointment of a Contractor or the development carried out under an agreement.
 3.  The decision regarding redevelopment of the buildings of housing societies shall be taken in the Special General Meeting (SGM) of the society held as per the registered Bye-Laws of such society in accordance with the procedure prescribed by these guidelines.
 4.  The Authorised Officer/Administrator appointed by the Registrar cannot take the decision regarding redevelopment of the buildings of co-operative housing societies.
Convening Special General Meeting (SGM) for the Redevelopment of Society Building: -
It will be essential that not less than 1/5th members of the co-operative housing society whose buildings are to be redeveloped should submit an application addressed to the Secretary of the Managing Committee of the society duly elected and constituted as per the Bye-Laws of the society and under the law for convening the Special General Meeting for deciding the policy in the matter of redevelopment of buildings belonging to the society together with their schemes and suggestions regarding redevelopment of such buildings. The Managing Committee shall take note of such application within 8 days of the receipt thereof and the Secretary of the society shall convene a Special General Meeting of all members of the society within 2 months. Agenda of this Meeting should be circulated to each member of the society 14 days in advance and the acknowledgment thereof should be maintained in the record of the society. Before convening such meeting, the Managing Committee of the society shall invite quotations from minimum 3 Architects registered with the Council of Architects under the Architects Act, 1972/Project Management Consultants (PMCs) on the Panel of Government/Local Authority for the preparation of Project Report regarding redevelopment work of the building and of these persons one such PMC shall be selected at the Special General Meeting.
 1.  For the sake of transparency, the societies which have proposed redevelopment shall create a Website on the internet. All sorts of information concerned with the redevelopment such as Notices, Minutes and Project Management Consultant’s Feasibility Report etc. shall be placed on this Website. This information shall be accessible to the members of the society. The notices and minutes pertaining to such Project shall be communicated to the members by e-mail/in presence/registered post. To facilitate despatch of notices and minutes pertaining to the said Project, each member shall be required to furnish his e-mail id and contact details. The Registrar shall be informed about the said website. Moreover, the afore-stated information shall be displayed on the Notice Board of the Society for the information of the members.
 2.  The notices and minutes pertaining to the Managing Committee Meeting and Special General Meeting regarding redevelopment will have to be communicated to the office of the concerned Registrar within 15 days of such meeting being held by e-mail and hard copy. Such societies must maintain the acknowledgements in this regard.
Following Topic-Wise Business shall be conducted in the said Special General Meeting: -
1.  To take a preliminary decision after taking into consideration the requisitions and suggestions received from the members regarding redevelopment of the society building.
2.  To appoint an expert and experienced Architect/Project Management Consultant from the Panel of Government/Local Authority to monitor the redevelopment work of the building and to fix the aspects and terms/conditions of the work to be done by them.
3.  To present an outline of the programme pertaining to the redevelopment of the building.
To accept written suggestions from the members regarding redevelopment of the building: -
The members of the society can submit in writing their realistic schemes/suggestions and recommendations regarding redevelopment of the society building as well as the names of the experienced and expert Architects/Project Management Consultants on the Panel within their knowledge to the Managing Committee 8 days prior to the date of the meeting. However, they must present to the society the letters/offers from the Architects/Project Management Consultants indicating their willingness to undertake the said redevelopment related work.
Decisions to be taken in the Special General Meeting: -
(a) The quorum of the Special General Meeting convened for the redevelopment of co-operative housing society buildings shall be 2/3rd of the total membership strength of the society. If the quorum is not fulfilled, the said meeting shall be adjourned and with 7 days’ notice the meeting shall be re-convened within the next 1 month. If in this meeting too, the quorum is not fulfilled it shall be assumed that the members are not interested in the redevelopment of the society building and the meeting shall be called off and thereafter the said subject shall not be placed again at the Special General Meeting for its approval until the next 3 months. In the Special General Meeting the suggestions, recommendations and objections made by the members regarding redevelopment of the society shall be taken into consideration and the opinions expressed by the members in this regard shall be recorded in the minutes of the meeting along with their names. In this Special General Meeting, the preliminary decision as to whether the society should proceed with the redevelopment or not shall be approved by the majority of the members present which shall not be less than minimum 51% of the total membership strength of the society. For this decision, the approval of minimum 51% members of the total membership strength of the society shall be required. In this regard, the approval, opinion and remarks expressed in writing/orally or in any other mode of communication by any member absent in the Special General Meeting shall not be taken into consideration.
Thus, the said decision shall be approved by a majority of not less than 51% of the total membership strength of the society e.g. if total membership strength of a housing society is 100 then the quorum of the Special General Meeting convened for the redevelopment of the society shall be 66.66 i.e. 67 members and for the majority, approval of 51 or more of such members shall be required. In other words, if 67 members are present at the meeting the approval of 51 or more members out of these 67 members present shall be required for the majority. Furthermore, if 75 members are present then also the approval of 51 or more members out of these 75 members present shall be required for a majority and so and so forth.
(b) Following the decision on the approval of redevelopment the below mentioned business shall be conducted with the approval of the Special General Meeting as stated herein above.
1.  Appointment of an expert and experienced Architect/Project Management Consultant from the Panel of the Government/Local Authority for the redevelopment related work of the building and fixation of aspects of work and the terms/conditions thereof.
2.  Presentation of outline of the programme regarding redevelopment of the building.
To circulate Minutes of the Meeting to all Members: -
The Secretary of the society should prepare minutes of the above Special General Meeting and circulate a copy thereof to all the members within 7 days and acknowledgements thereof should be maintained in the record and a copy thereof ought to be presented to the office of Registrar.
To obtain written consent letters from the members agreeing for proceeding with redevelopment: -
After decision as to redevelopment of the society is passed by a majority of not less than 51% of the total members as stated herein above, it would be necessary to obtain written consent letters of the members who exercise their vote in favour of the resolution for redevelopment in order to enable the Managing Committee to proceed with redevelopment.
To issue an Appointment Letter to the Architect/Project Management Consultant: -
The Secretary of the society shall issue an appointment letter to the Architect/Project Management Consultant selected at the Special General Meeting within 30 days of the date of the meeting and the Committee shall enter into a Work Contract Agreement with the Architect/Project Management Consultant on the terms and conditions approved at the Special General Meeting.
Works to be done by the Architect/Project Management Consultant at the initial stage: -
(a) To carry out survey of the land and building of the society.
(b) To obtain information regarding conveyance of the society land.
(c) To obtain information regarding FSI and TDR that would be available as per the buildings and land of the society in view of the prevailing policy of the Government under DCPR,2034 as well as the Regulations of MHADA/SRA/Municipal Corporation that would be applicable from time to time on the basis of title of the land. Accordingly, the concerned societies would be required to take action in that regard.
(d) To prepare a realistic Project Report/Feasibility Report by taking into consideration such factors as the residential area, commercial area, open spaces, garden, parking, construction specifications etc., to be furnished to the members in the light of suggestions and recommendations made by the members of society regarding redevelopment.
(e) The Architect/Project Management Consultant should prepare Project Report/Feasibility Report within two months of the date of his appointment and submit the same to the Managing Committee of the society.
Action to be taken on the receipt of the Redevelopment Project Report: -
(a) The Secretary of the society shall convene a meeting of the Managing Committee on the receipt of Redevelopment Project Report as aforesaid. In this meeting, the Architect/Project Management Consultant would be invited and a sanction would be sought for the Project Report/Feasibility Report in the light of suggestions made by the members in the meeting. He would put up a notice of the said meeting on the Notice Board of the society, specifying such details as the time and venue of the meeting etc. In this notice each member would be apprised of the fact that a copy of the Project Report/Feasibility Report so received would be available for the inspection of members of the society in the office of the society and that they could submit their suggestions 7 days prior to the next x Managing Committee Meeting and the acknowledgments of such notice would be kept in the record.Â
(b) The Secretary of the society shall forward the suggestions received from the members for the consideration of the Architect/Project Management Consultant 7 days prior to the Managing Committee Meeting as aforesaid.
(c) In this Managing Committee Meeting, a comprehensive discussion would be held on all factors such as the suggestions/recommendations of the members and the opinions of the Architect/Project Management Consultant. The Project Report/Feasibility Report with necessary modifications would be approved by a majority vote.
Thereafter the Draft Tender Document would be prepared and the date, time and venue of the next Managing Committee Meeting would be fixed for finalising the Draft Tender Document by holding discussion/deliberations thereupon. While preparing the Draft Tender Document the Architect/Project Management Consultant would keep either Carpet Area or Corpus Fund constant (non-fluctuating) and fix the other technical details so as to get competitive bids from the expert and experienced Developers and shall proceed to invite the Tenders.
The members of the society can inform the reputed and experienced Developers known by them about these things. In case of self-redevelopment too, the society and the Architect/Project Management Consultant should follow the above-mentioned procedure while preparing the Project Report/Feasibility Report, Tender Document and also at the time of invitation of Tenders from Contractors/Developers.
To declare the list of received Tenders: -
(a) On the last day for the receipt of Tenders, the Secretary of the society shall prepare a list of the Tenders so received and publish the same on the Notice Board of the society and its website.
(b) The Secretary of the society shall convene the Managing Committee Meeting of the Society within 15 days of the last date for the receipt of the Tenders. The bidders or their authorised representatives and the desirous members of the society cannot be barred from attending this Managing Committee Meeting. The Tenders so received shall be opened in the presence of all the persons present at the said meeting. The Architect/Project Management Consultant shall scrutinise all the Tenders and prepare a comprehensive chart thereof and if minimum 3 Tenders are received, shall approve such Tenders for keeping them at the Special General Meeting after verifying such factors as the merit, reputation, experience, competitive rates/offers etc. of the received bidders.
For the Tenders to be competitive, it is essential that minimum 3 Tenders should be received. However, if less than 3 Tenders are received initially, minimum one week’s extension should be granted. If despite such extension, less than 3 Tenders are received, then one week’s extension should be granted for the second time. In spite of all this, if less than 3 Tenders are received, as many Tenders as are received, shall be approved for keeping them at the Special General Meeting.
To select a Developer: -
(a)Â To get an Authorised Officer appointed by the Office of Registrar for the Special General Meeting: -
A Special General Meeting of the society shall be convened for the selection of a Developer from amongst the Tenders shortlisted by the Managing Committee of the society with the help of the Architect/Project Management Consultant by applying such diverse criteria as their experience, merit, financial capacity, technical competence, competitive rates/offers etc.
The Managing Committee should make an application accompanied by the list of members to the Registrar within 7 days for the appointment of an Authorised Officer so that the said Special General Meeting can be held in the presence of the Representative from the office of the Registrar of Co-operative Societies. The Registrar shall take a decision thereon and appoint an Authorised Officer. The shortlisted Developers or their Associates or Assistants should have minimum one project registered with the MAHARERA.
(b)Â To Convene a Special General Meeting for the finalisation of Tender: -
The Secretary of the society shall convene a Special General Meeting by fixing the time and venue of the meeting with the prior permission of the Authorised Officer within one month of his appointment and shall despatch the agenda of this meeting to all the members by hand delivery or Acknowledgment Post -AD 14 days prior to the meeting and by e-mail in case of members residing outside India and shall keep acknowledgements thereof in the record of the society.
The Secretary shall upload this agenda on the website of the society which is created for the redevelopment work. The Representative from the office of the Registrar shall satisfy himself that the Authorised Representatives of the bidders whose Tenders are to be presented at the meeting are present at the said meeting.
Moreover, he shall make arrangements for the video recording of the Special General Meeting at the expense of the society. In this meeting, save and except the authorised/registered members, no one else can remain present. For this purpose, the authorised/registered members shall be required to carry their identity cards at the venue of the meeting.
For the presentation of redevelopment proposals for the sanction of the concerned Authority the selection of Developer and other business must be conducted in the presence of the Authorised Officer present from the office of the Architect/Project Management Committee.
(c)Â Where Special General Meeting does not have a quorum:
The quorum of Special General Meeting shall be 2/3rd of the total membership strength of the society. If quorum is not fulfilled the meeting, shall be adjourned for the next 7 days and if this meeting too does not fulfil the quorum, it shall be assumed that the members are not interested in the redevelopment of the society building and the meeting shall be called off and thereafter for the next 3 months the said subject shall not be brought for the approval of the Special General Meeting.
(d)Â The Proceeding at the Special General Meeting regarding selection of the Developer: -
The Authorised Officer from the office of the Registrar shall attend this meeting and observe the proceedings at the meeting. Furthermore, when the required representatives and the Authorised Officer remain present at the appointed venue and time of this meeting and when the 2/3rd quorum as described above is fulfilled, the procedure of the meeting shall be conducted as follows: -
1.  To give comparative information regarding the Tenders shortlisted for presentation (regarding redevelopment work).
2.  To present the Tenders serially (Presentation of Tenders).
3.  To select one Developer for the redevelopment of building on stipulated terms and conditions and finalisation of Tender.
4.  To obtain consent of the Developer who is so selected.
5.  To obtain information about further developments.
It shall be necessary to obtain written approval of the members present for the appointment of Developer which shall not be less than minimum 51% of the total membership strength of the society. In this regard, the approval, opinion and remarks made in writing/orally or in any other mode by any members absent at the Special General Meeting shall not be taken into consideration. If any shortlisted Developers or their representatives if do not attend then the said meeting’s further proceedings shall be conducted by assuming their consent for the said project.
Development Agreement to be executed with the Developer:
The Development Agreement should be executed with the selected Developer within 3 months from the date of his selection subject to the terms and conditions approved by the Managing Committee of the society under the guidance of the Architect/Project Management Consultant.
In this Development Agreement, besides the points suggested by the Architect/Project Management Consultant appointed by the society the following points too shall be included: -
1.  Depending upon the size of the redevelopment project, the period for the completion of society redevelopment/construction project shall not exceed 2 years from the date of issue of first/plinth erection certificate and in exceptional circumstances shall not exceed 3 years.
 2.  The Developer shall give a Bank Guarantee to the society, to the extent of 20% of the total value of the Redevelopment Project.
 3.  During the period of redevelopment, the Developer shall furnish alternative accommodation to the members as far as possible in the same area pending completion of project or shall make arrangements to pay monthly rent and deposit as is agreeable to the members or shall make available such transit camps.
 4.  The Development Agreement with the society and the Permanent Alternate Accommodation Agreements (PAAAs) with the individual members shall be registered under the Registration Act, 1908.
 5.  New members shall be admitted to the society only on the completion of redevelopment project with the approval of the Special General Meeting of the society.
 6.  Carpet area to be offered should be clearly mentioned in the Agreement as required by the Real Estate (Regulation and Development) Act, 2016.
 7.  Redevelopment Rights given to the Developer shall be Non-Transferable.
 8.  Tenement holding members shall vacate their tenements only after all legal sanctions are accorded for the building redevelopment and upon the registration of Permanent Alternate Accommodation Agreements executed with the individual members.
 9.  The rights of the persons who are in possession of the flats shall remain intact.
 10. The Work Contract Agreement between the Architect and the Society must contain a provision for the resolution of any dispute that may arise in the course of redevelopment work by virtue of Section 91 of the Act.
 11. Upon the grant of Occupation Certificate, (OC) the flats in the redeveloped buildings should be allotted as far as possible by the present floor position and if a draw of lots becomes necessary for the allotment of flats the Developer should make arrangements for the draw upon completion of the building and at such time the flats should be allotted by a draw of lots in the presence of Registrar’s Representative and these proceedings should be video recorded.
 12. No committee member or office bearer of the society shall either be a Developer or his relation.
 13. The Building Plans sanctioned by the Municipal Corporation/Competent Authority must be placed again before the Special General Meeting for its information and if a member desires to obtain a copy of the Sanctioned Papers he should make a written application to the society in that regard. Thereupon, the Managing Committee shall be duty bound to furnish such information by charging appropriate fees therefor.
To carryout Cluster Redevelopment of the Societies enjoying ownership rights of the land and which are affiliated to a Co-operative Housing Federation: -1.  Societies having ownership right over the buildings and common areas can undertake cluster redevelopment in the name of and through the medium of Co-operative Housing Federation.
 2.  A Special General Meeting convened for the cluster redevelopment of the society buildings affiliated to a Co-operative Housing Federation shall have a quorum of 2/3rd of the total membership strength of the societies affiliated to such Federation.
 3.  Once the quorum is fulfilled in the Special General Meeting convened for the preliminary decision on the redevelopment of the buildings belonging to the affiliated co-operative societies, such decision shall be approved by a majority of members present which shall not be less than minimum 51% of the total membership strength of the affiliated societies. For this decision, the approval of minimum 51% members of the total membership strength of the affiliated societies shall be necessary. In this regard, approval, opinion or remarks made in writing/orally or in any other mode by any members absent at this Special General Meeting shall not be taken into consideration.
 4.  Before proceeding with the redevelopment of buildings belonging to the affiliated societies, such affiliated societies ought to accord their sanction in the following manner: -
For the purpose of redevelopment of buildings belonging to all the societies affiliated to the Federation, each society in its Special General Meeting, shall be required to fulfil 2/3rd quorum of its total membership strength and such resolution shall be approved by a majority of members present which shall not be less than minimum 51% of the total membership strength of such society.
In this regard, approval of minimum 51% members of the total membership strength of such society shall be required. Moreover, approval, opinion and remarks made in writing/orally or in any other mode by any members absent at this Special General Meeting shall not be taken into consideration.
Moreover, each society shall obtain written consent of all the members who have voted in favour of the resolution and shall submit its resolution and the written consents to the Committee of Federation or not less than 60% members of the total membership strength of all the societies affiliated to the Federation shall be required to vote in favour of the resolution and each society shall obtain written consent of all the members who have voted in favour of the resolution and shall submit its resolution and the written consent to the committee of the Federation.
Further procedure to be followed in the wake of preliminary decision on the cluster redevelopment of the societies as set out above shall be similar to the procedure for redevelopment of co-operative housing societies as described herein above.
While making any calculation during the course of procedure set out in this Government Resolution any fraction shall be converted into higher integer.
By the order and in the name of the Governor of Maharashtra.
Kamlakar Sitaram Badgujar
Work Desk Officer, Government of Maharashtra
Copy: -
1. The Private Secretary to the Hon’ble Minister (Co-operation),
2. The Private Secretary to the Hon’ble Minister of State (Co-operation),
3. The Principal Secretary (Co-operation), Co-operation, Marketing & Textile Department, Mumbai,
4.The Additional Chief Secretary, Department of Revenue and Forest, Mantralaya, Mumbai,
5.The Additional Chief Secretary, Department of Housing, Mantralaya, Mumbai,
6.The Principal Secretary, Department of Rural Development, Mantralaya, Mumbai,
7.The Commissioner of Co-operation and the Registrar of Co-operative Societies, Maharashtra State, Pune,
8.All Divisional Joint Registrars, Co-operative Societies,
9.All District Deputy Registrars, Co-operative Societies,
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Â
SOCIETY CANNOT TERMINATE DEVELOPMENT AGREEMENT
WITHOUT PERMISSION FROM MAHA RERAÂ
Generally, the decision of termination of the Development Agreement is resolved by the Society in their SGBM for reasons not attributed to the fault of the Society and in event if the said Developers violated/breached any of the agreed terms of the Development Agreement or the Developers become financially weak or are involved in any criminal act involving moral turpitude or any act of insolvency or adjudged as insolvent or an order made against them or passed any such resolution of winding up either compulsorily or subject to the judgment of any Court or voluntarily or of the official assignee or liquidator in such acts of insolvency or winding up and unable to furnish the genuine reasons to the satisfaction of the Society.
Further, if the Developers have abandoned the redevelopment contract as evidenced by no progress of work or have failed to commence the works or have without any lawful excuse suspended the progress of the works after receiving the written notice from the Society to resume the work or have failed to obtain the IOD/CC within the specified time frame or resorted to suppression, wrong or misleading information or material breach of any of the terms and/or condition or breach of any of the contractual obligations under the Development Agreement either by the said Developers or by their architect or engineer, structural engineer, contractor or sub-contractor or any of their representatives causing irreparable losses or impairment on account of any reason caused to the Society or failure to complete the work within a specified period of completion of redevelopment and obtained full OC as specified herein in this Agreement unless expressly agreed in writing by the Society for extension of time frame.
However, this extreme step is taken by the Society prior to the Registration of the redevelopment project with MAHARERA by the Developers after the Commence Certificate is procured. Once the redevelopment project is registered by the Developers with MAHARERA, unless the prior approval taken from MAHARERA by the Society, the Society cannot terminate the Development Agreement.Â
The Maharashtra Real Estate Regulatory Authority (MAHARERA) in a landmark order, protected the home buyers in a redevelopment project and directed the Developers and the Society to pay to MAHARERA, a penalty of Rs 15 lakhs for violating norms of RERA Act, 2016.Â
MAHARERA while hearing the complaint of Kaushal Haria, Girish Chheda & Meghna Visaria and Velbai Haria who had booked their flats in New Sangeeta CHS Ltd, Vidyavihar (E) in May 2016. The said project was a redevelopment project which was assigned to the Developers M/s Valdariya Constructions. The Society had appointed the Developers in December 2011, executed and registered the Development Agreement with them.Â
In the meantime, a dispute arose between the Developers and Society and the whole matter went to Arbitration. However, the Society terminated the Development Agreement executed with the Developers due to non-compliance of the development terms agreed and further refused to accept the rights of the purchasers to get their homes.
The Authorities of MAHARERA pronounced in the order that the termination of the Development Agreement executed between Developers and the Society is after the commencement of RERA Act and hence, the termination of the Development Agreement should have been done with prior permission of MAHARERA since the project was already registered with them and the Society is also a Promoter and therefore, transferring the development rights to some other Developers is not valid.
The Arbitrator allowed the Society for self-redevelopment. The complainants were seeking interest for delayed project and handover the possession with a parking lot and all amenities. Society submitted their response before the Court that the flats sold by the Developers was illegal and it was sold below the market price. Therefore, the complainants can seek a refund from the Developers and cannot seek an injunction against them.
Authorities of MAHARERA adjudged that under the Provisions of Section 2(zk) of the RERA Act, the Society is the Promoter of the project if the Developers fail to complete the project. Therefore, the Society is equally liable to the allottees i.e. the flat buyers who have booked their flats and are the allottees of the project registered with MAHARERA.
Further in the order, the Society was directed to give possession of flats to the to the said flat buyers by obtaining the Occupancy Certificate, as the Society had taken over the entire project for self-development as per the order of the Arbitrator.
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Â
DOCUMENTS TO BE ATTACHED WITH THE
DEVELOPMENT AGREEMENT FOR REGISTRATION
A Development Agreement is a key document essentially creating a charge and tangible interest of the Developers in the redevelopment of property of the Society. As per Section 17(1) of the Registration Act, 1908, compulsory registration is necessary in case of instruments/documents. The said Section reads as “which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any rights, title or interest, whether vested or contingent, of the value of the one hundred rupees and upwards, to or in immovable property,â€Â A Development Agreement is undisputedly covered within the ambit and domain of this statutory provision,
Serious problems can arise if an unregistered Development Agreement becomes subject-matter of a motion in Court and the Court finds it difficult to even admit the Development Agreement in evidence/as an exhibit. Likewise, post-execution of the Development Agreement, when serious disputes arise between the Society and the Developers, there can be serious difficulties relating to lawful maintenance of various financial/technical terms such as payment of Inconvenience & Hardship Compensation (Corpus), Displacement Allowance (Rent), Brokerage, Transportation, Bank Guarantee, Additional Carpet Area, Common Areas and Amenities to be shared by the Members of the Society inter-se when they find that the core-document, they trust upon, in not admissible as an evidence in the Court of Law since not registered.Â
Therefore, it is highly recommended that the Development Agreement be duly registered for the satisfaction of all the parties concerned and in the interest of justice, reasonableness and fair-play. The Office Bearers/Managing Committee of the Societies to take a note that certified copies of various documents which are to be attached with the Development Agreement as annexure while registration of the same. A comprehensive list of these documents has been listed below:
 1.  Original Development Agreement.
 2.  Copies of Consent Letters from Members.
 3.  Schedule: Description of property.
 4.  Detailed list of individual flat mentioning Name, Wing, Flat no., Floor No., Existing Carpet Area and Additional Carpet Area offered = New Carpet Area etc.
 5.  Property Card.
 6.  D P Remarks
 7.  Block Plan and Location Plan.
 8.  Registration Certificate of the Society.
 9.  NOC from Dy. Registrar of respective Ward.
10. Search Report/Title Clearance Certificate from the Advocate of the Society.
11. Latest Property Assessment Tax and other Taxes.
12. Latest Electricity Bill.
13. Latest Water Bill.
14. Minutes containing the Resolution of SGBM: Selection of Developers.
15. Minutes containing the Resolution of SGBM: Powers awarded to Office Bearers to execute all the Documents pertaining to the redevelopment of the Society
16. Power of Attorney.
17. PAN of the Society and the Developers.
18. Detailed Chart indicating Inconvenience & Hardship Compensation (Corpus), Displacement Allowance (Rent), Brokerage, Transportation, Corpus and Rent to be paid by the Developers to each Member.
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Â
HOW TO DRAFT DEVELOPMENT AGREEMENT
The venture of redevelopment of any property involves a massive volume of multi-crore of rupees as also the fate and future of all the resident members of the society. Once the property is handed over to the Developers, the society has only legal documents in their hand to rely and fall back upon in case of any adverse situation in accomplishing the successful task of the redevelopment.
The timely approach of legal experts/counsellors like us, who are well versed in redevelopment laws in respect of drafting/analyzing all the legal documents pertaining to the redevelopment in a scientific and systematic manner, can save the menace of such unforeseen adversities.
Drafting of any document pertaining to the redevelopment is very important component of legal practice and advocacy; one must understand that perfection in drafting is not achieved, unless one understands the relevant provisions under the Acts, Laws and Rules as also facts, figures and language of its terms and conditions. Many housing societies/landlords suffer in course of litigation due to inferior drafting, lack of documentation skills and without proper understanding of redevelopment laws.
Generally, the drafts of all the legal documents pertaining to redevelopment are prepared by the advocates of the Developers and sent for approval of the society or the landlord. The societies in turn, approach us for its scrutiny. We, as senior counsellors, are well adept in the field of scrutiny and vetting all types of legal documents in most defined and methodical manner. After precise and meticulous study, these drafts are scrupulously vetted, scanned and scrutinized by us.
Thereafter, the gray areas, pitfalls and shortfalls are uncovered and a written report is given to our client societies or landlords by apprising them the areas of alerts and awareness and impress upon and compel the Developers to correct/include/provide due coverage before finalizing all the legal documents of redevelopment.
A Redevelopment Agreement, as the name suggests, is an agreement between the residents and the Developers for the reconstruction of a new building by demolishing the old building. But it's not as simple as it sounds; the housing society needs to exercise necessary caution to ensure that the residents' corporate interest is safeguarded.
Even seemingly simple things such as getting the Redevelopment Agreement registered with the sub-registrar, paying proper stamp duty and registration charges by the Developers is very important.
In most cases, the Developers negotiate the deal of redevelopment with the Managing Committee of the society. In which case, the entire onus is on the Managing Committee to ensure that the interests of all the members are protected and they need to take all the precautions to avert litigation at a later date.
It's advisable to discuss the draft of Development Agreement in detail at the General Body Meeting so as to arrive at a consensus about its terms and conditions in order to avoid later hassles. As with any property dealing, when it comes to a redevelopment contract, it's of utmost importance to ensure that the Developers have a sound reputation. The members of the Managing Committee must visit the site of some of the previous projects redeveloped by the Developers so that they get first-hand information about the working skills.
Considering that the property of so many residents is at stake, it makes sense to seek the help of professionals like us in getting a clear picture about the redevelopment contract that the society is entering into. Sound advice from legal professionals before signing on the dotted line is sure to help the society make a responsible decision.
In order to ensure the smooth implementation of such a contract, the obligations of the Developers and all the consequences of the breach, if any, need to be put down in writing clearly in the Development Agreement. For instance, the time of completion of the project and the consequences of non-completion in the stipulated time must be specified in the Development Agreement so that the Developers do not drag on the work.
When drafting a Development Agreement, some of the important points and clauses are to be taken care of. As preamble, there should be a brief history of how the conveyance deed was executed with the society. The registration number of the society under the Maharashtra Co-Operative Societies Act, 1960 (MCS Act, 1960) should be mentioned in the Development Agreement.
There should be particulars of the existing flats with carpet area of the flats occupied by each of the member of the buildings. The area of the plot as per the 'Property Register Card' should be mentioned. The total estimated FSI area that can be constructed by premium FSI or by utilizing the TDR on the plot should be mentioned.
Transparency in floor area, (carpet, built-up, super built-up, hyper built-up), status of project (cause of delay, approximate completion time etc), quality of products used, design philosophy adopted, quality and construction standards adopted etc are very important to be taken care of while analyzing/drafting of the Development Agreement.
The Development Agreement should clearly mention the additional carpet area which will be made available to the members in the new building. The schedule of payment of various considerations such as corpus fund, rentals, brokerage and transportation should be specified in the Development Agreement. There should be a mention of the tentative date of procuring the IOD followed by vacating the flats by the members which should also be linked with the plans being approved by the concerned authority.
The number of open car parking space, stilt car parking, staked parking and closed parking which will be given to the members in the new building should be mentioned in the Development Agreement. Usually the Developers obtain at their own costs the rights under the Development Right Certificate (DRC) in accordance with the provisions of the Development Control Regulations for Greater Bombay, 1991 (DCR).
Further, the Developers get the building plans approved, obtain the commencement certificate and sanction of building plans from the MCGM and pay all the requisite deposits, fees and premiums to various authorities including the MCGM and the same should be clarified in the Development Agreement.
It should be spelt out in the Development Agreement that neither the society nor the members shall be expected to pay any type of expenses. It must be clarified in the Development Agreement that each prospective buyer of a flat in the new building who intends to be a member of the society will be required to pay to the society an entrance fee and share allotment money as well as a sum as approved by the society towards the capital and sinking fund of the society.
The time period for completion of the new building on the plot owned by the society shall be defined in the Development Agreement. In the event the Developers fail to complete the entire work within the stipulated period, a penalty clause must be mentioned in the Development Agreement.
It should be specified in the Development Agreement that from the date of taking complete vacant possession of the existing structure till the date of receipt of Occupation Certificate (OC) in respect of the new building and till such time that the Developers intimate the members to take possession of their respective flats, the Developers shall bear and pay all municipal taxes and other payments required to be paid to the concerned authorities.
The Development Agreement should list out the broad specifications and amenities to be provided for the flats in the new building on the plot owned by the society. It should have a proper schedule of the property at the end of the agreement which should specify the location of the property along with the name of the suburb, final plot number, CTS number, area of the plot and municipal ward number.
Another distinguishing feature of Development Agreement is the fact that the property viz. the land and building continues to remain the property of the society in the Property Card. What is given to the Developers is the right of development to exploit the percentage of development potential of the area to be kept by him as free sale area which he is entitled to dispose of and make profit there from.
This was clearly stated by the Bombay High Court in Chaturbhuj Dwarkanath Kapadia V/s. CIT 260 ITR 491 when it observed that “the object of entering into a Development Agreement is to enable a professional builder/contractor to make profits by completing the building and selling the flats at a profit. The aim of these professional contractors is only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreementsâ€. Such agreements are only a mode of remunerating the Developers for their services of constructing the building as stated in Gurinder Developers Vs. Kurla Konkan Niwas Co-operative Housing Society (2000) 3 Mah Lj 131.
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