Question 1

Does our building have to be declared dangerous before the society can decide to redevelop?

Accepted Answer

The 2019 directive opens by describing a building that a competent authority has declared dilapidated or dangerous and that qualifies for redevelopment under the development control rules. In practice societies also redevelop on the strength of a structural audit and the planning rules, and the directive's procedure applies to every kind of redevelopment. Whether clause 1 is a strict precondition is not settled. Clause 1 of the directive says that where the competent authority has declared the society's building dilapidated, dangerous to live in or dangerous to neighbours, and the building is eligible for redevelopment under the development control regulations, the society may take the redevelopment decision in its general body. Clause 2 then makes the whole procedure apply to every type of redevelopment — through a developer, self-redevelopment, cluster redevelopment and group redevelopment. The 2014 bye-laws (BL 154) put the duty to maintain and, if necessary, redevelop the building on the committee, and the draft 2026 bye-laws (dBL 152) ask the society first to examine the building's structural condition and remaining life, the cost of repairs, and the feasibility of redevelopment and of self-redevelopment. A practical reading: get a structural audit and a feasibility comparison of repairs versus redevelopment before the requisition reaches the SGM, and record why redevelopment rather than repair is proposed. Whether a society whose building is sound may redevelop purely for extra area is a question the directive's text does not answer directly; if a member challenges the decision on this ground, the forum is the Co-operative Court (s.91).

Question 2

What should the requisition by one-fifth of the members contain, and what must the committee do once it arrives?

Accepted Answer

The requisition goes to the secretary, signed by at least one-fifth of the members, asking for a special general meeting to decide the society's redevelopment policy, with the members' own proposals and suggestions. The committee must take note of it at a meeting within 8 days, and the secretary must call the SGM within 2 months on 14 days' notice to every member, keeping proof of delivery. Step by step under clause 5 of the directive: (1) members numbering not less than one-fifth of the total (fractions rounded up, cl. 20 — for 37 members, 8) apply in writing to the secretary of the duly elected committee, attaching their plans and suggestions for redevelopment; (2) within 8 days the committee records the requisition at its meeting; (3) before the SGM, the committee collects quotations from at least three architects or project management consultants (PMCs) registered with the Council of Architecture and on the Government or local-authority panel, so that the SGM can choose one; (4) within 2 months the secretary calls the SGM, sending the agenda to every member 14 days ahead and keeping acknowledgements on file. Members may send written suggestions up to 8 days before the SGM (cl. 9). The notice and minutes of this committee meeting and the SGM go to the Registrar within 15 days, by email and hard copy (cl. 7). Tip for members: keep a signed copy of the requisition with the date of delivery; if the committee sits on it, write to the Deputy Registrar, who can issue directions under s.154B-21.

Question 3

How is the architect or project management consultant (PMC) chosen, and can ordinary members suggest one?

Accepted Answer

The committee gathers quotations from at least three architects or PMCs who are registered under the Architects Act 1972 and on a Government or local-authority panel, and the first redevelopment SGM chooses one. Any member may put forward names of experienced panel architects in writing at least 8 days before the SGM, with the consultant's letter saying he is willing to take up the work. Clause 5 requires quotations from not fewer than three panel architects / PMCs for preparing the project report; clause 8 puts the choice of the PMC and the terms of its engagement on the SGM agenda; clause 9 lets members submit, in writing, names of experienced panel consultants known to them, at least 8 days before the meeting, but only with the consultant's own letter of willingness. After the SGM the secretary issues the appointment letter within 30 days, and the committee signs an agreement on the terms the SGM approved (cl. 13). The 2014 bye-laws already required architects to be appointed under the Architects Act (BL 156(d)-(f)); the draft 2026 bye-laws add that the PMC must act as an independent adviser in the society's interest and that no PMC with a conflict of interest with a prospective developer may be appointed (dBL 153(d)-(e)). Practical checks: ask each PMC to disclose past work for any developer likely to bid, fix the fee (lump sum or percentage) and deliverables in writing, and avoid fee arrangements where the developer pays the PMC.

Question 4

What exactly is decided at the first redevelopment SGM, and what paperwork must follow in the days after it?

Accepted Answer

The first SGM takes the preliminary decision to redevelop (quorum two-thirds, approval by at least 51 % of all members), chooses the architect/PMC and its terms, and is given an outline of the programme. Within 7 days the minutes go to every member and the Registrar; the committee collects written consent from those who voted in favour; and the PMC's appointment letter goes out within 30 days. Agenda under clause 8: (1) a preliminary decision on redevelopment after considering the requisition and members' suggestions; (2) selection of a panel architect/PMC and settling its scope and terms; (3) a presentation of the outline programme. Voting under clause 10(a): the minutes must record every member's suggestions, objections and votes by name, and absentees' consent in any form does not count. Checklist after the meeting: minutes prepared and a copy handed to every member within 7 days with acknowledgements kept, and a copy to the Registrar (cl. 11); notice and minutes also reported to the Registrar within 15 days by email and hard copy, with acknowledgements preserved (cl. 7); signed consent letters from every member who voted in favour (cl. 12); appointment letter to the PMC within 30 days and an agreement on the approved terms (cl. 13); everything posted on the society's redevelopment website and notice board (cl. 6). Under the June 2026 Rules a redevelopment SGM also needs 14 clear days' notice, the presence of the Registrar's representative, and a video recording kept by the chairman with a copy at the Registrar's office (Rule 106C-13(3)(i)).

Question 5

What must the PMC's project report cover, and how soon must it be ready?

Accepted Answer

Within two months of appointment the architect/PMC must survey the land and building, collect the title and land-transfer information, work out the FSI and TDR available under the MHADA, SRA or municipal rules that apply, and prepare a realistic project report covering members' residential and commercial areas, open space, garden, parking and construction specifications. Clause 14 lists the PMC's first-stage work: (a) survey of the society's building and land; (b) information about the transfer of the land (whether the society holds conveyance, lease or only agreements); (c) the FSI and TDR the property can use under the prevailing Government policy and the regulations of MHADA, SRA or the municipal corporation, depending on who owns the land; (d) a realistic project report that takes members' suggestions into account and states the residential and commercial area for members, open space, garden, parking and construction specifications; (e) submission of the report to the committee within two months of appointment. The draft 2026 bye-laws add a feasibility report covering title, planning potential, structural condition, repairs versus redevelopment, self-redevelopment versus a developer, finance, schedule, transit arrangements and risks, to be placed before the general body before any final decision (dBL 154, 156). Members should check that the report states the existing carpet area of each flat from the registered agreements, not from the builder's brochure, because the tender will be built on it.

Question 6

How can members inspect and object to the project report before the developer tender is issued?

Accepted Answer

When the report arrives, the secretary calls a committee meeting with the PMC and puts up a notice (date, time, place) on the notice board. Every member gets a notice that the report can be inspected at the society's office and that suggestions must reach the committee at least 7 days before that meeting. The committee discusses them with the PMC and approves the report, with changes, by majority. Clause 15 sets out the steps: (a) the secretary calls the committee meeting to approve the report, invites the PMC, publishes the notice on the notice board, and gives each member written notice (acknowledgement kept) that the report is open for inspection at the office and that suggestions are due 7 days before the meeting; (b) the secretary forwards members' suggestions to the PMC for comment; (c) at the meeting the committee discusses the suggestions and the PMC's views in detail, makes the needed changes, approves the report by majority, discusses the draft tender, and fixes the date of the next meeting to finalise the tender. Members who want a copy rather than inspection can ask in writing; the society may charge the copying fee under its bye-laws. Keep your suggestions specific — for example, the minimum additional carpet area, parking per flat, and the rent level — because those are the points that go into the tender.

Question 7

Why must the redevelopment tender keep either the carpet area or the corpus fund fixed?

Accepted Answer

So that the bids can be compared. The directive tells the PMC, when inviting competitive tenders, to hold one of the two — the carpet area offered to members or the corpus fund — constant, and to fix the other technical terms, so developers compete on the remaining variable instead of offering packages that cannot be compared. Clause 15(c) says that in preparing the tender the PMC keeps one of carpet area and corpus fund fixed (unchanging), settles the other technical particulars, and invites competitive tenders from experienced developers; members may tell developers they know about the tender. For example, if the tender fixes the new carpet area at the existing area plus a stated percentage, developers compete on corpus, rent and other money terms; if it fixes the corpus, they compete on area. Either way, the specifications, amenities, parking, rent, the 20 % bank guarantee and the time for completion should be written into the tender, so that the SGM compares like with like. For self-redevelopment the same procedure applies when the society and PMC prepare the tender for contractors (cl. 15, last sentence). Commercial levels (how much extra area or corpus) are not fixed by law; they depend on the FSI available and the market.

Question 8

How are developer tenders opened, and what happens if fewer than three bids come in?

Accepted Answer

On the last date the secretary puts up a list of the tenders received. Within 15 days the committee meets and opens them in front of the bidders' representatives and any member who wishes to attend. With three or more tenders, the PMC's comparative statement goes to the SGM. With fewer than three, the deadline is extended by at least one week, then once more by one week; after that whatever has come in goes to the SGM. Clause 16: (a) on the closing day the secretary lists how many tenders arrived and publishes the list on the notice board; (b) within 15 days of the closing date the secretary calls a committee meeting; bidders or their authorised representatives and interested members cannot be refused entry; the tenders are opened before everyone present; the PMC scrutinises them and prepares a comparative chart examining quality, reputation, experience and competitive rates; and if at least three tenders were received, the committee approves them for presentation at the SGM. Three tenders are required for competition. If fewer arrive, a first extension of at least one week is given; if still fewer than three, a second extension of one week; if still fewer, the tenders received go to the SGM. Keep the list, the attendance sheet, the opening minutes and the comparative chart; they are the evidence if the process is later challenged.

Question 9

What happens at the SGM that selects the developer, step by step?

Accepted Answer

The committee asks the Registrar, within 7 days and with the member list, to appoint an authorised officer. Within a month of that appointment the SGM is called on 14 days' notice. It is held before the officer, video recorded at the society's cost, with only members admitted. The shortlisted bidders present, the SGM chooses one, and the choice needs the written approval of members present who number at least 51 % of all members. Clause 17: (a) within 7 days the committee applies to the Registrar, with the member list, for an authorised officer to attend; the selected developer (or its associate) must have at least one project registered with MahaRERA. (b) Within one month of the appointment the secretary fixes the date with the officer and sends the agenda 14 days ahead by hand delivery and post (email for members abroad), keeps acknowledgements and uploads the agenda on the society's website. The Registrar's representative confirms that the bidders' authorised representatives are present; the meeting is video recorded at the society's cost; nobody but members may attend, and members must carry identity proof. (c) Quorum is two-thirds of all members; if it fails the meeting is adjourned by 7 days, and if it fails again the subject is dropped for 3 months. (d) Business: comparative information on the tenders, presentations in turn, selection of one developer with terms, the developer's consent, and briefing on next steps. The appointment needs the written approval of members present numbering at least 51 % of total membership; absentees' views in any form are ignored; a selected developer who is absent is treated as consenting. Under Rule 106C-13(3)(j) the Registrar's representative sends a factual report on the meeting to the Registrar, who communicates it to the society.

Question 10

After the June 2026 Rules, can members attend and vote at a redevelopment SGM by video conference?

Accepted Answer

Yes, the Rules now allow it. Participation in any general meeting may be in person or by a video link the society provides that records and identifies participants, and the 51 % needed to select a developer counts members attending by video. The meeting must still be held before the Registrar's representative and video recorded. How remote members give the written consent the 2019 directive requires is not yet spelt out. Rule 106C-13(3)(b) proviso allows members to take part in a general body meeting in person or by video conferencing or other audio-visual means provided by the society, capable of recording and recognising participation and storing the proceedings with date and time. Rule 106C-13(3)(j) says the resolution selecting a developer or contractor needs a majority of 51 % of total members "including those attending through video conferencing". Before 22 Jun 2026 societies on the 2014 bye-laws treated redevelopment SGMs as in-person meetings, and the directive (cl. 17(b)) still speaks of members carrying identity proof at the venue and giving written approval (cl. 12, 17(d)). A careful society will: announce the video option in the notice; verify each remote member's identity on camera; record the whole meeting; and collect signed consent letters (scanned and then in original) from remote members who vote in favour. The Rules prevail over inconsistent bye-laws; how the Registrar's office reconciles the directive's written-consent step with remote voting should be checked with the Deputy Registrar before the meeting.

Question 11

Must a society going for redevelopment run a website, and what has to be put on it?

Accepted Answer

Yes. The 2019 directive requires the society to create a website for the redevelopment, tell the Registrar about it, and post all redevelopment information on it — notices, minutes, the PMC's report and the like — for members. Members must give the society an email address; notices and minutes also go by email, by hand or by registered post, and are put on the notice board. Clause 6 aims at transparency: the society creates a website where notices, minutes, the PMC's report and all other redevelopment information are kept for members; notices and minutes about the project are sent to members by email, in person or by registered post; every member must give an email ID and contact details; the Registrar is informed of the website; and the information is also published on the notice board. Clause 17(b) adds that the agenda of the developer-selection SGM is uploaded on the website. The approved building plans must later be placed before the general body, and a member who wants a copy of approved documents applies in writing; the committee must supply it on payment of a reasonable fee (cl. 18(13)). A members-only login is sensible, because the site will carry names and flat numbers; publish only what members need. The draft 2026 bye-laws repeat that members may inspect all redevelopment records and obtain copies (dBL 160).

Question 12

Which carpet area must the development agreement promise, and how do we check we actually got it?

Accepted Answer

The directive requires the agreement to state clearly the carpet area due to each member as defined in the RERA Act 2016 — the net usable floor area inside the flat's walls, excluding external walls, service shafts, exclusive balcony or verandah and exclusive open terrace, but including internal partition walls. Check it at possession by a measurement from the society's own architect against the PAAA figure. Clause 18(6) says the development agreement must clearly mention the carpet area payable under the Real Estate (Regulation and Development) Act 2016. RERA s.2(k) defines carpet area as the net usable floor area of an apartment, excluding the area covered by external walls, areas under services shafts, exclusive balcony or verandah and exclusive open terrace, but including the area covered by internal partition walls. Old agreements often state "built-up" or "super built-up" area; the PMC should convert each member's existing entitlement to RERA carpet area before the tender (redevelopment-305), and each PAAA should state the new carpet area separately from balconies or other areas. Also fix in the agreement what happens if the measured area falls short (for example, payment at a stated rate per square foot, or rejection). The June 2026 Rules separately switch several levies to carpet area (Rule 106C-12(4)), so accurate figures matter for future maintenance too. A dispute about the area delivered is decided under the agreement's dispute clause, which the directive requires to refer to s.91 (cl. 18(10)).

Question 13

What is hardship compensation in a redevelopment, and can the society insist on it?

Accepted Answer

Hardship (or 'inconvenience') compensation is a one-time sum some developers pay each member for the disruption of moving out and back, over and above rent and shifting charges. No law or directive requires it; it is a commercial term the society can put in the tender and the development agreement. Once agreed it must be written in the agreement and each member's PAAA and paid on the same basis to everyone. The 2019 directive speaks of rent, deposit or transit accommodation (cl. 18(3)) and of a corpus fund as a tender variable (cl. 15(c)) but says nothing about hardship compensation, so its existence and amount depend on the tender and negotiation. Good practice: define it in the tender on a stated basis (for example, per square foot of existing carpet area) so bids can be compared; state when it is paid (commonly on vacating, or part on signing and part on vacating); and route it through a clear schedule in the development agreement with each member's figure in his PAAA. The draft 2026 bye-laws require equal treatment of members and full disclosure throughout (dBL 150(e)), and courts looking at dissenting members have weighed whether they were offered the same terms as others (see redevelopment-003). Unequal side payments to individual members are a common source of later disputes. Tax treatment is separate (redevelopment-322).

Question 14

What does the 2019 directive require about rent, deposit and transit accommodation while the new building is built?

Accepted Answer

Until the project is complete the developer must, as far as possible in the same area, either give members alternative accommodation, or arrange monthly rent and a deposit acceptable to the members, or provide a transit camp. The amounts, escalation, advance period and brokerage are commercial terms to be fixed in the development agreement and each PAAA. Clause 18(3) obliges the developer, during redevelopment and until completion, to provide residential alternative accommodation, preferably in the same area, or to arrange monthly rent and deposit acceptable to the members, or to provide transit camps. The directive leaves the figures to the parties. Points the agreement should cover: the rent per month (often linked to the existing carpet area and local rents); annual escalation; how many months are paid in advance and when the next instalment falls due; the refundable deposit for the member's rented home; one-time shifting and brokerage charges both ways; what happens if completion is delayed beyond 2 (or 3) years (cl. 18(1)) — rent continues, often with a higher rate; and post-dated cheques or a separate guarantee for rent. Stopped rent is one of the strongest grounds for treating the developer as in default (see redevelopment-005 and redevelopment-320). The draft 2026 bye-laws require the feasibility report to address transit accommodation (dBL 156(h)).

Question 15

The developer wants us to vacate as soon as the first plan approval comes. Must we move out before every approval is in hand?

Accepted Answer

No. The directive says members vacate their flats only after all legal approvals for the redevelopment have been obtained and each member's permanent alternate accommodation agreement (PAAA) has been registered. A first approval alone (such as an intimation of approval) is not enough unless the development agreement defines the approvals and the society's general body agrees to an earlier date. Clause 18(8) is the protection: flat-holding members vacate only after all legal permissions for the redevelopment are received and the PAAA with the individual member is registered. Clause 18(4) requires the development agreement and each PAAA to be registered under the Registration Act 1908. What counts as "all approvals" is best defined in the development agreement — commonly the approved plans, the commencement certificate for at least the plinth, environmental or other clearances where needed, and any NOCs the planning authority requires — together with the first rent cheques and the bank guarantee (cl. 18(2)). If the developer presses members to vacate earlier, the committee should ask for copies of each approval and place them before the general body (cl. 18(13)). A member who is being pressured individually can write to the committee and, if the committee does not act, to the Deputy Registrar. Once all approvals and a registered PAAA are in place, a member who still refuses can be compelled through the courts (redevelopment-003).

Question 16

How are flats in the new building allotted — by the old floor order, by lottery, or at the developer's choice?

Accepted Answer

As far as possible each member gets a flat on the same relative floor as now. If a draw becomes necessary, the developer arranges it after the building is complete, in the presence of the Registrar's representative, and the draw is video recorded. The developer cannot allot existing members' flats at his discretion. Clause 18(11) says that after the occupancy certificate, flats in the redeveloped building are allotted, as far as possible, in the order of floors members now occupy; if allotment by lots becomes necessary, the developer arranges the draw after completion, in the presence of the Registrar's representative, and has it video recorded. Practical points: fix in the development agreement how the order is applied when the new building has more floors or a different layout (for example, relative position from the ground), how members with larger old flats are matched, and whether the sale component is on separate floors or a separate wing; record every member's allotted flat number in his PAAA where it can be fixed in advance. Swaps between members are possible by mutual written agreement approved by the committee. Clause 18(9) adds that the rights of those in possession of flats remain unaffected.

Question 17

Can buyers of the developer's sale flats become members of our society before the new building is complete?

Accepted Answer

No. The directive says new members are admitted to the society only after the redevelopment project is complete, and only with the approval of the society's general body. After that, each buyer applies like any other purchaser, with a registered agreement for sale from the developer. Clause 18(5) provides that new members are taken into the society after completion of the redevelopment project, with the general body's approval. When they apply, Rule 106C-4 requires the membership application with at least five shares and the ₹500 entrance fee, and a certified copy of the stamped and registered agreement with the promoter builder; the committee then decides. The draft 2026 bye-laws require share certificates to new members for newly created flats within six months of the occupancy certificate or completion, whichever is earlier (dBL 14(b)). Until then, buyers deal with the developer, who remains responsible for his unsold units; the development agreement should say that the developer pays society charges on sale flats from the date of the OC or possession, whichever is earlier, and that sale flat buyers must accept the society's bye-laws. A general body cannot reasonably refuse a buyer who meets the legal conditions merely because he bought from the developer; refusal must be on grounds the Act and bye-laws allow, with an appeal to the Registrar.

Question 18

Our developer wants to bring in a partner or hand the project over to another company. Is that allowed?

Accepted Answer

Not without the society. The directive makes the development rights given to the developer non-transferable. Any change of developer or assignment of the agreement is a fresh decision for the society, taken through the general body; the society is not bound by a transfer it has not approved. Clause 18(7) states that the development rights given to the developer are non-transferable. A developer may still hire contractors or raise finance, but handing over the development rights, the agreement or control of the project to another entity amounts to a new developer. The development agreement should say so expressly and also cover changes in the developer's own ownership (for example, sale of the company or of a partnership share) and the mortgage of the sale component to lenders — which should never extend to the members' rehabilitation flats. If the developer tries to assign, the committee should place the proposal before an SGM with the PMC's and the society advocate's advice. Under the 2014 bye-laws, if an agreement is not executed with the selected developer the society may cancel the resolution and appoint another developer from the shortlist or start afresh (BL 174(b)); a replacement developer should normally be chosen through the directive's procedure (see redevelopment-320).

Question 19

When can the society invoke the developer's 20 % bank guarantee, and can the developer stop it?

Accepted Answer

The directive requires a bank guarantee for 20 % of the total project cost. It can be invoked when the event the guarantee and the agreement name occurs — typically failure to pay rent, stoppage of work or failure to complete on time. If it is an unconditional guarantee, a court will stop payment only in exceptional cases of clear fraud or irretrievable injustice. Clause 18(2) requires the developer to give the society a bank guarantee equal to 20 % of the total cost of the redevelopment project. The directive does not say when it may be invoked, so the development agreement and the guarantee's own wording decide it. Drafting points: make it unconditional and irrevocable, payable on the society's written demand; keep it valid until the occupancy certificate and handover of all members' flats, with a duty to renew at least 30 days before expiry (and a right to invoke if not renewed); and list the default events. Invocation: the committee (authorised by a general-body resolution) sends the demand in the exact form the guarantee requires, before expiry. The Supreme Court in U.P. State Sugar Corporation v Sumac International (1996) held that courts should not restrain encashment of an unconditional bank guarantee except for fraud of an egregious nature known to the bank, or where encashment would cause irretrievable injustice; a mere dispute about who is in breach is not enough. Money received should be kept in a separate account and used, with general-body approval, for rent or completion.

Question 20

In what order should the society proceed to terminate a defaulting developer and bring in a new one?

Accepted Answer

Build the record first: written notices of each default under the agreement, a PMC report on progress, and a general-body resolution. Then serve the termination notice the agreement requires, invoke the bank guarantee, revoke the power of attorney, and seek interim protection (usually under s.9 of the Arbitration Act) if the developer resists. A new developer is chosen by the directive's procedure. A typical sequence, subject to the agreement's own terms: (1) the PMC certifies the status of work, approvals and rent payments; (2) the committee sends a default notice giving the cure period in the agreement; (3) an SGM, with notice under the directive and the Rules, resolves to terminate and authorises the committee; (4) termination notice served, bank guarantee invoked (redevelopment-319), power of attorney revoked by a registered deed of revocation and notice to the planning authority and the sub-registrar; (5) if the developer disputes it, the dispute clause governs — often arbitration, with the High Court granting interim relief under s.9, while member–society disputes go to the Co-operative Court under s.91 (cl. 18(10); see redevelopment-007); (6) the society selects a new developer following clauses 15 to 18 again, including tenders and the authorised officer's presence. Courts have supported societies where the developer's default was serious — no construction and no rent (see redevelopment-005). The outgoing developer's claims for money spent are settled in the dispute forum; they do not by themselves block termination. Engage an advocate before step 4.

Question 21

In a redevelopment, whose money is the corpus fund — the society's, or each member's?

Accepted Answer

It depends on how the agreement pays it. A corpus paid to the society, in return for surrendering its development rights, is the society's fund: it goes into the society's books and is used only as the general body decides. Amounts paid to individual members under their PAAAs (often also called 'corpus') belong to those members. The agreement should say which is which. The 2014 bye-laws list "corpus fund, in case of redevelopment" among the society's modes of raising funds (BL 7(m)); the June 2026 Rules let a society maintain a corpus fund (Rule 106C-11(8)). The draft 2026 bye-laws define it as money received or receivable by the society from the developer in lieu of surrendering the development rights of the plot by a registered document, or contributed by members as the general meeting decides (dBL 4(x)); it is to be used only for purposes the general body decides (dBL 18(g), 19(h)). In practice developers often pay a per-member amount into each member's account, described in the PAAA; that is the member's money, not a society fund. The distinction matters for accounts (a society corpus appears in its balance sheet and audit), for tax (redevelopment-322) and for disputes when a member sells before completion. How a society corpus may be spent (for example, to meet higher maintenance in the new building) is covered in funds_investments-009.

Question 22

Is the hardship allowance or corpus amount a member receives from the developer taxable income?

Accepted Answer

The Mumbai bench of the Income Tax Appellate Tribunal has repeatedly treated hardship allowance paid by a developer to a flat owner in redevelopment as a capital receipt, not taxable as income; some orders say it reduces the cost of the flat for capital gains. The High Courts have not finally settled the point, and the Income-tax Act 2025 has renumbered the provisions. Take a chartered accountant's advice and disclose it. In Nalni Sanjeev Nadkarni v ITO (ITAT Mumbai, July 2024) the Tribunal held that the benefit of a bigger flat and the hardship allowance received from the developer were capital receipts that cannot be treated as revenue receipts (para 7), following a line of earlier Tribunal orders (for example Delilah Raj Mansukhani, Vinod Murlidhar Chawla and Lawrence Rebello). Many later orders take the same view. What this means practically: the department has in several cases tried to tax such receipts as "income from other sources", and members have had to go to appeal; the treatment of a corpus paid into a member's account is usually argued the same way. A corpus paid to the society in return for surrender of development rights raises the society's own tax questions (capital receipt versus income). The Income-tax Act 2025 replaced the 1961 Act from 1 Apr 2026, but these Tribunal orders were given under the 1961 Act; whether the new Act changes the position has not been tested. Keep the development agreement, the PAAA and payment records; report the receipt in the return with a note, and get professional advice.

Question 23

How are the new flat and the monthly rent from the developer treated for income tax, and what happens when I later sell the new flat?

Accepted Answer

Generally, receiving the new flat in place of the old one is not treated as a sale by the member, and when the new flat is sold its cost and holding period are commonly linked to the old flat. Rent paid by the developer to cover your temporary home has been argued both ways. These are unsettled areas; get a chartered accountant's view. What is fairly clear: a member of a co-operative society holds shares with a right to occupy the flat; during redevelopment the society, not the member, grants development rights, and the member receives a new flat under a PAAA. Tribunal orders have generally not taxed the member at that point and have treated the larger area as a capital receipt (see redevelopment-322). On a later sale of the new flat, questions arise about (a) the cost of acquisition — often the cost of the original flat, with no addition for the extra area received free; and (b) the holding period — several Tribunal orders count it from the purchase of the original flat, which can make the gain long-term. Rent from the developer: some assessees treat it as a reimbursement of rent they pay (so no net income), others show it as income; the answer depends on the agreement and facts. The provisions for a joint development agreement by an individual landowner (1961 Act s.45(5A) and TDS under s.194-IC) were drafted for landowners and are not an easy fit for a society member. All of this was decided under the 1961 Act; the 2025 Act's equivalents are to be mapped.

Question 24

Who pays stamp duty and registration on the development agreement and the members' PAAAs, and is GST involved?

Accepted Answer

Both documents must be registered, and the development agreement attracts stamp duty under the Maharashtra Stamp Act; developers usually bear stamp duty and registration for both under the agreement. Concessional duty on PAAAs for the rehabilitation area has been granted by Government orders, but the current rate must be checked with the IGR. GST on the flats given to members is the developer's liability. Confirm with the society's advocate and a chartered accountant. The directive requires the development agreement and each member's PAAA to be registered under the Registration Act 1908 (cl. 18(4)). The Maharashtra Stamp Act treats an agreement giving a developer power to construct on and sell property as chargeable like a conveyance on market value; for PAAAs of existing members the Government has in the past remitted duty to a nominal amount for the area equal to the old flat, with duty payable on any extra area bought. Because remission orders change, get the current position from the Inspector General of Registration (IGR Maharashtra) or the sub-registrar before signing, and write in the development agreement that the developer bears stamp duty, registration fees and GST on the members' flats. On GST: from 1 Apr 2019 the residential real-estate scheme taxes construction of apartments, including flats given to landowners/society members in exchange for development rights, in the developer's hands; the society and members are not the ones who pay it, though the agreement should say so. An unregistered PAAA gives the member weak protection and blocks the vacating step (cl. 18(8)).

Question 25

In self-redevelopment, how does the society choose a contractor and raise the money?

Accepted Answer

The same 2019 procedure applies — requisition, SGM, panel PMC, project report, at least three tenders from contractors, and selection at an SGM before the Registrar's authorised officer. Since June 2026 the society may borrow up to ten times its land value (by a Government-approved valuer). The draft bye-laws add separate books and bank account and general-body approval of every borrowing. Clause 2 applies the directive to self-redevelopment and makes the developer-selection procedure apply to the appointment of a contractor; clause 15 says the society and PMC follow the same method in preparing the project report and tender and inviting contractors' tenders; clause 17(d) and Rule 106C-13(3)(j) speak of selecting a "developer or contractor" by 51 % of total members. Finance: the normal borrowing ceiling is ten times paid-up capital, reserve fund, members' land and building contributions and building fund less losses (Rule 106C-10), but for self-redevelopment the society may borrow up to ten times the land value on a valuation by a Government-approved valuer (106C-10 proviso; dBL 16(ii) requires prior GB approval). The draft 2026 bye-laws require separate books of account, a separate bank account and project records, and prior GB approval of all borrowing, expenditure and commitments (dBL 158(c)-(d)), with physical and financial progress reports to the GB (dBL 160(e)). A sale component will usually need MahaRERA registration with the society as promoter. The draft bye-laws cite a Government resolution of 13 Sep 2021 on self-redevelopment (dBL 150), which should be read for any incentives before planning.

Question 26

Can the society expel, fine or charge extra to a member who refuses to sign the PAAA after the redevelopment is approved?

Accepted Answer

Under the 2014 bye-laws there is no expulsion ground for refusing to vacate, and a society cannot invent fines. The draft 2026 bye-laws propose refusal to vacate after the approvals in the development agreement as a ground for expulsion — draft only, and expulsion always needs the Registrar's approval. The usual route against a holdout remains the courts, and costs have been awarded against frivolous objectors. Expulsion under the Act needs a general-body resolution and the Registrar's prior approval after the member has been heard (s.35; BL 48–53). The 2014 grounds are about defaults and conduct, not redevelopment. The draft 2026 bye-laws add ground (g): refusing to vacate the flat in redevelopment after the approvals provided in the development agreement have been obtained (dBL 52(g)); until the bye-laws are finalised and adopted by a society, this ground is not available. Charges: a society may levy only the charges its bye-laws and the Rules permit (Rule 106C-12), so a "penalty for delay" in redevelopment has no basis unless the development agreement itself provides consequences between the developer and the member. The effective remedies are: offering the member the same registered PAAA as others; then, after all approvals, an application by the developer or society for a court receiver under s.9 of the Arbitration Act (redevelopment-003); and seeking costs, which the High Court has awarded against members whose objections were frivolous (reported, 2024).

Question 27

How do the 2014 bye-laws, the June 2026 Rules and the draft 2026 bye-laws differ on redevelopment?

Accepted Answer

The 2014 bye-laws only say redevelopment follows Government directives (and still name the superseded 2009 GR). The June 2026 Rules add binding meeting rules — 14 clear days' notice, two-thirds quorum, the Registrar's representative, video recording, 51 % including video attendees — and a 10× land-value borrowing limit for self-redevelopment. The draft bye-laws add a full chapter on process and transparency. The 2019 directive prevails throughout. 2014 bye-laws: BL 154 makes the committee responsible for redevelopment as per Government directives; BL 156 covers architects and tenders; BL 174 refers to the 3 Jan 2009 GR "as amended from time to time" — now read as the 4 Jul 2019 directive, which superseded it; corpus fund on redevelopment is a mode of raising funds (BL 7(m)). June 2026 Rules (binding on all societies from 22 Jun 2026): Rule 106C-13(3)(i) — 14 clear days' notice, quorum two-thirds of total members, the Registrar's representative present, video recording kept by the chairman with a copy at the Registrar's office; 106C-13(3)(j) — developer/contractor selection by 51 % of total members including video attendees, and a factual report by the Registrar's representative; 106C-10 proviso — self-redevelopment borrowing up to 10× land value; 106C-11(8) — corpus fund. Draft 2026 bye-laws (not yet in force): Chapter XVI, dBL 150–161 — modes including federation; GB supreme, committee executes; preliminary assessment; independent PMC without conflicts; due diligence (title, conveyance, OC/CC, litigation, dues); feasibility report; separate books for self-redevelopment; progress reports; inspection rights; the directive prevails (dBL 161); fresh share certificates within 6 months of OC (dBL 14(b)); and expulsion for refusal to vacate (dBL 52(g)).

Question 28

Our building is one of several on land owned by a housing federation. How is a group redevelopment approved?

Accepted Answer

Where the federation owns the land and common areas, it can carry out a cluster redevelopment. Its SGM needs a quorum of two-thirds of affiliated societies and approval by at least 51 % of them. Before work starts, either every affiliated society passes its own resolution (two-thirds quorum, 51 % of its members) with written consents, or at least 60 % of all members across the societies vote in favour. Clause 19 of the directive: (1) a housing federation that holds title to the affiliated societies' buildings and common land may carry out group redevelopment; (2) the quorum for its SGM is two-thirds of the total affiliated member societies; (3) the preliminary decision needs the approval of not less than 51 % of the total affiliated societies, with absentees' consent ignored; (4) before work begins, the affiliated societies must approve in one of two ways — each society, at its own SGM with a quorum of two-thirds of its members, passes the resolution by at least 51 % of its total members and sends the resolution and written consents of supporters to the federation committee; or at least 60 % of the total members of all affiliated societies together vote in favour, each society again collecting written consents and sending them to the federation. After this preliminary decision, the steps are the same as for a single society (PMC, report, tenders, selection). Fractions are rounded up (cl. 20). If your society holds its own conveyance rather than the federation, the individual-society route applies and joining a cluster is a separate decision.

Question 29

Once the new building gets its occupancy certificate, what must the society and the developer still complete?

Accepted Answer

Allot flats by floor order or a recorded draw, verify each flat's carpet area, hand over possession under the PAAAs, obtain the developer's final documents (OC, approved plans, service NOCs, warranties), release the bank guarantee only when everything is done, admit the sale-flat buyers with general-body approval, and issue fresh share certificates within six months under the draft bye-laws. A closing checklist drawn from the directive and bye-laws: (1) allotment by existing floor order, or a draw before the Registrar's representative that is video recorded (cl. 18(11)); (2) measurement of each member's flat against the RERA carpet area in the PAAA (cl. 18(6); redevelopment-312); (3) the approved plans placed before the general body (cl. 18(13)); (4) collection from the developer of the OC, completion certificate, as-built drawings, fire, lift and other service certificates, and warranties (see builder_handover-307); (5) settlement of rent up to the date possession is offered, and of any shortfall; (6) release of the 20 % bank guarantee only after these are complete (cl. 18(2)); (7) admission of new members for sale flats with GB approval (cl. 18(5)); (8) surrender and cancellation of old share certificates and issue of fresh ones for the allotted premises, and new certificates to new members, within six months of the OC or completion, whichever is earlier (dBL 14(b)); (9) update of the registers, property tax assessment and insurance for the new building; (10) a final progress report to the general body (dBL 160(e)). Keep all of it as permanent records.

Question 30

What checks should the society make before choosing a redevelopment developer?

Accepted Answer

The 2019 directive sets minimums. The developer must have at least one MahaRERA-registered project. The society needs at least three tenders, prepared by a PMC from the Government or local-authority panel. The developer gives a bank guarantee of 20 % of project cost. No committee member or relative may be the developer. Beyond that, check the developer's finances, litigation and track record, and put the PMC's comparison before the general body. From the s.79A directive of 4 Jul 2019 (see redevelopment-001, -006): - the architect or PMC is chosen from at least three quotations, from the panel (cl. 5); - the PMC prepares the project report and tender papers; members can inspect and comment (cl. 14-15); - at least three tenders, opened at a committee meeting within 15 days (cl. 16); - selection at an SGM before the Registrar's authorised officer, video recorded (cl. 17); - a developer with at least one MahaRERA-registered project; - a registered development agreement within three months, a 20 % bank guarantee, completion within two
  years (three in exceptional cases), non-transferable rights (cl. 18);
- no committee member or relative as developer (cl. 18(12)). The draft 2026 bye-laws add: - the society's own due diligence first: title, conveyance, OC/CC, litigation, records, dues (dBL 155); - a feasibility report comparing repair, self-redevelopment and developer routes (dBL 156); - a PMC with no conflict of interest with any bidder (dBL 153(e)). Practical checks, as practice rather than law: - completed projects and delays on MahaRERA; - pending cases and insolvency proceedings; - audited financials and net worth; - past rent and bank-guarantee performance; - references from other societies. Take an advocate's opinion on the draft agreement.

Question 31

What is self-redevelopment, and how is it different from giving the building to a developer?

Accepted Answer

In self-redevelopment the society itself is the developer. It appoints its own architect, PMC and contractor, borrows the construction finance and sells any surplus flats, instead of handing development rights to a builder. From 22 Jun 2026 it may borrow up to ten times the land value. The draft 2026 bye-laws require separate books and a separate bank account, and general-body approval of every borrowing. The 2019 directive recognises developer, self and cluster modes. The draft 2026 bye-laws list self-redevelopment among the modes (dBL 150(a)) and refer to the Government's self-redevelopment resolution of 13 Sep 2021. The draft rules for self-redevelopment: - the general body appoints the architects, engineers, PMC, contractors, legal advisers and chartered
  accountants (dBL 158(b));
- separate books, bank account and project records (dBL 158(c)); - every borrowing, expenditure and financial commitment needs prior general-body approval, unless the
  general body delegates it (dBL 158(d));
- progress reports to the committee and general body, and members' right to inspect all records
  (dBL 160).
Rule 106C-10 lets a housing society borrow up to ten times the land value (by a Government-approved valuer) for self-redevelopment, instead of the ordinary ten-times-capital limit. The trade-off: the society keeps the profit a developer would take, but carries the construction, sales and financing risk. The general body should see a feasibility report comparing both routes first (dBL 156). Selection of the contractor still follows a fair, transparent tender process.

Question 32

What majority is needed for our society to decide to go for redevelopment?

Accepted Answer

At least one-fifth of the members must ask for it in writing; the special general meeting (SGM) needs a quorum of two-thirds of all members, and the decision needs the approval of at least 51 % of all members (not just 51 % of those present). Absent members' written or oral consent does not count. Under the 4 Jul 2019 directive: a requisition by not less than 1/5 of members starts the process; the committee takes note within 8 days and holds the SGM within 2 months on 14 days' notice (cl. 5). At the SGM the quorum is 2/3 of total membership; if it is not met, the meeting is adjourned and reconvened within one month on 7 days' notice, and if it fails again the subject cannot come back for 3 months. The decision needs a majority of not less than 51 % of total members, and consent of absentees in any form is not counted (cl. 10(a)). The directive's own example: 100 members → quorum 67; at least 51 must vote in favour, whether 67 or 75 attend. Members who vote in favour then give written consent (cl. 12), and the minutes go to all members and the Registrar within 7 days (cl. 11). Fractions are rounded up (cl. 20). Every committee meeting and SGM on redevelopment is intimated to the Registrar within 15 days (cl. 7). An administrator or authorised officer running the society cannot take this decision (cl. 4).

Question 33

I voted against redevelopment. Am I bound by the general body's decision?

Accepted Answer

Yes, if the decision was validly taken. The Bombay High Court has repeatedly held that a member of a co-operative society is bound by the general body's majority decision and that a minority cannot hold up a redevelopment approved in accordance with the law. Your remedy is to challenge the decision itself, on legal grounds, before the proper forum — not to refuse to cooperate. In Girish Mulchand Mehta v Mahesh S. Mehta (2009) a Division Bench said that on becoming a member a person loses his individuality with the society and has no independent rights except those given by the statute and bye-laws, and that dissenting members "cannot take a stand alone position but are bound by the majority decision of the General Body" (para 16); even if they remain members they are bound whether they approve or not (para 18). The same principle comes from the Supreme Court's reading of co-operative membership in Zoroastrian CHS (2005, para 11, following Daman Singh). In Maya Developers v Neelam Thakkar (2016) the High Court asked whether a majority can decide the fate of all and answered "an unequivocal yes" as the basis of the co-operative statute (para 74), stressing proper procedure, transparency and disclosure. In 2024 (Dem Homes LLP v Taruvel CHS) the Court ordered costs against non-consenting members who did not vacate after a majority-approved agreement (reported; see further reading). Grounds on which a minority can legitimately object: the SGM lacked quorum or the 51 % majority; the decision was not taken as the directive and bye-laws require; the terms offered to dissenters are worse than to others; conflicts of interest (committee members or relatives as developer, barred by cl. 18(12)); fraud. Raise these promptly — before the Deputy Registrar or by a s.91 dispute in the Co-operative Court.

Question 34

Can a member who refuses to vacate be forced out for redevelopment?

Accepted Answer

Yes, through the courts, once the redevelopment has been validly approved, the approvals are in place and the member has been offered a registered permanent alternate accommodation agreement (PAAA) on the same terms as others. The usual route is an application by the developer (or society) under s.9 of the Arbitration Act for a court receiver to take possession; the society cannot use force itself. In Girish Mulchand Mehta (2009) the Division Bench upheld the appointment of a Court Receiver under s.9 of the Arbitration and Conciliation Act 1996 to take possession of the building, including the flats of dissenting members who were not themselves parties to the development agreement, and hand it to the developer (paras 13, 21). The 2019 directive protects members: nobody need vacate until all sanctions are obtained and a registered PAAA is executed (cl. 18(8)). The draft 2026 bye-laws add refusal to vacate after lawful approvals as a ground for expulsion (see membership-005) — draft only. Courts have also awarded costs against members whose objections were found frivolous (Dem Homes, 2024, reported). For dissenting members: ask in writing for the PAAA, carpet-area statement, rent and corpus terms that others received; if they are unequal or the approvals are missing, those are the points a court will weigh.

Question 35

Our committee skipped some steps of the 2019 redevelopment directive. Does that make the whole redevelopment illegal?

Accepted Answer

Not necessarily. The Bombay High Court has treated the redevelopment directives as directory: what matters is substantial compliance — proper notice, participation, disclosure and the required majority. Minor procedural slips do not automatically invalidate the decision or disqualify the committee, but core requirements (quorum, 51 % majority, no conflict of interest) should never be skipped. In Vilas Vishnu Jadhav v State of Maharashtra (2024) the Bombay High Court set aside a disqualification of committee members under s.79A(3) for breach of the redevelopment guidelines, following its earlier view (Kamgar Swa Sadan CHS) that such a GR is directory and does not itself prescribe consequences for non-compliance. The Court also held the disqualification could extend only to the committee, not to membership. The directive, however, still binds as a s.79A direction, and the Registrar may act on serious breaches. Members who want to challenge a flawed process should do so early and on substantive grounds (no quorum, no majority, undisclosed interest, unequal treatment), before the Deputy Registrar or the Co-operative Court. Committees should keep a compliance file for each clause (notices, minutes, video of the selection SGM, Registrar intimations) — evidence avoids most disputes.

Question 36

The developer has delayed for years and stopped paying rent. Can the society terminate him and appoint a new developer?

Accepted Answer

Yes, if the developer is in serious default. Courts have held that a developer who does not perform — no construction, no transit rent — has no enforceable right to hold the society back, and that the members' right to safe housing outweighs his commercial interest. Follow the termination clause, pass a general-body resolution, and expect the developer to go to arbitration. In Kher Nagar Sukhsadan CHS v State of Maharashtra (2024) the Bombay High Court held that where the developer failed to pay transit rent and complete construction as the development agreement required, there was a complete failure of consideration and no rights accrued to it (para 24); the society, which had terminated in 2019 after 14 years, could proceed with a new developer. The Supreme Court upheld the society's position in A A Estates v Kher Nagar Sukhsadan CHS (2025), holding that development rights validly terminated before the developer's insolvency are not assets protected by the IBC moratorium (para 16.12). Other Bombay High Court decisions have refused s.9 interim relief to developers who sat on a project for a decade. Steps: issue the notices the agreement requires (cure period); record the default with evidence (rent ledger, site photos, sanctions status); pass the termination resolution at a general body; revoke the power of attorney; then run a fresh developer selection under the 2019 directive (cl. 16-17). Development rights are not transferable by the developer (cl. 18(7)); the 20 % bank guarantee (cl. 18(2)) may be invoked under the agreement. Take legal advice before terminating — a wrongful termination can expose the society to damages in arbitration.

Question 37

What protections must the development agreement give members under the 2019 directive?

Accepted Answer

The agreement must be signed and registered within 3 months of selecting the developer, together with individual registered PAAAs; the developer gives a bank guarantee of 20 % of the project cost; completion is due within 2 years (3 in exceptional cases); development rights cannot be transferred; and members vacate only after all sanctions and a registered PAAA. Clause 18 of the 4 Jul 2019 directive: agreement within 3 months and registered, with PAAAs (18, 18(4)); bank guarantee of 20 % of total cost (18(2)); completion in 2 years from the plinth/first certificate, 3 in exceptional cases (18(1)); rights non-transferable (18(7)); vacate only after all permissions and a registered PAAA (18(8)); flats allotted by existing floor position where possible, draw of lots only if needed, before the Registrar's representative and video recorded (18(11)); no committee member or relative as developer (18(12)); new members admitted only after completion with general-body approval (18(5)); disputes under s.91 (18(10)). Developer selection happens at an SGM in the presence of the Registrar's authorised officer, video recorded, from at least three tenders, and the developer must have at least one MahaRERA-registered project (cl. 16-17). Commercial terms (extra carpet area, corpus, rent, brokerage/shifting) are not fixed by law; they are for the general body to negotiate with professional advice.

Question 38

Who decides redevelopment disputes — an arbitrator, the Co-operative Court or the civil court?

Accepted Answer

It depends who is fighting whom. Society vs developer disputes usually go to arbitration under the agreement's arbitration clause, with the High Court (commercial division) granting interim relief under s.9. Member vs society disputes about the redevelopment decision or its management go to the Co-operative Court under s.91, or to the Registrar. Title and complex property questions go to the civil court. Development agreements typically contain an arbitration clause; the Bombay High Court entertains s.9 petitions for interim measures, and in Girish Mulchand Mehta (2009) it allowed such measures to reach dissenting members who claim under the society. The 2019 directive says disputes are to be referred under s.91 (cl. 18(10)); s.91 covers disputes touching the constitution, management or business of the society among members, the society and its committee. The Registrar handles complaints about non-compliance with the directive and may act under s.79A(3). A member's individual PAAA with the developer may itself carry an arbitration clause. Because the forum affects limitation and cost, take advice early.

Question 39

Can the committee sign with a developer who is related to a committee member, or pick a developer without tenders?

Accepted Answer

No. The 2019 directive bars any committee member or relative of one from being the developer, and the developer must be selected from at least three tenders at an SGM in the presence of the Registrar's authorised officer, with the meeting video recorded. Clause 18(12) bars committee members and their relatives from being the developer. Clause 16 requires tenders opened at a committee meeting within 15 days of the last date, with at least three tenders (extensions allowed before whatever has come in goes to the SGM). Clause 17 requires the committee to apply to the Registrar within 7 days for an authorised officer, and the selection SGM to be held within one month in his presence, video recorded at the society's cost. A member who suspects a conflict of interest should write to the committee and the Deputy Registrar with specifics; the Registrar can act under s.79A(3) and, for committee misconduct, under the Act's disqualification and supersession provisions.

Redevelopmentपुनर्विकास