1. INTRODUCTION 

The President of India on December 02, 2022, assented to the bill proposing amendments to the Maharashtra Housing and Area Development Act, 1976 (“the Act”), and introduced the Maharashtra Housing and Area Development (Amendment) Act, 2020 (“Amendment Act”), thereby clearing the way for the redevelopment of ‘cessed' and ‘dangerous' buildings. This news alert deals with the analysis of the Amendment Act and its impact on the tenants/developers and owners of cessed and dangerous buildings.

2. BACKGROUND

The presidential approval of the Amendment Act comes in the backdrop of a two-year waiting period since the bill was first approved in the Maharashtra State Assembly on September 08, 2020.

According to the Government of Maharashtra, a large number of buildings in Mumbai are categorized as cessed buildings. Despite declaring these cessed buildings as dangerous by the Mumbai Municipal Corporation under Section 354 of the Mumbai Municipal Corporation Act1 (“MMC Act”), the landowners have failed to undertake the redevelopment of such cessed and dangerous buildings on a priority basis.

By way of the Amendment Act, Section 79A has been introduced which deals with the redevelopment of cessed buildings that are declared as dangerous by the Mumbai Municipal Corporation under Section 354 of the MMC Act (“Building/s”). The Amendment Act allows the owners of the Buildings to initiate the process of redevelopment within 3 months from the date of receipt of notice under Section 354 of the MMC Act. In the event, the redevelopment process is not initiated within 3 months, the Maharashtra Housing and Development Authority (“MHADA”) will issue another notice to the owners of the Buildings allowing them to submit a redevelopment proposal within 6 months from the date of receipt of the notice. The redevelopment proposal shall be accompanied by the consent of 51% of the occupants or tenants in the Buildings.

In the event the owners fail to do so, the proposed co-operative housing society of tenants or occupants will be entitled to submit a redevelopment proposal within the next 6 months with the consent of 51% of the occupants or tenants in the Building. In the event, the tenants or occupants also fail to make a proposal, MHADA will undertake redevelopment of incomplete or stalled projects as per the procedure laid down in Section 91-A of the Act.2 Further, the Amendment Act provides that once the building is redeveloped by the proposed co-operative housing society or MHADA, the owner will get compensation at the rate of 25% of the amount of the ready reckoner rates or 15% of the built-up area of sale component determined as per the ready reckoner rates, whichever is higher.

3. INDUSLAW VIEW

3.1 In light of the Amendment Act, the intention of the government is to ensure that the redevelopment of cessed buildings is carried out. In the event the owner fails to carry out the redevelopment work, the tenants or occupants will have the right to take up the matter. However, the timelines for submission of the proposal need to be reduced as the provisions of the Amendment Act get kicked in when a building is in poor condition. Therefore, it is crucial that timelines to initiate and complete the redevelopment process are very tight.
3.2 Although the Amendment Act allows the tenants or occupants of the Buildings to submit a proposal for redevelopment, it needs to be seen as to how the tenants or occupants will be able to redevelop the buildings practically. The owner will still have to be given his stake in the project and legal issues will also have to be addressed, as the title of the project will still be with the owner. In such a scenario, for a new developer to come in and complete a project, he will need much more legal protection.
3.3 The Amendment Act will motivate the landowners and developers of the Buildings to take up redevelopment work on priority to prevent losing out on the redevelopment projects and will provide some movement to the halted redevelopment projects. However, the extent of the practical applicability of these amendments vis-a-vis arranging funds for the completion of the redevelopment work of these projects will have to be considered. It will be interesting to see how the Government of Maharashtra proposes to overcome these challenges.


Footnotes

1. Section 354 of the MMC Act. Removal of structures, etc., which are in ruins or likely to fall. (1) If it shall at any time appear to the Commissioner that any structure (including under this expression any building, wall or other structure and anything affixed to or projecting from any building, wall or other structure) is in a ruinous condition, or likely to fall, or in any way dangerous to any person occupying, resorting to or passing by such structure or any other structure or place in the neighbourhood thereof, the Commissioner may, by written notice, require the owner or occupier of such structure to pull down, secure or repair such structure subject to the provisions of section 342, of danger therefrom. (2) The Commissioner may also if he thinks fit, require the said owner or occupier, by the said notice, either forthwith or before proceeding to pull down, secure or repair the said structure, to set up a proper and sufficient hoard or fence for the protection of passersby and other persons, with a convenient platform and hand-rail, if there be room enough for the same and the Commissioner shall think the same desirable, to serve as a footway for passengers outside of such hoard or fence.

2. Section 91-A of the Act. Procedure in case of incomplete or stalled projects. Notwithstanding anything contained in any of the provisions of Chapter VIII or any other law for the time being in force or in any agreement, contracts, judgment, decree or order of any Court or Tribunal to the contrary, in cases where, after obtaining No Objection Certificate for redevelopment of old cessed building as per the Development Control and Promotion Regulations-2034 for Greater Mumbai or any other earlier Development Control Regulations therefor, the building is demolished and,–

(a) the redevelopment work is left incomplete, delayed or has not been commenced within three years from the date of issue of No Objection Certificate; or

(b) the redevelopment work of old cessed building is stalled for more than two years from the date of issue of the Commencement Certificate by the Mumbai Municipal Corporation or Planning Authority; or

(c) the holder of the No Objection Certificate has committed breach of any of the terms and conditions of the No Objection Certificate or has not paid rent for temporary alternate accommodation to the tenants or occupants of such building,– the Board may, after obtaining the prior approval of the State Government, initiate the action for acquisition of such building under the provisions of the Act and shall complete the redevelopment work.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.