The committee-developer nexus: how to spot it and protect your society

The committee-developer nexus is when the people you elected to run your society — the managing committee — quietly favour one particular builder, usually because a committee member, an office-bearer, or a close relative stands to gain if that builder is chosen. Maharashtra law treats this as a serious conflict of interest. The Government's directive dated 4 July 2019, issued under Section 79A of the Maharashtra Co-operative Societies (MCS) Act, 1960, plainly bars any committee member, office-bearer or their relative from being the developer of their own society's redevelopment. This page explains, in simple language, how the nexus works, the warning signs to watch for, and the exact steps — most of them already written into the law — that keep your redevelopment honest and in your members' hands.

What the "committee-developer nexus" actually means

A few plain-English terms first. The managing committee is the small group of members you elect to run the society day to day. Office-bearers are the chairman, secretary and treasurer. The developer — the law calls this the promoter — is the builder who demolishes the old building and constructs the new one in exchange for the extra flats they are allowed to sell.

A "nexus" simply means a hidden link. The problem arises when that link runs between the people choosing the builder and the builder being chosen. It can look like a committee member who is secretly a partner in the developer's firm, an office-bearer whose relative owns the construction company, or a committee that has quietly accepted money, a larger flat, or a promised "consultancy fee" to steer the vote toward one name. In every version, the committee is meant to represent you — but is really sitting on the other side of the table.

This is not the same thing as a committee doing its homework and recommending a builder. Recommending, after proper checks, is normal and expected. The danger is a concealed interest that quietly removes the committee's ability to negotiate hard on your behalf, because the person negotiating benefits whichever way the deal goes.

Why the law takes this so seriously

Redevelopment is often the single largest financial event in a member's life, and the committee holds enormous trust. To stop that trust being abused, the State issued a binding directive under Section 79A of the MCS Act, 1960 — the section that lets the Government give societies orders they are legally bound to follow. The directive dated 4 July 2019 sets out how a redevelopment must be run, and one of its clearest rules is this: no committee member, office-bearer, or their relative may be the developer. The law does not stop to ask whether a particular deal happened to be fair; it removes the conflict at the root by keeping insiders out of the builder's chair entirely.

The same directive then surrounds the whole builder-selection process with safeguards designed to make a hidden nexus almost impossible to sustain: an open tender, properly recorded minutes, an independent Project Management Consultant, the Registrar's authorised officer present at the selection meeting, and video recording of that meeting. Read together, these turn what used to be a back-room decision into a documented, witnessed one. Our step-by-step guide to the 79A process walks through each stage.

The conflict-of-interest disclosure the directive expects

The 4 July 2019 directive bars the insider from the builder's chair. It does not hand the society a form to fill in. So the practical job is to turn that bar into a signed paper, taken before the tender is advertised, from everybody who will touch the tender. A concealed interest is hard to prove. A false signed declaration is easy to prove, because the register that contradicts it is public and anyone can pull it.

Take it from six sets of people, not just the committee: every managing committee member and office-bearer; the Project Management Consultant and the architect; the society's advocate; the tender-scrutiny sub-committee, if one is formed; anyone authorised to correspond with bidders; and each bidding developer, declaring from its own side.

Take it twice. Once before the tender advertisement goes out, and again at the committee meeting where the sealed bids are opened. Interests get acquired in the middle of a tender, and a second dated signature closes that gap.

The declaration should require each signatory to disclose, by name and amount:

• Any shareholding, directorship, partnership, designated partnership or proprietorship in any bidding entity, or in its holding, subsidiary, associate or group company.
• The same interests held by a spouse, parent, child, sibling, son-in-law or daughter-in-law, or by any person ordinarily residing with the signatory.
• Any employment, retainer, brokerage, commission, consultancy or professional fee received from, or promised by, any bidder in the last three years.
• Any loan, deposit, advance or guarantee given to or taken from any bidder or its associates.
• Any agreement, memorandum, letter of intent or oral understanding for the sale, purchase, mortgage, gift or exchange of any flat, shop, garage or parking space in the society — whether already made or under discussion.
• Any additional flat, extra carpet area, corpus, rent, contract, appointment or benefit of any kind offered or promised by a bidder, to the signatory or to anyone on the signatory's behalf.
• An undertaking that if any such interest arises later it will be disclosed in writing within seven days, and that the signatory will not discuss or vote on the subject.

Have every declaration signed, dated, tabled at the meeting, taken on record by resolution and kept in the tender file. Then verify them. A declaration nobody checks is only paper — and the registers that check one are listed in the next section.

The declaration itself — text your society can adopt

Put the following on the society's letterhead, one sheet per signatory. Nothing in it needs a lawyer to draft; it needs a date and a signature.

To the Secretary, ________________ Co-operative Housing Society Ltd., Registration No. ____________, Ward ____.

I, ________________, holding Flat/Shop No. ____, signing as [member of the managing committee / Chairman / Secretary / Treasurer / Project Management Consultant / architect / advocate / authorised representative of the bidder ________________], in connection with the society's redevelopment tender dated __________, declare as follows.

1. I hold no share, directorship, designated partnership, partnership or proprietary interest in any bidder named in this tender, or in any holding, subsidiary, associate or group entity of a bidder. Details, if any: entity, my role, number of shares or percentage held.
2. To the best of my knowledge no spouse, parent, child, sibling, son-in-law or daughter-in-law of mine, and no person ordinarily residing with me, holds any such interest. Details, if any: name, relationship, entity, role.
3. In the three years ending today I have neither received nor been promised any employment, retainer, brokerage, commission, consultancy or professional fee from any bidder or anyone acting for a bidder. Details, if any: payer, amount, date.
4. I have given no loan, deposit, advance or guarantee to, and taken none from, any bidder or its associates. Details, if any: amount, date.
5. There is no agreement, memorandum, letter of intent or oral understanding — concluded or under discussion — for the sale, purchase, mortgage, gift or exchange of my unit, or of any other unit in this society, with any bidder or anyone acting for a bidder. Details, if any: unit, party, date.
6. No additional flat, extra carpet area, corpus, rent, contract, appointment or benefit of any kind has been offered or promised to me, or to anyone on my behalf, by any bidder.
7. If any interest of the kinds above arises after today, I shall disclose it to the committee in writing within seven days, and shall not speak or vote on any matter concerning that bidder.

I know that this declaration will be tabled before the general body and kept in the tender file.

Signature ____________   Name ____________   Flat No. ____   Date ________   Place: Mumbai

Where a clause does not apply, write "Nil" against it. Do not leave a clause blank — a blank is not a denial, and a "Nil" that turns out to be false is.

Source: Section 79A directive dated 4 July 2019, which bars a committee member, office-bearer or their relative from being the developer of their own society's project. The directive prescribes the bar but does not prescribe a form. The itemised disclosure and the wording above are drafting suggestions for giving that bar practical effect — they are not statutory text, and your society is free to adopt them by resolution with any additions its advocate recommends.

Warning signs to watch for

You rarely see the nexus directly — you see its symptoms. The table below pairs common warning signs with the specific protection the law, or plain good practice, already gives you. None of these signs proves wrongdoing on its own, but several together are a clear reason to slow down and ask questions in writing.

The safeguards that break the nexus

The 4 July 2019 directive builds in several checks. Understanding what each one is for makes it easier to insist on it calmly and firmly.

• Open tender. The society invites offers openly instead of dealing with one pre-chosen builder, so members can see and compare competing terms.
• Requisition. The process is started by a written requisition signed by not less than one-fifth (1/5th) of the total members — which also means one-fifth of the members can force redevelopment onto the agenda when the committee prefers to keep it off.
• Quorum and approval. A developer can only be appointed at a special general body meeting with a two-thirds (2/3rd) quorum — meaning at least two-thirds of the total membership must be present for the meeting to count — and the appointment needs the approval of not less than 51% of the society's total membership strength, not 51% of those who happen to attend. Absent members are not counted as approvals, so a thin meeting cannot carry a builder through.
• Registrar's authorised officer. The Registrar is the Government official who oversees co-operative societies; the "authorised officer" is their representative, who must attend the selection meeting as an independent witness.
• Video recording. The selection meeting must be video-recorded, so what was said and agreed cannot later be quietly rewritten.
• Independent PMC. A Project Management Consultant is an outside expert who checks the plans, the buildable area and the offer terms, so the committee is never the only voice in the room.
• 20% bank guarantee. The developer must give a bank guarantee worth 20% of the project — a bank's written promise to pay the society if the developer defaults.
• Registered agreements. The Development Agreement (DA) — the master contract between society and builder — and each member's Permanent Alternate Accommodation Agreement (PAAA), the individual agreement for your new flat, must both be registered. Section 17 of the Registration Act, 1908 makes this compulsory, which puts the real terms on the public record.

The documents that expose a nexus — and where to get each one

A nexus is proved by two papers placed side by side, not by an argument in a meeting. Nearly every register you need is public, and most can be searched in one evening. Pull them before the special general body meeting, not after the resolution has been passed.

Source: MCS Act, 1960, Section 32; Companies Act, 2013, Section 399; Limited Liability Partnership Act, 2008, Section 36; Indian Partnership Act, 1932, Section 66; Registration Act, 1908, Section 57; RERA, 2016, Section 11; Section 79A directive dated 4 July 2019.

How to protect your society: concrete steps

1. Get organised early. Bring members onto the same page before any builder is discussed. You can register your society for guidance so you enter the process informed rather than reacting to it.
2. Ask for interest declarations in writing. Adopt the seven-clause declaration set out above by committee resolution, and take it from every committee member, the PMC, the architect, the advocate and each bidder — once before the tender is advertised, again when the bids are opened. The directive already bars the interest; the signed sheet is what makes a later concealment provable.
3. Float a real open tender. Compare offers on equal terms with our offer comparison tool, and sanity-check what your plot can actually build using the FSI calculator so no builder can understate your entitlement.
4. Appoint independent experts. A PMC for the technical side and a lawyer for the agreements. An independent tender and agreement review catches one-sided clauses before they are signed.
5. Insist on the mandatory meeting conditions. Two-thirds quorum of the total membership, approval by not less than 51% of the total membership, the Registrar's authorised officer present, and video recording — refuse to treat any appointment made without them as valid, and have the minutes say so.
6. Get everything registered. Ensure the DA and every PAAA are registered, and that the 20% bank guarantee is in place before demolition begins.
7. Keep your own paper trail. Save every notice, minute, offer and letter. Quiet, documented vigilance protects a society far better than confrontation in meetings.

What the society must minute — and at which meeting

Minutes are the society's only record made on the day, and under Section 32(1) of the MCS Act, 1960 they are a record every member is entitled to inspect. A dispute under Section 91 is decided on documents, and quorum, presence, disclosure and the vote count exist in only one document — the minute book. What was not written down on the day is, six years later, only somebody's recollection. Insist that the following goes into the minute book at the meeting itself — not into a summary circulated three weeks later.

Then ask for a copy of the minutes in writing. Under Section 32(2) of the MCS Act, 1960 the society must furnish copies within one month from the date you pay the prescribed fee. Diarise that month. The month running out is what turns "the secretary is busy" into a documented default you can place before the Registrar.

Source: MCS Act, 1960, Section 32; Section 79A directive dated 4 July 2019 — two-thirds quorum, approval by not less than 51% of total membership, Registrar's authorised officer present, video recording, and a 20% bank guarantee.

If you suspect a nexus: where to go, what to file, under which provision

Stay calm and act on paper. Many concerns dissolve once members simply ask, in writing, for the tender, the minutes and the interest declarations they are entitled to see. Give the committee a fair chance to answer before assuming the worst. When it does not answer, escalate in this order — each step creates the record the next step needs.

1. Written complaint to the committee — bye-laws 172 to 174. Hand it to any office-bearer against acknowledgement. The committee must decide it at its next meeting and communicate the decision within 15 days. Fifteen days of silence is itself the ground for the next step, so date your letter and keep the receipt.
2. Written application to the District Deputy Registrar of Co-operative Societies for your district — Mumbai City or Mumbai Suburban. File it at the counter, keep the inward number, and attach the interest declaration alongside the public-registry printout that contradicts it. Cite Section 79A(1) of the MCS Act, 1960 — the 4 July 2019 directive is binding on the society — and ask for a specific direction (stay the appointment, produce the tender file, re-float the tender), not for "action".
3. Inquiry under Section 83, MCS Act, 1960. On the application of one-fifth (1/5th) of the members, the Registrar holds an inquiry into the constitution, working and financial condition of the society. The applicants may be asked to deposit the cost of the inquiry, refundable if the allegations are substantially proved.
4. Assessment of damages under Section 88. Where money or property of the society has been misapplied or retained, or there has been misfeasance or breach of trust, the Registrar can assess the loss and fix it on those responsible personally. This is the provision that recovers money from an office-bearer, as distinct from merely cancelling a contract.
5. Action against the committee under Section 78. Where the committee has wilfully disobeyed a binding direction or acted to the prejudice of the members' interests, the Registrar may remove or supersede it and appoint an administrator.

What the application to the District Deputy Registrar must contain

An application written as a letter of grievance gets filed and forgotten. Set it out as a numbered application, carry two copies, and make sure the second copy comes back to you stamped with the inward number and date — that stamped copy is the proof you filed at all.

1. A title that names the provision. "Application under Section 79A(1) of the Maharashtra Co-operative Societies Act, 1960, read with the Government directive dated 4 July 2019." An untitled application is treated as correspondence.
2. Who is applying. The society's full registered name, registration number, ward and address; then each applicant's name, flat number and signature. Where you are also asking for an inquiry under Section 83, state the count as a fraction — "10 of 48 members, being not less than one-fifth" (see the arithmetic below) — so the officer can see the threshold is met on the face of the paper.
3. The dates, in order. The requisition, the notice of the special general body meeting, the date of the meeting, the date of the appointment resolution, and the date of the Development Agreement if one has been executed or registered. Every later argument is anchored to these dates.
4. The breaches, one sentence each. Tie each to what it offends — quorum below two-thirds of total membership; approval short of 51% of total membership; no authorised officer present; no video recording; no open tender; an undisclosed interest contrary to the bar in the directive.
5. The relief, stated specifically. Stay the operation of the appointment resolution; direct the society to produce the complete tender file and the video recording; direct that a fresh tender be floated; direct an inquiry under Section 83. Asking for "necessary action" gives the officer nothing to order.
6. Annexures, listed and page-numbered. (A) extract of the register of members showing total strength; (B) the interest declarations as signed; (C) the MCA, Registrar of Firms or Index-II printout that contradicts a declaration; (D) the meeting notice and the minutes as received; (E) the tender advertisement and every bid or comparative chart you have; (F) your bye-law 172 complaint with the acknowledgement, showing that 15 days have passed without a decision.
7. A verification at the foot — that the contents are true to the applicants' knowledge — signed by each applicant with date and place.

Preserve the evidence in the same week. Write separately to the secretary, against acknowledgement, asking that the master video file of the selection meeting, the sealed-bid envelopes with their receipt log, the attendance sheet and the ballot papers be preserved and not destroyed, and asking for a copy of the recording under Section 32(2). Recordings are routinely overwritten. A dated letter asking for preservation converts a later disappearance from an accident into a documented default.

Source: MCS Act, 1960, Sections 32, 78, 79A, 83, 88, 91 and 92; Model Bye-Laws (2014), bye-laws 172 to 174; RERA, 2016, Sections 14 and 31; Consumer Protection Act, 2019, Section 69, with tiers under the Consumer Protection (Jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021; Bharatiya Nyaya Sanhita, 2023, Sections 316 and 318; MOFA, 1963, Section 11.

What a Section 91 dispute should actually ask for. A dispute that only complains is treated as a grievance and gets nowhere. Plead specific reliefs: a declaration that the resolution appointing the developer is void for want of the two-thirds quorum, of approval by 51% of the total membership, of the Registrar's authorised officer or of the video recording; an injunction restraining the society and the developer from executing, registering or acting on the Development Agreement; a direction to re-float the tender; and production of the complete tender file and the recording. Move the interim application for injunction on the day you file. An injunction sought after the agreement is registered and flats are sold is worth very little.

Criminal allegations belong with the police and your advocate, on documents — not in a society WhatsApp group, where an unproved accusation helps nobody and can itself be actionable. For more patterns worth knowing, see our frauds and scams section.