Gaps in Maharashtra's redevelopment policy — and how to protect your society

Maharashtra actually has one of the stronger redevelopment rulebooks in India — the Section 79A directive of 4 July 2019, the Real Estate (Regulation and Development) Act, 2016 (RERA) and deemed conveyance together give housing-society members rights they simply did not have a generation ago. The real gaps are not missing rights; they are slow enforcement, the quiet way premium and TDR costs shrink your share, thousands of societies that still do not own their own land, and delay penalties that are often too weak to change a defaulting builder's behaviour. The good news for your society is that almost every one of these gaps can be closed at the agreement stage — by following the 79A procedure, insisting on RERA registration, sizing the bank guarantee correctly, and appointing an independent project management consultant (PMC) and lawyer who answer to you, not to the developer.

What we mean by a "gap" in redevelopment policy

A gap is not the same as a missing law. In almost every case the rule exists — the gap is the distance between what the rule promises on paper and what a member can actually enforce quickly and cheaply when a project goes wrong. A completion deadline you cannot enforce for two years is a gap. A conveyance right you never exercised is a gap. A penalty that is cheaper to pay than to obey is a gap. Understanding this distinction matters, because it tells you exactly where your own committee has to do the work that regulation alone will not do for you.

There is also a structural reason these gaps persist. Co-operation is a State subject: in Union of India v. Rajendra N. Shah (2021) the Supreme Court struck down the Constitution (97th Amendment) Act, 2011 in so far as it applied to State co-operative societies, holding that Parliament could not legislate a uniform national code for them without ratification by the States. So the framework that governs your society is a patchwork of State directives, planning regulations and a central real-estate law — strong in parts, but not seamlessly joined up. That is where careful drafting steps in.

Gap 1 — Good timelines, slow enforcement

The 79A directive is unusually specific about time. The shortlisted developer must complete the building within two years of the plinth commencement certificate (CC), extendable to three years only in exceptional cases, and must furnish a bank guarantee equal to 20% of the project value. RERA reinforces this: under Section 18, if the promoter fails to hand over possession by the agreed date, allottees can demand a refund with interest or, if they choose to continue, interest for every month of delay.

The gap is what happens next. Neither the directive nor RERA automatically removes a non-performing builder or hands the site back to the society. Your realistic routes are a MahaRERA complaint, an action on the development agreement, or a dispute before the Co-operative Court under Section 91 of the Maharashtra Co-operative Societies (MCS) Act, 1960 — all of which take time while members keep paying for rented accommodation. The policy gives you the right to be finished on schedule; it does not give you a fast button to press when you are not. Read what to do when a builder delays for the practical sequence of steps.

Gap 2 — Premium and TDR costs quietly shrink your share

Mumbai redevelopment runs on extra buildable area. Under DCPR 2034 (the Development Control & Promotion Regulations 2034 for Greater Mumbai), that area comes from a mix of the base floor space index (FSI), fungible compensatory FSI, Transferable Development Rights (TDR), a road-width-based FSI table and — for cessed or old buildings — the incentive-FSI schemes in Regulation 33(7), 33(7)(A) and 33(7)(B), with cluster schemes under 33(9) and slum rehabilitation under 33(14). The developer pays premiums to the planning authority to unlock much of this.

Here is the gap: policy decides how the area is created, not how generously it is shared. When Ready Reckoner rates, TDR prices or premiums rise, the developer's cost of generating the saleable area rises too, and that pressure is routinely passed back to members as a smaller carpet-area increase, a thinner corpus, a lower rent, or a longer sale period. Because the exact FSI is plot-specific — it depends on your plot size, road width, zone and scheme — there is no single universal figure to quote. Model your own numbers with the FSI calculator and the additional area calculator before you negotiate, so a developer cannot understate what your plot can generate.

Gap 3 — Thousands of societies still don't own their land

Under the Maharashtra Ownership Flats Act, 1963 (MOFA), the promoter who built your original building was legally obliged, under Section 11, to convey the land and building to the society. Many never did. The remedy is deemed conveyance under Section 11(3), obtained through the Competent Authority — the designated District Deputy Registrar of Co-operative Societies — who can execute the conveyance in the builder's place. Once executed, the instrument must be registered under Section 17 of the Registration Act, 1908 to create a valid title in the society's name.

The gap is that the law provides the remedy but does not apply it for you: the society has to file for deemed conveyance and see it through. Redeveloping on land you do not legally own weakens your negotiating hand, complicates approvals and can stall the whole project. Treat conveyance as step one, not an afterthought — our conveyance and deemed conveyance guide explains how to start. Note too that at the individual level, when you eventually buy or sell, Section 194-IA of the Income-tax Act, 1961 requires the buyer to deduct 1% TDS where the consideration or stamp-duty value is Rs 50 lakh or more — a reminder that clean title paperwork has tax consequences downstream.

Gap 4 — The money-protection gap

RERA created a real safeguard for buyers' money: under Section 4(2)(l)(D), a promoter must deposit 70% of the amounts realised from allottees in a separate scheduled-bank account, to be withdrawn only in proportion to construction completion and certified by an annual chartered-accountant audit within six months. That keeps a developer from spending your project's money on another site.

Two gaps remain for societies. First, RERA registration itself is not universal: Section 3(2) exempts projects on land up to 500 square metres or with up to eight apartments, so a small redevelopment may fall outside the full RERA net — you then rely almost entirely on your agreement. Second, the 70% rule protects flat buyers' money, not directly the society members' rehab component; your protection there is the bank guarantee and the registered agreements. MahaRERA has, encouragingly, held that a redeveloping society can itself be a promoter or co-promoter, which gives members standing to use RERA's machinery. Confirm your project's RERA position early rather than assuming it is covered.

The gap, and the protection that closes it

The 79A directive — your strongest ready-made shield

The Government of Maharashtra's directive under Section 79A of the MCS Act, 1960, dated 4 July 2019 (No. SGY-2018-PK 85-14-S) — which superseded the earlier 3 January 2009 directive — lays down a transparent, member-protective procedure. Because these thresholds are law, not custom, a committee that follows them is largely protected from allegations of bias, and every member gets a documented voice. The key numbers are worth memorising:

For a cluster or federation route, the directive requires the 2/3 quorum and 51% approval per society, plus not less than 60% of all affiliated members overall. Our step-by-step walkthrough is in the 79A process guide.

A worked example: sizing the protection

Suppose a mid-sized society has a project value of Rs 60 crore. The 79A directive entitles the society to a bank guarantee of 20% — that is Rs 12 crore of real, encashable security, sized to the project rather than to a token penalty figure. Insist that the guarantee's validity extends comfortably beyond the promised completion date, because a guarantee that lapses on the very day the builder is late is worthless.

Now overlay the timeline. If the plinth CC is issued in, say, March, the 79A clock means possession is due within two years, and the registered PAAA should record that date and the monthly rent. If the developer overshoots, RERA Section 18 lets members claim interest for the delay period on top of contractual rent — and the bank guarantee is there to encash if things go from delay to default. Note that a change to the sanctioned plans midway is not the developer's call alone: Section 14 of RERA bars altering approved plans without the consent of at least two-thirds of the allottees, and Section 14(3) makes the promoter liable to repair structural defects notified within five years. Each of these is a specific, citable lever your agreement should reference explicitly.

What this means for your society

Read together, the message is simple: the policy sets the outer rules, but your agreement decides how well those rules protect you. Four disciplines close almost the entire gap.

1. Run the 79A procedure by the book

Proper requisition, quorum, 51% approval, the Registrar's officer at a video-recorded selection meeting, and a developer with a genuine MahaRERA track record. This is your process shield.

2. Register everything and confirm RERA

The DA and every PAAA must be registered; confirm the project's MahaRERA registration number before construction starts rather than accepting "it is being processed". Registration under the Registration Act, 1908 is what makes your rights enforceable against third parties.

3. Appoint an independent PMC and lawyer

Both must be engaged by, and answerable to, the society — never recommended by the developer. This is where vague area definitions, one-sided force-majeure clauses and weak penalties are caught. Learn the warning signs in our guide to red flags in a development agreement, and compare rival proposals fairly with the offer comparison tool.

4. Keep a paper trail and know your remedies

If things go wrong, your routes are MahaRERA (delay, defects, disclosures), the Co-operative Court under MCS Section 91, and the Consumer Protection Act, 2019 for deficiency of service. Where an office-bearer or middleman commits outright fraud, the Bharatiya Nyaya Sanhita (BNS), 2023 applies — Section 318 for cheating and Section 316 for criminal breach of trust (punishable up to five years). Knowing the remedy exists keeps a wavering developer honest.

A fair overall picture

None of this means the system is broken. Maharashtra remains one of the more progressive states for housing redevelopment, and the reforms have genuinely strengthened the members' hand — the 79A procedure, MahaRERA oversight and deemed conveyance did not exist in this form a generation ago, and older confusions such as VAT and service tax on under-construction flats were folded into a single GST regime in 2017. The gaps that remain are largely about the speed and cost of enforcement and about how fairly the extra area is shared — not the absence of rights. A well-prepared society that uses the protections above turns paper rights into real outcomes.

Where to find the official rule

Always read the source before you rely on any summary. The Section 79A directive and co-operative rules are published by the Government of Maharashtra's Co-operation, Marketing & Textiles Department; Government Resolutions generally appear on the state portal. MahaRERA registrations and orders are searchable on the MahaRERA website, DCPR 2034 provisions (including the Regulation 33(7) family of schemes) run through the planning authority and MHADA, and TDS and capital-gains rules sit on the Income-tax Department's e-filing portal. Because these portals reorganise their pages from time to time, search by the document title, GR subject or registration number rather than an old link, and confirm you are reading the current version.