Can a Society Terminate a Non-Performing Developer?
The complete termination pathway for a Mumbai society: the clauses your development agreement must contain, the notice to serve and exactly what goes in it, the Section 79A meeting, the right forum, the registered Deed of Cancellation, the power of attorney — and every deadline to put in the diary.
Yes — but not by a letter. Ending a registered development agreement (DA) in Mumbai is a sequence of five documents, served and executed in order: a dated default register, a breach notice that doubles as the thirty-day notice under Section 20(2) of the Specific Relief Act, 1963, a general body resolution passed with Section 79A discipline, a termination notice, and a registered Deed of Cancellation. Only after that do you revoke the developer’s power of attorney and put a new builder on the plot. Skip a step and the developer keeps a registered foothold on your land long after he has stopped building — and no bank or new developer will touch the file.
This page gives you the whole pathway: what your DA must contain, what the notice must say, where to go, what to file, under which provision, and the dates to diarise. It is general legal information, not advice on your society’s facts — take the drafting and the filing to a lawyer who handles Maharashtra redevelopment.
What counts as a “non-performing” developer?
Termination has to be built on breach — a genuine, material failure to do what the agreement promised. A change of mind by members, or a rival builder waving a bigger flat, is not a lawful ground on its own. What makes a breach material is that it goes to the root of what the society contracted for. In practice that means:
- Long, unexplained delay — work that runs far past the agreed timeline with no valid reason.
- Abandonment — the builder stops work and the site sits idle for months.
- Not paying transit rent — members are left without the monthly rent or alternate accommodation the developer agreed to fund.
- Failure to obtain approvals — the developer does not secure the sanctions and permissions it undertook to get.
- Financial default — the builder cannot fund construction, or diverts money meant for this project elsewhere.
The deciding factor is always evidence, and each default has one document that proves it. Get that document before you write a word of the notice. The middle column below is a shopping list — work through it and you have a termination file; skip it and you have a complaint.
| The default | The document that proves it — and where to get it | What it unlocks |
|---|---|---|
| Completion date missed | The registered DA (completion and grace clauses) plus the project’s MahaRERA page showing the declared and revised completion dates | RERA s. 18 — refund with interest, or interest for every month of delay |
| Transit rent stopped | The PAAA rent clause, the society’s rent register, and members’ bank statements showing the last credit | A liquidated money claim; and grounds to invoke the 20% bank guarantee |
| Site abandoned | Dated, geotagged site photographs at fixed intervals; the ward’s MCGM Building Proposals file showing no inspection or progress; the security register | Material breach for the termination notice |
| Approvals not obtained | IOD, CC and plinth-CC status from MCGM Building Proposals for your ward — ask for certified copies, not the builder’s photocopies | Breach of the approval milestone in the DA |
| Project money diverted | The engineer’s, architect’s and chartered accountant’s certificates the promoter must upload on the project’s MahaRERA page | RERA s. 4(2)(l)(D) — 70% of amounts realised must sit in a separate account and be drawn only in proportion to completion, on those certificates |
| Sanctioned plans changed without consent | The sanctioned plan set from MCGM against the plans annexed to your PAAA | RERA s. 14(2) — previous consent of at least two-thirds of allottees is needed to alter sanctioned plans (minor alterations an allottee requests, or ones certified as necessary by the project professionals, are carved out by s. 14(2)(i)) |
| Money entrusted for a stated purpose and used elsewhere, or dishonesty from the very start | The entrustment document, the bank trail, and the promise that was false when made | Criminal — BNS 2023 s. 316(2) (criminal breach of trust) or s. 318(4) (cheating with delivery of property); FIR under BNSS s. 173(1), or the Economic Offences Wing for large sums |
Source: RERA 2016, ss. 4, 14, 18; Bharatiya Nyaya Sanhita 2023, ss. 316, 318; Bharatiya Nagarik Suraksha Sanhita 2023, s. 173. See our note on when a builder’s conduct becomes criminal for the ingredients each BNS section demands.
If you are only watching a project slip and have not reached this stage, our guide on what to do when a builder delays sets out the first moves before anyone talks about ending the contract.
Why a concluded, registered agreement changes everything
Maharashtra law draws a sharp line between a developer who holds a concluded contract and one who does not. A concluded contract normally means a development agreement that has been signed by the authorised parties, adequately stamped under the Maharashtra Stamp Act, 1958, and registered. Under Section 17 of the Registration Act, 1908, the DA, the Permanent Alternate Accommodation Agreement (PAAA) and the eventual conveyance are all documents that must be compulsorily registered. Only once a registered DA exists are the developer’s rights treated as vested — meaning enforceable rights the society cannot simply brush aside.
Before that stage — where there is only a letter of intent, an unsigned draft, or a general body approval but no registered DA — a developer generally cannot claim vested development rights. In that position the society usually has far more freedom to change course, because the builder never acquired a binding legal interest in the land or the redevelopment. This is also why the state’s Section 79A redevelopment directive insists that both the DA and the PAAA be registered, and requires the developer to furnish a bank guarantee worth 20% of the project cost. If the builder defaults, that guarantee is a ready remedy the society can invoke — one more reason to make sure it was actually taken and kept alive.
| Stage of the deal | Where the society usually stands |
|---|---|
| Registered DA with a termination clause | Strongest position for an orderly exit. Follow the clause on its own terms — the listed ground, the stated notice, the stated cure period — and the argument narrows to whether the default happened, which your evidence file answers. |
| Registered DA, no express termination clause | General contract law applies. The society must prove a material breach and give reasonable written notice plus a fair chance to remedy. |
| Only an LOI or approval, no registered DA | The developer typically has no vested rights; the society is usually much freer to select a new developer. |
Do this before you serve anything. Take a fresh search at the office of the Sub-Registrar where the DA was registered — in Mumbai City that is the Registrar of Assurances, in the suburbs the Joint Sub-Registrar for the ward — covering every year from the date of the DA to today, against the property’s CTS number. Download the Index-II of the DA itself. That one exercise, which costs a few hundred rupees, tells you the three things you must know before you terminate: whether the developer has mortgaged your land, whether he has already registered sales of free-sale flats to third parties, and whether a separate power of attorney was registered alongside the DA. Each of those changes what your termination has to achieve.
The nine clauses your development agreement must contain
How cleanly you can exit is decided years earlier, at the drafting table. Read your own DA against this list before you serve the notice, because the clause numbers you cite in the notice come from here. If a row is missing from your agreement, the right-hand column tells you what you must prove instead — and that is the extra work a weak agreement costs you.
| # | Clause | What it must actually say | If it is missing |
|---|---|---|---|
| 1 | Events of default | A closed, numbered list: the completion date missed; transit rent unpaid beyond a stated number of days; an approval milestone missed; insolvency; abandonment for a stated number of days; creation of any third-party right without consent. | You must prove at common law that the breach was material, not merely a breach. |
| 2 | Cure period | A number of days, running from the date of deemed service, with the mode of service and the address for service spelt out. | You must fix a reasonable period yourself and justify it in the notice. |
| 3 | Time is of the essence | Those words, expressly, next to the completion date and the grace period both stated in figures and in words. | Delay alone becomes much harder to treat as repudiation. |
| 4 | Liquidated damages for delay | A rupee figure per member per month, with escalation, payable without proof of loss. | You must prove actual loss, member by member. |
| 5 | Bank guarantee | 20% of project value; unconditional and irrevocable; payable on the society’s first written demand without proof of loss; kept alive until the Occupancy Certificate, with an obligation to renew 30 days before expiry. | A guarantee tied to a fixed calendar date quietly dies while the project drags on. |
| 6 | Power of attorney — automatic revocation | That the POA is granted only to perform this agreement, is not coupled with interest, and stands automatically revoked on termination. Section 202 of the Indian Contract Act, 1872 opens with the words “in the absence of an express contract” — this clause is that express contract. | An “irrevocable” POA survives your revocation letter and must be undone by the forum. |
| 7 | Consequences of termination | Immediate handover of site possession, all sanctioned plans, IOD, CC, NOCs, the MahaRERA registration and login, and a bar on creating any third-party right after the notice date. | You litigate for documents you already paid for. |
| 8 | Step-in / substituted performance | An express right for the society to complete the balance work through another agency at the developer’s cost — mirroring Section 20 of the Specific Relief Act, 1963. | You can still use s. 20, but the cost recovery is contested rather than agreed. |
| 9 | Dispute resolution | Either a proper arbitration clause — seat at Mumbai, the appointing procedure, the number of arbitrators — or an express clause naming the civil court. Not both, and not silence. | You spend the first six months arguing about where to argue. |
Source: Specific Relief Act 1963, s. 20; Indian Contract Act 1872, s. 202; bank guarantee percentage from the Section 79A directive dated 4 July 2019. For the full wording to insist on before anyone signs, see the agreement clause library and red flags in a development agreement.
The notice to serve — and the nine things it must contain
This is the single document that decides whether your termination survives a challenge. Do not send an angry letter about “repeated delays”. Send a notice that a stranger could read alongside the DA and tick off. It must contain, in this order:
- The registration particulars of the DA — date of execution, serial number, and the Sub-Registrar’s office. This ties your notice to the registered instrument you are going to cancel.
- Each default, separately numbered, with its date and the clause breached. Not “you have delayed” but “the completion date under Clause 9 was 12 September 2024; as on today no application for Occupancy Certificate has been made”.
- The money, computed. Arrears of transit rent member-wise up to a stated date, plus interest at the rate the DA prescribes. A number in the notice is a number in the claim.
- The time to cure — the exact period your DA’s cure clause gives you (row 2 of the checklist above). If the DA is silent, state a period and state why it is reasonable.
- The Section 20(2) sentence. An express statement that if the default is not cured the society will terminate, invoke the bank guarantee, and get the balance work completed through another agency and recover the cost from the developer. Under Section 20(2) of the Specific Relief Act, 1963 that step requires written notice of not less than thirty days calling on the party in breach to perform, so give thirty clear days even if your DA’s cure period is shorter. Section 20(3) is what lets you recover the extra cost.
- A reservation of rights — “without prejudice to the society’s right to claim damages and interest and to proceed under RERA and in law”.
- Signature by an authorised person, with the dated committee resolution authorising the notice annexed to it. An unauthorised notice is the first thing a developer’s lawyer attacks.
- Service at the address for service in the DA, by registered post acknowledgement due and email to the address in the DA and courier. If the project is MahaRERA-registered, serve a copy at the promoter’s registered address on the MahaRERA page too.
- Proof, preserved. The postal receipt, the tracking printout, the acknowledgement card, the email with headers. File them with the notice, not in someone’s drawer.
Worked example — the numbers that go into the notice
Society of 42 members. DA registered 12 March 2021. Clause 9: completion in 36 months plus 6 months grace → due date 12 September 2024.
Notice drafted today, 22 August 2026 → delay = 23 months and running.
Transit rent Rs 40,000 per member per month, unpaid for the last 7 months: 42 × 40,000 × 7 = Rs 1,17,60,000 (Rs 1.176 crore).
Project value stated in the DA Rs 55 crore → bank guarantee at 20% = Rs 11 crore. Check the expiry date printed on it before you serve anything.
Diarise: 30 clear days from service → earliest lawful termination 22 September 2026. Limitation on the delay claim — three years from 12 September 2024 — expires 12 September 2027.
Source: Specific Relief Act 1963, s. 20(2) and (3); Limitation Act 1963, Article 55; bank guarantee percentage from the Section 79A directive dated 4 July 2019. Figures are illustrative — substitute your own agreement’s dates and amounts.
The Section 79A route: the meeting, and the officer who can force one
Termination is a general body decision, not a committee decision. Run it with the same discipline the Section 79A directive dated 4 July 2019 lays down for appointing a developer, because that is the standard the developer’s lawyer will measure it against:
| Step | The threshold | Why it matters at termination |
|---|---|---|
| Requisition, if the committee will not convene | Not less than one-fifth (20%) of total members sign a written requisition | This is the members’ own trigger when office-bearers are protecting the builder |
| Special General Body Meeting | Quorum of two-thirds of total members | A thin meeting is the easiest ground to set the resolution aside |
| The termination resolution | Not less than 51% of total membership strength — not 51% of those present | Absentees count against you. In a 42-member society you need 22 votes in favour (51% of 42 = 21.42, rounded up), whatever the attendance |
| Oversight | Registrar’s authorised officer present; the meeting video-recorded | The video is your evidence of the count and of who said what. Keep it |
Source: Section 79A directive dated 4 July 2019, as set out in our 79A process guide. The 51% here is a society resolution counted against total membership — it is a different figure from the 51% occupier consent under DCPR 2034 Regulation 33(7) for cessed buildings.
If the committee stalls, name the officer. The door is the Deputy Registrar or District Deputy Registrar of Co-operative Societies for your ward — the same office that deputes the authorised officer for a redevelopment meeting. Under Section 79A of the MCS Act, 1960 the State’s redevelopment directions bind the society, so a refusal to convene the meeting, a meeting held without the authorised officer, or a meeting not video-recorded is a complaint to that office, in writing, with the requisition and the acknowledgement of its delivery annexed. The Registrar can direct an inquiry into the society’s affairs under Section 83, act against a committee under the removal provisions of Section 78, and where office-bearers have misapplied or retained society money, assess damages against them under Section 88. Committees that have gone quiet usually start moving when a 79A complaint is filed against them by name.
Replacing the developer is a fresh 79A exercise, not a shortcut. Once the old DA is cancelled, you start again: fresh tenders, a fresh Special General Body Meeting with the same quorum and 51% approval, a MahaRERA-registered developer, a newly registered DA and PAAA, and a fresh 20% bank guarantee before anyone vacates. Do not let a “substitute” builder be slipped in on the strength of the old resolution.
RERA remedies when the delay is the core problem
If the redevelopment is a registered real-estate project, MahaRERA runs in parallel with the DA — and it is often the faster track, because the society does not have to prove the whole contract case to get a refund order. The provisions worth naming in your complaint:
| Provision | What it gives you |
|---|---|
| RERA s. 31 | The complaint itself, filed with the Authority. Members are allottees in their own right; the society files separately for what it is owed. |
| RERA s. 18 | On failure to hand over possession by the agreed date: withdraw and claim a refund with interest, or stay and claim interest for every month of delay until possession. |
| RERA s. 4(2)(l)(D) | 70% of the amounts realised from allottees must sit in a separate account and may be withdrawn only in proportion to completion, certified by an engineer, an architect and a chartered accountant. Diversion is a breach you can put to the Authority with the certificates as evidence. |
| RERA s. 7 and s. 8 | Revocation of the promoter’s registration for default; and on revocation the Authority may, after consulting the appropriate Government, permit the remaining development to be carried out by the association of allottees. |
| RERA s. 14(3) | Five-year defect liability from handover, and thirty days for the promoter to rectify a notified defect. |
| RERA s. 40 | A money order of the Authority is recoverable as arrears of land revenue — so an order is enforceable through the Collector, not only by another lawsuit. |
| RERA s. 43(5) and s. 44(2) | Appeal to the Maharashtra Real Estate Appellate Tribunal within 60 days of receiving the order (s. 44(2)). Under the proviso to s. 43(5), a promoter appealing must first deposit at least 30% of the penalty, or the amount payable to the allottee including interest and compensation. |
Source: Real Estate (Regulation and Development) Act 2016, ss. 4, 7, 8, 14, 18, 31, 40, 44.
Two related duties are worth remembering. Until conveyance of the land and building to the society is completed, the promoter remains responsible under the Maharashtra Ownership Flats Act, 1963 (Section 11) for the outgoings and taxes — a builder cannot walk away from those liabilities merely because the relationship has soured (our note on who pays outgoings until conveyance explains this). And if the developer has actually diverted members’ money or misled the society from the outset, that can cross into criminal territory under the Bharatiya Nyaya Sanhita, 2023 — cheating or criminal breach of trust — as covered in our page on when a builder’s conduct becomes criminal. Keep those routes in mind, but treat them as separate from the civil question of ending the contract.
Can the developer force the society to continue?
This is the fear that keeps committees awake: if we terminate, can the builder go to court and force us to hand the project back to him? The answer is in the statute, not in a general belief about what courts do. Section 14 of the Specific Relief Act, 1963 lists contracts that cannot be specifically enforced, and three of its clauses are the ones argued about in redevelopment: a contract whose performance involves a continuous duty the court cannot supervise; a contract so dependent on the personal qualifications of the parties that the court cannot enforce its material terms; and a contract which is in its nature determinable. Section 41(e) then says an injunction cannot be granted to prevent the breach of a contract whose performance would not be specifically enforced. Where those clauses fit an agreement, the developer’s route is compensation under Section 73 of the Indian Contract Act, 1872, not an order putting him back on your plot. Whether they fit your agreement depends on its wording, so put the point to your lawyer rather than assuming it.
The same statute protects him if you get it wrong. Terminate without a real breach, or without the notice and the resolution above, and the damages claim under Section 73 becomes straightforward — and the developer can seek an injunction restraining the society from handing possession to anyone else until the dispute is decided, which freezes your plot for years. Doing it correctly is not paperwork for its own sake. It is what keeps the site free for the next builder.
Where the fight is decided: choosing the right forum
If the developer disputes the termination, the venue matters as much as the merits. Pick the row that matches what you actually want, not the row that matches your anger:
| What you want | Where you go | Provision to cite | What you file | Deadline |
|---|---|---|---|---|
| To end the DA, or claim damages — and the DA has an arbitration clause | The arbitrator; Bombay High Court only to appoint one or for interim relief | Arbitration and Conciliation Act 1996, s. 21 (notice), s. 11 (appointment), s. 9 (interim measures) | A notice invoking arbitration, served so delivery is provable | Arbitration commences the day the s. 21 notice is received — and the three-year limitation runs regardless |
| The same claim, no arbitration clause | City Civil Court, Mumbai, or the Bombay High Court, by the value of the claim | Specific Relief Act 1963, s. 38 (perpetual injunction), s. 20 (substituted performance and its cost) | A plaint with the registered DA, the notices with proof of service, and the resolutions | 3 years from the date of breach — Limitation Act 1963, Article 55 |
| Refund, interest, or action against the promoter in a RERA-registered project | MahaRERA | RERA 2016, s. 31, with s. 18, s. 7 | A complaint in the prescribed form with the PAAA, payment proof and the MahaRERA project extract | Appeal within 60 days — RERA s. 44(2) |
| To test whether the termination resolution was validly passed, whether the meeting was properly held, or whether the committee acted beyond its authority | Co-operative Court | MCS Act 1960, s. 91(1) | A dispute application with court fee, a certified true copy of the resolution, the minutes complained of and an I-Register extract | Limitation is fixed by s. 92 — settle the date with your advocate on day one |
| Compensation for deficiency of service, claimed by members | District, State or National Consumer Commission — the tier is set by the value of the consideration paid | Consumer Protection Act 2019 | A consumer complaint | 2 years from the cause of action — s. 69 |
| Criminal action for diverted money or dishonesty from the start | The local police station; the Economic Offences Wing of the Mumbai Police for large sums | BNS 2023 s. 316(2), s. 318(4); registration under BNSS 2023 s. 173(1) | A written complaint or FIR, with the committee resolution authorising it | If the police refuse to register, apply to the Magistrate under BNSS s. 175(3) |
Source: Arbitration and Conciliation Act 1996, ss. 9, 11, 21; Specific Relief Act 1963, ss. 20, 38; RERA 2016, ss. 7, 18, 31, 44; MCS Act 1960, ss. 91, 92, 164; Consumer Protection Act 2019, s. 69; BNS 2023, ss. 316, 318; BNSS 2023, ss. 173, 175; Limitation Act 1963, Article 55.
The Section 91 trap — read this before you file. Many committees assume the whole fight belongs in the Co-operative Court. Section 91(1) does not say that. It requires both parties to fall within its listed categories: the society, its committee or a past committee; a past or present officer, agent or servant; a member, past member or a person claiming through one; a surety; or another society. A developer appointed under a development agreement is a contracting third party and is not on that list. So the society-versus-developer contract fight does not fit Section 91 on the words of the section. Use Section 91 for the internal fight — the validity of the resolution, the conduct of the meeting, an office-bearer’s breach of duty — and take the contract fight to arbitration, the civil court, MahaRERA or a consumer commission. And note Section 164: before suing the society or an office-bearer in a civil court over an act touching its business, two months’ written notice must be delivered to the Registrar, and those two months must actually expire.
Getting the forum wrong costs a year and can leave the limitation clock working against you. Our companion page on which forum hears a redevelopment dispute works through the overlaps in detail.
A registered agreement is not undone by a letter
This is where most societies stop too early. They serve a termination notice, celebrate, and then find two years later that no bank will fund the new project and no serious developer will bid — because the old DA is still standing on the property register. A registered instrument is undone in only two ways:
- A Deed of Cancellation executed by both the society and the developer, stamped and registered at the same Sub-Registrar’s office where the DA was registered. This is the clean exit, and it is what a defaulting developer will sometimes sign in exchange for a negotiated walk-away.
- An arbitral award or a court decree declaring the DA terminated, which the society then lodges with that same office so the record reflects it.
A cancellation signed by the society alone does not remove the developer’s registered rights from the record. Plan for one of the two routes above from the day you serve the breach notice — the pleading that asks for a declaration of valid termination is what converts a notice into a clear title.
| Provision | What it requires |
|---|---|
| Registration Act 1908, s. 17(1)(b) | An instrument that extinguishes a right or interest in immovable property must be registered — a Deed of Cancellation of a registered DA is such an instrument |
| Registration Act 1908, s. 23 | Present it for registration within four months of the date of execution |
| Registration Act 1908, s. 25 | Delay beyond that may be condoned for up to a further four months, on a fine of up to ten times the registration fee |
| Registration Act 1908, s. 49 | An unregistered document that ought to have been registered cannot be received in evidence of the transaction — which is why the letter alone proves nothing |
The day after it is registered, do four things. Take the Index-II of the Deed of Cancellation and a fresh search from the Sub-Registrar. Lodge certified copies with (i) MCGM Building Proposals for your ward, so no further plan is processed on the old developer’s authority; (ii) MahaRERA, if the project is registered; (iii) the developer’s financier, if the search showed a mortgage on your land; and (iv) the society’s own bankers. Then demand handover of the sanctioned plans, IOD, CC, NOCs and the MahaRERA login — and if the developer will not give them, apply to MCGM Building Proposals for certified copies of your own file rather than waiting.
The power of attorney: the piece committees forget
Nearly every development agreement is accompanied by a power of attorney (POA) — sometimes a clause inside the DA, sometimes a separate registered instrument. It is what lets the developer sign plans, deal with MCGM, and in the worst-drafted cases sell and mortgage. Terminating the DA does not automatically kill it.
- Find it and read what it authorises. Your search report will show a separately registered POA. Three levels matter: authority only to sign plans and pursue approvals; authority to sell the free-sale component; authority to mortgage the land. The third is the dangerous one and is the reason you took the search.
- Understand why “irrevocable” is not just a word. Section 202 of the Indian Contract Act, 1872 provides that where the agent has an interest in the property that is the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of that interest. A developer’s POA backed by his share of the constructed area is the classic case. A revocation letter, on its own, does not end it.
- Revoke it properly anyway. Execute a Deed of Revocation of Power of Attorney, register it at the same Sub-Registrar’s office, serve it on the developer, publish a public notice in one English and one Marathi newspaper, and give written intimation to MCGM Building Proposals, MahaRERA, the Collector’s office and any financier named in the search. Section 206 requires reasonable notice of revocation; Section 204 means you cannot undo acts lawfully already done under the authority; Section 205 makes a principal who revokes without sufficient cause liable to compensate. So do it with cause, in writing, and on the record.
- Ask the forum to declare it spent. In the same arbitration or suit in which you seek a declaration that the DA stands terminated, ask for a declaration that the authority under the POA stands revoked and spent. That declaration — not your letter — is what a bank, a buyer and the next developer will actually accept.
- Fix it in the next agreement. Section 202 begins with the words “in the absence of an express contract”. So supply the express contract: a clause stating that the POA is granted solely to perform the DA, is not coupled with interest, and stands automatically revoked on termination. That is clause 6 of the checklist above, and it is the cheapest insurance in the whole document.
Source: Indian Contract Act 1872, ss. 201–206; Registration Act 1908, ss. 17, 23, 25, 49.
Deadlines to diarise
Put these in the society’s diary and on one sheet pinned inside the minute book. Most terminations fail not on the law but on a date that quietly passed.
| Trigger | What you must do | Deadline | Provision |
|---|---|---|---|
| The completion date in the DA passes | Open a dated default register; write to the developer that week | Day 0 — every later period runs from here | Your DA’s completion clause |
| You decide to replace the developer | Serve written notice calling on him to perform, stating you will otherwise complete through another agency at his cost | Not less than 30 days | Specific Relief Act 1963, s. 20(2); recovery of the cost under s. 20(3) |
| The cure period expires | Pass the termination resolution at the SGBM and serve the termination notice | Weeks, not months — continued silence reads as waiver | Section 79A directive dated 4 July 2019 |
| The bank guarantee | Demand extension in writing, or invoke it. A guarantee is dead the day after the expiry printed on it | Diarise the expiry the day you receive the guarantee; act 30 days before | Section 79A directive dated 4 July 2019 (20% of project value) |
| A structural defect notified in a RERA project | Promoter must rectify | 30 days, within 5 years of handover | RERA 2016, s. 14(3) |
| MahaRERA decides against you | Appeal to the Maharashtra Real Estate Appellate Tribunal | 60 days from receiving the order | RERA 2016, s. 44(2) |
| The Tribunal decides against you | Appeal to the Bombay High Court | 60 days from communication of the decision | RERA 2016, s. 58 |
| The Deed of Cancellation is executed | Present it for registration | 4 months; up to 4 more months on a fine of up to ten times the fee | Registration Act 1908, ss. 23 and 25 |
| You intend to claim damages for the breach | Serve the arbitration notice, or file the plaint | 3 years from the date the contract is broken | Limitation Act 1963, Article 55 |
| You intend to enforce the agreement instead | Suit for specific performance | 3 years from the date fixed for performance | Limitation Act 1963, Article 54 |
| You intend to sue the society or an office-bearer in a civil court | Deliver written notice to the Registrar first | 2 months, which must actually expire before filing | MCS Act 1960, s. 164 |
| Members intend to file a consumer complaint | File before the commission fixed by the value of the consideration | 2 years from the cause of action | Consumer Protection Act 2019, s. 69 |
| You intend to file in the Co-operative Court | Dispute application under s. 91 | Limitation is fixed by s. 92 and varies with the kind of dispute — fix your date on the day the grievance arises | MCS Act 1960, s. 92 |
Source: Specific Relief Act 1963, ss. 14, 20, 38, 41; Limitation Act 1963, Articles 54 and 55; Registration Act 1908, ss. 17, 23, 25, 49; Indian Contract Act 1872, ss. 73, 201–206; RERA 2016, ss. 4, 7, 8, 14, 18, 31, 40, 44, 58; MCS Act 1960, ss. 78, 79A, 83, 88, 91, 92, 164; Consumer Protection Act 2019, s. 69; BNS 2023, ss. 316, 318; BNSS 2023, ss. 173, 175; Section 79A directive dated 4 July 2019.
What the society must minute, and when
Six resolutions carry a termination. Each one has a job, and each is a document you will later have to produce in certified copy. Number them, date them, and have every page of the minute book signed.
- Committee resolution — open the default register. Records the defaults known on that date, appoints two members to compile the evidence listed in the table above, and authorises a legal opinion. Pass it the week the completion date passes.
- Committee resolution — authorise the notice. Names the advocate, approves the draft breach notice, and names the office-bearer who will sign and serve it. Annex a copy of this resolution to the notice itself.
- SGBM resolution — terminate. The agenda item must use the word “termination” and identify the DA by its date and registration number. Minute the quorum figure, the number of members voting for and against, that the Registrar’s authorised officer was present, and that the meeting was video-recorded. Preserve the video.
- Resolution — invoke the bank guarantee. Authorises the written demand to the issuing branch and directs that the proceeds go into a separate designated account, not the general fund.
- Resolution — authorise the filing. Names the forum, the relief sought and the person authorised to sign, verify and file. The Co-operative Court and MahaRERA both expect a certified true copy of this resolution with the papers.
- Resolution — cancellation and the new developer. Approves execution of the Deed of Cancellation and the Deed of Revocation of POA, and records that no new developer will be appointed until the cancellation is registered and a fresh 79A tender process is completed.
File a certified true copy of the SGBM resolution with the Deputy or District Deputy Registrar for your ward. It costs nothing and it is the cheapest proof you will ever produce that the general body, not a handful of office-bearers, took the decision.
What this means for your society
Do these seven things, in this order, and put a date against each one at your next committee meeting. One: take the search from the Sub-Registrar and the Index-II of your DA, so you know whether the land is mortgaged or flats are sold. Two: read your DA against the nine-clause table above and write down the clause numbers you will cite. Three: compile the evidence column, document by document. Four: serve the breach notice with the Section 20(2) sentence and not less than thirty clear days. Five: pass the termination resolution at an SGBM with a two-thirds quorum and 51% of total membership, with the Registrar’s authorised officer present and the camera running. Six: serve the termination notice, invoke the bank guarantee before its expiry, and file in the forum the decision table points to. Seven: do not stop until the Deed of Cancellation and the Deed of Revocation are registered — that is the finish line, not the notice.
Then, and only then, start again. Use our offer comparison tool to weigh new developers side by side and our FSI calculator to sanity-check what the plot can actually deliver, so the replacement is chosen on numbers rather than on relief.
Because termination disputes turn on the precise facts and the exact wording of your agreement, treat this page as background rather than a substitute for advice. Consult a lawyer experienced in Maharashtra redevelopment before you act, and if you would like a plain-language second opinion, you can register your society for a no-obligation review by our team.
Related guides & tools
Common questions
What must our breach notice say before we can terminate the developer?
Nine things: the registration particulars of the development agreement (date, serial number and Sub-Registrar's office); each default separately numbered with its date and the clause breached; the arrears computed to a stated date; the time allowed to cure, taken from the agreement's cure clause; an express statement that if the default is not cured the society will terminate, invoke the bank guarantee and get the balance work completed through another agency at the developer's cost; a reservation of the right to damages and to proceed under RERA; the signature of a person authorised by a dated committee resolution, with the resolution annexed; service at the address for service in the agreement by registered post acknowledgement due, email and courier; and preservation of the postal receipt and acknowledgement. Because of the fifth item, give not less than thirty days — that is the minimum notice Section 20(2) of the Specific Relief Act, 1963 requires before you complete through another agency and recover the cost.
How do we cancel a registered development agreement in Mumbai?
A letter does not undo it. A registered development agreement is undone in only two ways: a Deed of Cancellation executed by both the society and the developer, stamped and registered at the same Sub-Registrar's office, or an arbitral award or court decree declaring the agreement terminated, which the society then lodges with that office. A cancellation signed by the society alone does not remove the developer's registered rights from the record. Section 17(1)(b) of the Registration Act, 1908 makes an instrument extinguishing rights in immovable property compulsorily registrable, Section 23 requires it to be presented within four months of execution, and Section 25 allows a delay of up to a further four months on a fine of up to ten times the registration fee.
The developer holds an irrevocable power of attorney. Can we revoke it?
Not by a letter alone. Section 202 of the Indian Contract Act, 1872 says that where the agent has an interest in the property that is the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of that interest — which is exactly what a developer's power of attorney backed by his share of the project is. Section 204 prevents revocation as regards acts already lawfully done, Section 206 requires reasonable notice of revocation, and Section 205 makes a principal who revokes without sufficient cause liable to compensate. So do both: execute and register a Deed of Revocation at the same Sub-Registrar's office, serve it, publish a public notice, and intimate MCGM Building Proposals, MahaRERA and any financier; and ask the arbitrator or court in the same proceeding to declare that the agreement stands terminated and the authority is spent. Because Section 202 begins with the words “in the absence of an express contract”, your next agreement should expressly state that the power of attorney is granted only to perform the agreement and stands revoked on its termination.
Can a terminated builder force our society to continue the project?
The answer lies in the Specific Relief Act, 1963. Section 14 lists contracts that cannot be specifically enforced, and three of its clauses commonly fit a development agreement: a contract whose performance involves a continuous duty the court cannot supervise, a contract so dependent on the personal qualifications of the parties that the court cannot enforce its material terms, and a contract which is in its nature determinable. Section 41(e) then bars an injunction to prevent the breach of a contract whose performance would not be specifically enforced. On that footing a wrongly terminated developer's normal remedy is compensation under Section 73 of the Indian Contract Act, 1872. Whether those clauses apply turns on the wording of your agreement, so put it to your lawyer rather than assuming it. If the society terminates without a real breach or without process, the damages claim becomes easier and the developer may obtain an injunction restraining handover to anyone else.
What can MahaRERA do if our registered project's builder delays?
Section 18 of RERA lets affected allottees either withdraw and claim a refund with interest, or stay and claim interest for every month of delay until possession. The complaint is filed with the Authority under Section 31. Section 7 lets MahaRERA revoke the promoter's registration for default, and Section 8 lets the Authority, after consulting the appropriate Government, permit the remaining development to be carried out by the association of allottees. A money order of the Authority is recoverable as arrears of land revenue under Section 40. Diversion of project money is separately actionable: Section 4(2)(l)(D) requires seventy per cent of the amounts realised from allottees to sit in a separate account, withdrawn only on the certificate of an engineer, an architect and a chartered accountant in proportion to completion. An appeal against a MahaRERA order goes to the Maharashtra Real Estate Appellate Tribunal within sixty days under Section 44(2).
Is the Co-operative Court under Section 91 the right forum to fight the termination?
Usually not for the contract fight. Section 91(1) of the MCS Act, 1960 requires both parties to fall within a listed set — the society, its committee or a past committee, a past or present officer, agent or servant, a member or past member or a person claiming through one, a surety, or another society. A developer appointed under a development agreement is a contracting third party and is not on that list. Section 91 is the right forum for the internal fight: whether the termination resolution was validly passed, whether the general body meeting was properly held, whether the committee acted beyond its authority. The contract fight goes to arbitration if the agreement has an arbitration clause, otherwise to the City Civil Court or the Bombay High Court by value, or to MahaRERA or a consumer commission depending on the relief. Before suing the society or an office-bearer in a civil court, Section 164 requires two months' written notice to the Registrar.
Do we need a general body resolution to terminate a developer, and with what majority?
Yes, and use the same discipline the Section 79A directive dated 4 July 2019 sets for appointing a developer. If the committee will not convene the meeting, not less than one-fifth (20%) of the total members sign a written requisition. The Special General Body Meeting needs a quorum of two-thirds of total members. The resolution should carry not less than 51% of total membership strength, not 51% of those who attend, so absentees count against it. Have the Registrar's authorised officer present and video-record the meeting, exactly as for the selection meeting. A termination pushed through by a few office-bearers is the weakest version of the decision, and the developer will attack it first.
Can the society use the developer's bank guarantee if he defaults, and by when?
Yes, if it was actually taken and is still alive. The Section 79A directive dated 4 July 2019 requires a bank guarantee equal to 20% of the project value — on a project valued at Rs 55 crore that is Rs 11 crore. A bank guarantee is dead the day after the expiry printed on it, so diarise that date the day you receive the guarantee and demand a written extension well before it. Check three things in the wording before you rely on it: that it is unconditional and irrevocable, that it is payable on the society's first written demand without proof of loss, and that it runs until the Occupancy Certificate rather than to a fixed calendar date. Invoke it by a written demand from the society signed by the office-bearers authorised by a committee resolution, addressed to the issuing branch.
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