SRA Circular On Advance Transit Rent Applicable To Ongoing Projects Also

Introduction

In a project being developed under a slum rehabilitation scheme, the eligible slum dwellers are to be paid transit rent, till the date of their new rehab tenement is handed over possession to them by the developer. However, there have been several instances in the past where the slum dwellers have been living in transit accommodation for years and the developers have stopped paying the rent for the same.

Over the years, the complaints regarding non-payment of rent have drastically increased.

Background

Keeping in view the increasing instances of defaults by developers, a Public Interest Litigation being PIL No. 109 of 2019 by Vijendra Kumar Rai against the State of Maharashtra1 (“PIL“) was filed before the Hon’ble Bombay High Court for non-payment of transit rent to eligible slum dwellers. The PIL highlighted that the substantial dues had not been paid to the eligible slum dwellers by the respective developers.

The Hon’ble Bombay High Court vide its Order dated 19th July 2023 in the PIL took into consideration the difficulties faced by the slum dwellers due to non-payment of transit rent and considered it as a serious concern. The Hon’ble Court was of the opinion that if each slum dweller would need to resort to court process for non-payment of dues, it would give rise to substantial litigations. In view thereof, the Hon’ble Court issued various directions inter alia directing the Slum Rehabilitation Authority (“SRA“) to take proactive measures to ascertain whether transit rent is being paid to the slum dwellers.

Directions by the SRA

In pursuance of this order of the Hon’ble Bombay High Court, the SRA issued a Circular (“SRA Circular“) on 01st August 2023 with various directions as under:

  1. The developer shall deposit advance rent of two years and a post-dated cheque for the remaining period of completion at the stage of Annexure III and the Letter of Intent in favor of the Developer shall be issued only pursuant to depositing the advance rent.
  2. No new proposals of defaulting developer/firms and its partners/directors to be accepted unless all dues are cleared in respect of payment of transit rent.
  3. The defaulting developer/firm and its partners/directors shall not be entitled to be appointed as developers irrespective of the consent of society, in the existing SRA proposals wherein the previous developers are terminated.
  4. The developers of the Slum Rehabilitation Scheme who have failed to handover the PAP/PTC tenements to the SRA shall not be entitled to submit any new proposal.

The directions set out in the SRA Circular were to be adhered to strictly.

Does this SRA Circular apply to ongoing projects?

Prima facie, the SRA Circular seemed to apply only to new projects as it directed deposit of advance rent at the stage of Annexure III and also stipulated such deposit as a pre-requisite for issuing the Letter of Intent. There was no mention of approvals post the LOI stage. This was a convenient interpretation to take for developers of ongoing projects, but was it really in line with the intent of the SRA Circular? Existing delays in payments of transit rent, which the Bombay High Court was dealing with, were obviously made in ongoing projects.

An opportunity to address this gap came up before the Bombay High Court in the PIL.

By its Order dated 30th August 2023, the Bombay High Court recorded that the SRA has, by its affidavit filed in the PIL, admitted that the SRA Circular is applicable to ongoing projects as well. The Bombay High Court also noted that despite this, the SRA was not taking enough steps to implement the SRA Circular in letter and spirit.

To this, the SRA submitted to the Court that even for issuance of permissions in ongoing projects, the condition of deposit of advance rent is being strictly adhered to.

The Bombay High Court has therefore issued directions that no permissions shall be granted to developers unless the conditions of the SRA Circular are fulfilled. Any breaches would be viewed seriously by the Court.

In view of this, and the submission of the SRA in Court, developers would need to pre-deposit rent for 2 years and PDCs for rent for 1 year, before expecting any approvals in all SRA projects, ongoing or otherwise.

Footnote

1. Public Interest Litigation 109 of 2019

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.

Media Coverage

About Dhaval Vussonji

Ask a Question

© 2023. Dhaval Vussonji & Associates.

Expertise

DVA on LinkedIn

Stay in touch and learn with us. 

Ask a question

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Legal Disclaimer

User Acknowledgement

By proceeding further and clicking on the “AGREE” button herein below, I acknowledge that I of my own accord wish to know more about Dhaval Vussonji & Associates for my own information and use. I further acknowledge that there has been no solicitation, invitation or inducement of any sort whatsoever from Dhaval Vussonji & Associates or any of its members to create an Attorney-Client relationship through this knowledgesite. I further acknowledge having read and understood the Disclaimer below.

Disclaimer

This knowledgesite (www.dvassociates.co.in) is a resource for informational purposes only and is intended, but not promised or guaranteed, to be correct, complete, and up-to-date. Dhaval Vussonji & Associates (DVA) does not warrant that the information contained on this knowledgesite is accurate or complete, and hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause.

DVA further assumes no liability for the interpretation and/or use of the information contained on this knowledgesite, nor does it offer a warranty of any kind, either expressed or implied. The owner of this knowledgesite does not intend links from this site to other internet knowledgesites to be referrals to, endorsements of, or affiliations with the linked entities. DVA is not responsible for, and makes no representations or warranties about, the contents of Web sites to which links may be provided from this Web site.

This knowledgesite is not intended to be a source of advertising or solicitation and the contents of the knowledgesite should not be construed as legal advice. The reader should not consider this information to be an invitation for a lawyer-client relationship and should not rely on information provided herein and should always seek the advice of competent counsel licensed to practice in the relevant country/state. Transmission, receipt or use of this knowledgesite does not constitute or create a lawyer-client relationship. No recipients of content from this knowledgesite should act, or refrain from acting, based upon any or all of the contents of this site.

Furthermore, the owner of this knowledgesite does not wish to represent anyone desiring representation based solely upon viewing this knowledgesite or in a country/state where this knowledgesite fails to comply with all laws and ethical rules of that state. Finally, the reader is warned that the use of Internet e-mail for confidential or sensitive information is susceptible to risks of lack of confidentiality associated with sending email over the Internet.

Accept