The Development Control and Promotion Regulations for Greater Mumbai, 2034 (“DCPR“), have been sanctioned by the Urban Development Department of the Government of Maharashtra under the provisions of Section 31(1) of the Maharashtra Regional and Town Planning Act, 1966.
Regulation 33(5) of the DCPR deals with development/redevelopment of housing schemes of Maharashtra Housing & Area Development Authority (“MHADA”). Under Regulation 33(5) MHADA grants a higher Floor Space Index (FSI) for redevelopment of such lands to mainly provide housing to the economically weaker sections and lower and middle-income group category.
As per the provisions of Regulation 33(5) of the DCPR, a no objection certificate from MHADA is required for undertaking redevelopment of MHADA owned lands. The Society and the Developer execute a development agreement recording the terms and conditions for redeveloping the land. Since MHADA was not party to such development agreements, in case of breach by the developer of any terms of the development agreement such as non-payment of rent, etc. MHADA could not intervene.
Requirement of Tripartite Agreement
Hence, the Government of Maharashtra, Housing Department vide its Circular dated 16th March, 2021 mandated execution of a tripartite agreement between the housing society, the developer and MHADA in case of redevelopment under Regulation 33(5) of DCPR so that MHADA can also intervene in case of any breach by the developer of the terms and conditions of the development agreement.
However, the process of execution of the tripartite agreement caused considerable delay in the project and also led to many projects being stalled.
Cancellation of the Circular requiring execution of Tripartite Agreement
In order to speed up the redevelopment process, the Government of Maharashtra, Housing Department by its Circular dated 15th September, 2022, cancelled the Circular dated 16th March, 2021 which mandated the execution of the tripartite agreement between the housing society, the developer and MHADA and accordingly there is no requirement of execution of the tripartite agreement in case of redevelopment under Regulation 33(5) of DCPR.
Generally, MHADA issues the a no objection certificate (“NOC“) for redevelopment in the name of the Society and accordingly MHADA recognizes the society. Further, there is a condition in such NOC issued by MHADA, that in case of breach of any of the terms of the NOC, the NOC issued by MHADA shall stand cancelled.
In light of the aforesaid, the Society may insist that the development agreement between the society and developer should contain a clause that in the event the NOC issued by MHADA is cancelled then the development agreement shall also stand terminated. The developer may inturn shall have to insert appropriate clauses in the development agreement to safeguard its interest, the interest of the lender as also the interest of the flat purchasers in the aforesaid circumstances, considering the provisions of the Real Estate (Regulation and Development) Act, 2016.
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