A Guide for Managing Committees and Members on Section 79A Guidelines
Pune is witnessing a massive wave of redevelopment. Old buildings are being demolished to make way for high-rises. For a Cooperative Housing Society, this is a golden opportunity to get new amenities, larger apartments, and a substantial corpus fund.
However, it is also a high-risk commercial transaction. If your Development Agreement is weak, or if you skip procedural steps, the Society risks getting stuck with an incomplete building and no rent.
Here is your legal roadmap to navigating redevelopment safely under Maharashtra’s Section 79A Guidelines.
1. The Mandatory Nature of Section 79A
The Maharashtra Government issued specific guidelines under Section 79A of the MCS Act. These are designed to stop corruption and ensure transparency.
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- Not Optional: These guidelines are mandatory. You cannot bypass them.
- The Consequence: If a Society appoints a builder without following the tender process or transparency rules outlined in 79A, the Registrar can disqualify the appointment. The entire project can face legal stays.
2. The Tender Process: Why Transparency Matters
You should never hand over a multi-crore project to the first builder who walks in. You need a competitive process.
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- Project Management Consultant (PMC): The Society must first appoint a PMC. The PMC’s job is to prepare a feasibility report and float a public tender.
- Competitive Bidding: You need at least three competitive bids. Do not just look at the highest corpus offered. Compare them on:
- Technical strength (past projects).
- Financial stability (debt levels).
- Offer value (Rent + Corpus + Extra Area).
3. The Development Agreement (DA): Your Safety Net
This is the most critical document. Once signed, it dictates your fate for the next 3-4 years. A strong DA must include:
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- Performance Bank Guarantee: The builder must provide a Bank Guarantee (usually 20% of the construction cost). If they delay or abandon the site, the Society can encash this to finish the work.
- Termination Clause: You need a clear exit route. If the builder stops work for 3 months without a valid reason, the Society must have the legal right to terminate the contract and appoint a new developer.
- Specific Timelines: Avoid vague phrases like “36 months from approvals.” Use specific dates and penalty clauses for every single day of delay.
4. Managing Dissenting Members
In almost every Society, there is a small group that opposes redevelopment.
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- The 51% Rule: In Maharashtra, you do not need 100% consent. If 51% of the members (present and voting in the Special General Meeting) approve the proposal, the decision binds the minority.
- Eviction Proceedings: If dissenting members refuse to vacate their flats, the Society can approach the Competent Authority to initiate summary eviction proceedings against them to ensure the project isn’t stalled.
5. Due Diligence Checklist
Before you sign on the dotted line, verify the builder:
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- Financial Health: Check their balance sheet. Are they over-leveraged?
- Site Visits: Visit their completed projects. Talk to the residents there. Did they get possession on time? Did they receive the Occupation Certificate (OC)?