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Another blow under the belt to Developers of South Mumbai is that the Developers are required to handover flats to MHADA On redevelopment of cessed buildings under DCR 33(7). The Bombay High Court has upheld a law requiring those Developers who are undertaking redevelopment of old buildings in the island city required to hand over a few flats to MHADA known as the Developers surplus housing stock. The surplus area means additional premium FSI available to them to construct saleable flats.

A Division Bench of Chief Justice Mohit Shah and Justice Girish Kulkarni dismissed petitions of Developers challenging the constitutional validity of certain provisions of the Development Control Regulations i.e. DCR 33(7).

The judges opined that having taken advantage of higher FSI, the Developers cannot be permitted to approbate and reprobate by trying to escape from their obligations voluntarily undertaken by them to surrender part of the surplus area.

The Developers on the other hand, contended that MHADA was paying them a pittance of Rs 235/- per square foot for the flats under handover as against the construction cost of over Rs. 2,500/- per square foot incurred for the saleable flats.

The Court pointed that the additional construction rights that the Developers had received under DCR 33(7) was FSI of 3 as against the basic FSI of 1.

The judges further said that they would have appreciated if the Developers had volunteered to handover flats to MHADA as part of the surplus built-up area in direct proportion to the FSI that they get under DCR 33(7). Unfortunately, the Developers did not derive any delight of giving even after availing FSI of 3 from 2011 onwards as is apparent from filing of the petitions.

The Developers strongly expressed their resentment to the Court that there were 292 plots having old dilapidated buildings in the city which cannot be redeveloped because of road widening or the requirement to keep minimum building margins. 

There are over 19,000 cessed privately-owned buildings in the city constructed before the 1940s. DCR 33 (7) is the rule that is applied for the redevelopment of these buildings under which as against the FSI of 1, the Developers can utilize an FSI of 3. In return, they have to hand over a few flats to MHADA for a specified price. However, the policy of MHADA is not clear that how many flats are to be handed over to them. The Developers questioned that why they should handover flats to MHADA and that it amounted to acquisition of immovable property from the Developers.

The HC rejected the contentions of the Developers pointing to the benefits that they derived from rule under DCR 33(7).

An interesting case is worth mention here that in the year 2013, State Housing Board seized 114 apartments in two plush high-rises in Byculla after the Developer failed to hand over a portion of the surplus area to the State Housing Board on the redevelopment of a cessed building despite their repeated notices.

The apartments located in a 22-storey building with a total area of about 4,600 square metres, a residential housing colony near Byculla police station, were then allotted as permanent accommodation to those who had been living in the transit camps of MHADA for years after being displaced from dilapidated cessed buildings. In terms of the total number of flats as well as their value, this was perhaps the largest housing stock that MHADA could ever manage to recover from a single Developer at least over the past 13 years. 

The estimated market value of these flats worked out was approximately Rs 300 crores constructed around five years ago. The carpet area of these flats range from 225 square feet to 560 square feet and the building is well-equipped with elements such as granite flooring and a modular kitchen. It is learnt that the Developer was to hand over these flats to MHADA originally in 2008. However, the Developer did not comply or pay heed to the notices.

The Developer’s plea was that the company never intended not to hand over the required surplus housing stock to MHADA as per norms and that as per the earlier policy,  they could hand over the housing stock in some other developed area within the same Ward. However, the MHADA later scrapped this policy making it mandatory for the Developers to hand over flats in the same project. Later again the MHADA reverted to the old policy and hence, there was some confusion which led to the delay.

MHADA’s Repair Board is responsible for the maintenance of cessed buildings under DCR 33(7) constructed before 1970 that have been paying repair cess to MHADA for their upkeep. Developers are required to seek consent from the this Housing Board before taking redevelopment of such buildings and are also supposed to surrender a pre-calculated amount out of the total surplus housing stock generated on redevelopment.

During the year 2013, since the large number of Developers defaulted on handing over of this surplus housing stock to MHADA who sent notices to 33 Developers which together owed the Housing Board a total surplus area of about 10 lakhs square feet. Now that the Bombay High Court has upheld a law requiring those Developers who are undertaking redevelopment of old buildings in the island city shall mandatorily hand over the calculated number of flats to MHADA. The Developers today are suffering from cash crunch, mounting of unsold stock, frequent changes in Govt. policies, TDR rates sky rocketing, rising of labour and material cost etc. Kehte hai ki “Kangali main aata gilla.”