If Not Here, Then Where? The Legal Quandary for Registration of Resident Welfare Associations In Telangana

A fundamental aspect of any legal system is determining which legal framework governs a particular institution. The issue becomes difficult when Owners’ Associations or Resident Welfare Associations (RWAs) themselves are unclear about the law under which they should function especially in Telangana. 

A recent judgement of the Telangana High Court (HC) in Sarojini v. State of Telangana[1] has reopened an important debate about the legal status of Owners’ Associations and Resident Welfare Associations (RWAs) in the State. The Court held that an Owners’ Association formed solely for the maintenance and management of a private apartment complex does not serve a “public purpose” within the meaning of Section 3(1) of the Telangana Societies Registration Act, 2001.[2] Consequently, such associations cannot ordinarily be registered under the Act. The Court clarified that such associations may seek registration under another legal framework but did not specify which framework should be adopted.

The uncertainty surrounding the registration of Owners’ Associations did not originate with the Sarojini judgement alone. Earlier judicial decisions had already exposed similar conceptual difficulties regarding the legal character of such associations. In Nuggets Estates Pvt. Ltd. v. State of Andhra Pradesh,[3] the Andhra Pradesh High Court held that an association formed exclusively for the maintenance and management of a private apartment complex does not satisfy the requirement of “public purpose” under the Societies Registration Act because its activities remain confined to a closed group of residents. Conversely, in Kalakuteers v. State of Telangana,[4] the Telangana High Court recognised that Owners’ Associations and RWAs could validly seek registration under the cooperative law framework and that the State could not compel citizens to adopt only one statutory model where multiple legal mechanisms were available.

While the Real Estate (Regulation and Development) Act, 2016 (RERA) contemplates the formation of associations of allottees, it does not provide a comprehensive framework governing their legal status, membership, voting rights, internal governance, dispute resolution, or financial accountability in Telangana. In fact, the model Agreement for Sale prescribed under the Telangana RERA Rules requires Owners’ Associations or RWAs to be registered under the Societies Registration Act, 2001—a requirement that now stands in direct tension with the Sarojini judgment.

But while the Sarojini judgment answered where Owners’ Associations and RWAs cannot register, it left unresolved, particularly for those already registered under the Societies Registration Act, 2001, the far more important question: under which law should they register, and what framework will govern their functioning?

The Supreme Court itself has recognised, in State of Bihar v. Kameshwar Singh,[6] that the meaning of “public purpose” is not rigid and must evolve with changing societal needs. Viewed in this context, a narrow distinction between “private apartment management” and “public purpose” may not adequately account for the realities of modern urban governance.

Owners’ Associations and RWAs are intrinsically linked to property ownership; their powers operate upon rights arising from ownership itself. This understanding is reflected in apartment ownership laws across India. For example, the Telangana Apartments (Promotion of Construction and Ownership) Act, 1987[7] recognises the concept of undivided interest in common facilities and envisages a framework where apartment owners collectively administer shared property. Similar legislation exists in several other states.[8]

One alternative presently followed in Telangana is registration under the Telangana Co-operative Societies Act or the Telangana Mutually Aided Co-operative Societies Act (TMACS Act) (collectively, the Co-operative Statutes). At first glance, this appears reasonable because these statutes provide an established framework for democratic management, elections, financial accountability, and dispute resolution. However, upon closer examination, they reveal a serious legal inconsistency that affects the rights of property owners.

One of the most significant issues arising from registration under the Co-operative Statutes is the restriction on dual membership. The proviso to Section 19(1)(a) of the Telangana Co-operative Societies Act, 1964 provides that an applicant is not eligible for membership if they are “already a member of a Cooperative Society registered under this Act, or any other Coop. Act providing the same or similar services.” An identical restriction appears in Section 19(1) of the TMACS Act, which provides that a person may be admitted as a member “subject, however, to the condition…that the Applicant is not already a member of a Co-operative Society registered under this Act, or the Telangana Co-operative Societies Act, 1964, providing the same or similar services.” These restrictions were designed for traditional co-operative institutions—such as agricultural, credit, or consumer co-operatives—where membership is voluntary and based on a common economic objective.

To illustrate: consider a person—say, Ms. Preethi—who owns apartments in two separate residential complexes, each governed by its own Owners’ Association registered as a co-operative society. Because both associations pursue similar objects, i.e., maintenance and management of residential property, Ms. Preethi may legally be permitted to hold membership in only one of them. This creates an inequitable situation: Ms. Preethi bears the full obligations and responsibilities of ownership in both properties, yet may be denied membership and participation rights in one association solely because of the statutory restriction on dual membership in co-operative societies with similar objects.

Membership in both associations would potentially constitute a violation of the Co-operative Statutes—an absurd outcome for a person who has lawfully purchased two properties. This creates a direct inconsistency with general property law. The Transfer of Property Act, 1882 places no restriction on a person purchasing or owning multiple residential properties. Article 300A of the Constitution of India protects the right to property, providing that no person shall be deprived of property save by authority of law. While Article 300A principally operates against State action, the dual-membership restriction is itself a statutory limitation—one that indirectly curtails a significant incident of ownership, namely the right to participate in the administration and management of one’s own property.

The result is a legislative gap. Owners’ Associations and RWAs are neither traditional societies nor conventional co-operative societies, and courts across jurisdictions have treated them as bodies created for collective administration of property rather than mere social organisations.[9] Without a dedicated legal framework, both associations and individual owners remain in an uncertain legal position.

The solution does not lie in stretching existing laws beyond their original purpose. Instead, there is a compelling need for dedicated legislation that recognises the unique nature of Owners’ Associations and RWAs. Such a framework should address, at minimum: automatic membership arising from ownership; guaranteed participation rights for every owner irrespective of the number of properties owned; voting rights; governance and election procedures; powers and limitations of executive committees; financial transparency and accountability; dispute resolution mechanisms; management of common areas, amenities, and facilities; and the legal status and personality of the association itself.

A legislative model already exists. Several states now provide for registration of apartment owners’ associations directly under dedicated apartment ownership statutes, bypassing the societies registration and cooperative law frameworks entirely. The Odisha Apartment (Ownership and Management) Act, 2023 and the Tamil Nadu Apartment Ownership Act, 2022 are both in force and provide for registration with a designated competent authority, mandating a single association per project with built-in dispute resolution and financial accountability. West Bengal has operated a similar framework under its Apartment Ownership Act, 1972 for over five decades. Most recently, the Karnataka Apartment (Ownership and Management) Bill, 2025, passed by both Houses of the Karnataka Legislature in August 2026 and awaiting the Governor’s assent, goes further by expressly prohibiting registration of apartment owners’ associations under any other law. These precedents offer a concrete template that Telangana could adapt to resolve the very quandary the Sarojini judgment has exposed.

The Sarojini judgment answered one question: Owners’ Associations and RWAs ordinarily cannot register under the Telangana Societies Registration Act, 2001 because they do not serve a “public purpose” in the statutory sense. But it left them in a quandary, particularly those already registered, and left unresolved a far more important question that every Owners’ Association and RWA continues to face: if not here, then where?

 

The views expressed are for general informational purposes and do not constitute legal advice. Readers should consult qualified legal counsel for advice specific to their circumstances.

 

References:

[1] G. Sarojini v. State of Telangana (WP. 3432/ 2021) (Telangana HC 2025).

[2] Telangana Societies Registration Act 2001, s 3(1).

[3] Nuggets Estates Pvt. Ltd. v. State of Andhra Pradesh (2013 SCC OnLine AP 74)

[4] Kalakuteers v. State of Telangana (W.P. No. 25713 of 2019)

[5] Real Estate (Regulation and Development) Act 2016, s 11(4)(e).

[6] State of Bihar v Kameshwar Singh AIR 1952 SC 252.

[7] Telangana Apartments (Promotion of Construction and Ownership) Act 1987. S. 9.

[8] Maharashtra Apartment Ownership Act 1970; Karnataka Apartment Ownership Act 1972; Delhi Apartment Ownership Act 1986.

About the Author:

Preethi is a Senior Associate with Fox Mandal, Hyderabad. She brings in more than 13 years of professional experience and practices primarily in the area of real estate and construction law including transactions pertaining to acquisition, disposition, leasing and financing of residential, commercial and mixed-use properties. 

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If not under the Societies Act, 2001, then under which law/framework should Owners’ Association or RWA’s register themselves and which law/framework will govern their functioning?

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Right to Housing Vs. Commercialisation of Real Estate in India

India’s housing landscape reveals a stark contradiction: families in dense settlements such as Dharavi often live in cramped, insecure spaces, while luxury apartments in nearby neighbourhoods are priced in crores and, in some cases, remain underoccupied as investment assets. This contrast is not an anomaly. It captures the central tension of India’s housing crisis: the collision between housing as a basic condition for dignity and real estate as a profit-maximising commodity.

The Constitutional Promise:

Although the Indian Constitution does not expressly recognise housing as a Fundamental Right, the Supreme Court has read aspects of shelter and livelihood into Article 21, which protects the Right to Life and Personal Liberty. In Olga Tellis v. Bombay Municipal Corporation (1985), [1] the Court held that the right to livelihood is integral to the right to life because forced eviction without procedural safeguards can destroy the means by which people survive. Later judgments further developed the idea that shelter is part of a dignified life. Internationally, India is also a party to the International Covenant on Economic, Social and Cultural Rights (ICESCR), which recognises adequate housing as part of the right to an adequate standard of living. Yet these commitments remain aspirational. The gap between legal recognition and the ground reality has widened as markets have deepened.

The Scale of Crisis:

The Ministry of Housing and Urban Poverty Alleviation’s Technical Group estimated India’s urban housing shortage at 18.78 million units at the beginning of the 12th Five-Year Plan period, with the overwhelming share concentrated among Economically Weaker Sections (EWS) and Low-Income Groups (LIG).[2] This figure should be used carefully because it is based on 2012 estimates; more recent studies suggest that the shortage may have evolved in both scale and composition. At the same time, Indian cities also show a paradox: housing units may remain vacant or unaffordable while low-income households continue to live in overcrowded, insecure, or informal settlements. The problem, therefore, is not only a shortage of physical units but also a mismatch between what is built, where it is built, and who can afford it.

The demand for affordable housing in India has been significantly shaped by rapid urbanisation and large-scale migration to cities such as Mumbai, Delhi, Bengaluru and Hyderabad in search of educational & employment opportunities. Due to this large-scale migration, MoHUA launched Affordable Rental Housing Complexes (ARHCs) as a sub-scheme of Pradhan Mantri Awas Yojana – Urban (PMAY-U) in July 2020[3] to provide dignified living to urban migrants/poor near their workplace. The Scheme got implemented through two models and as of December 2024, 5,648 government-funded vacant houses had been converted into ARHCs, while 82,273 rental housing units had been sanctioned through public and private sector participation, of which 35,425 units had been completed.

Building on this initiative, the Government has incorporated Affordable Rental Housing as one of the four verticals under PMAY-U 2.0[4], which is a demand driven scheme where states/UTs have been given the authority to approve projects that are identified through a demand survey. The Affordable Rental Housing (ARH) version 2.0 aims to promote the creation of rental housing for Economically Weaker Section (EWS)/Lower Income Group (LIG) beneficiaries, including migrant workers and other poor people who do not want to own a house but require housing for a short-term basis.

Urban land supply is constrained by a combination of physical scarcity, fragmented ownership, restrictive land-use rules, low or unevenly applied Floor Space Index norms, outdated master plans, inadequate public transport connectivity, and slow approval processes. These constraints raise the cost of serviced land and formal housing. In the absence of adequate public rental housing, serviced land supply, and affordable finance, speculative capital can push prices further away from the reach of middle- and low-income households.

Over the years, real estate has moved beyond shelter and become a major investment asset class. Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)[5] allow investors to participate in income-generating real estate and infrastructure assets without directly owning physical property. These instruments can bring transparency, liquidity, and institutional capital into the sector, but they also reinforce the broader shift toward treating land and built space as financial assets.

Since liberalisation in 1991, and particularly after foreign direct investment in construction development was liberalised in the mid-2000s, Indian real estate has become increasingly integrated with domestic and global capital markets. REIT regulations were introduced earlier, but India’s first listed REIT came to market in 2019. To date, REIT activity in India has been concentrated largely in commercial office and retail assets rather than mainstream affordable residential housing. Therefore, the article’s core concern is not that REITs alone have transformed housing affordability, but that the broader financialisation of real estate has shifted market incentives toward investors, higher-value assets, and faster capital returns.

Developers are often incentivised to prioritise premium and luxury projects because these typically offer higher margins, stronger buyer profiles, and better access to finance than affordable housing. As a result, even when overall construction activity rises, the supply that reaches low- and moderate-income households may remain inadequate. For readers, this distinction is important: a housing boom does not automatically translate into housing access.

The Real Estate (Regulation and Development) Act, 2016 (RERA Act), has improved transparency, consumer protection, and accountability in registered projects. However, the RERA Act primarily addresses project-level conduct such as delays, disclosures, and buyer protection rather than the structural causes of unaffordability. Meanwhile, short-term rental platforms, corporate leasing, and investor-owned rental units can add pressure in high-demand neighbourhoods, especially where housing supply is limited. In Bengaluru, for instance, multiple market reports since 2023 have recorded sharp rent increases in technology corridors such as Whitefield, Sarjapur Road, Bellandur, and the Outer Ring Road. These increases are linked to return-to-office trends, limited rental supply, and the premium placed on proximity to employment hubs.

The flagship government response to housing inequality has been the Pradhan Mantri Awas Yojana (PMAY), launched in 2015 with the objective of “Housing for All.” Under PMAY-Urban, the government has used interest subsidies, affordable housing partnerships, in-situ slum redevelopment, and beneficiary-led construction support.[6] PMAY has enabled a large number of sanctioned and completed houses, especially when PMAY-Urban and PMAY-Gramin are considered together. However, the programme has also faced important critiques. Migrant workers, casual labourers, and renters are often difficult to reach through ownership-led models. Many units are located on urban peripheries where transport costs and livelihood distance reduce practical affordability. Completion delays, land availability, and weak integration with jobs, schools, health services, and public transport further limit impact. Most importantly, subsidies alone cannot solve a market structure that makes affordable housing commercially unattractive without public support.

In Karnataka, the Karnataka Real Estate Regulatory Authority has amended the Karnataka Real Estate (Regulation and Development) Rules, 2017, in 2021 and inserted Rule 3(3)(e), providing that no registration fee is payable for Affordable Housing in Partnership (AHP) projects under PMAY-Urban. The amendment aims to reduce compliance costs and encourage participation in affordable housing. However, the more important policy question is whether such exemptions translate into lower end-user prices, better project viability, and increased supply in locations where low-income households actually need housing. Without transparent data on uptake, completion, occupancy, and affordability outcomes, the effectiveness of such exemptions remains difficult to assess.

The right to housing and the commercialisation of real estate need not be irreconcilable. The challenge is to design markets so that they serve public purpose rather than displace it. Several strategies deserve serious consideration: mandatory inclusionary zoning that requires a share of new residential development to be affordable; stronger use of land-value capture and Transferable Development Rights (TDR) with binding accountability; vacancy taxes or higher holding costs for long-term vacant units in high-demand areas; expansion of professionally managed public and social rental housing; and better integration of housing policy with mass transit, employment centres, schools, health services, water, and sanitation. Legal reform is also worth debating. Making the right to adequate housing more explicit and enforceable could strengthen accountability, but it must be paired with realistic fiscal commitments, urban planning reform, and institutional capacity at the state and city levels.

Conclusion

India’s housing question is ultimately a question about the kind of society it intends to build. If housing is treated only as a vehicle for wealth creation, market systems will continue to produce efficient but exclusionary outcomes. If, however, a home is understood as the foundation of dignity, security, health, education, and livelihood, then the role of the state must go beyond subsidising ownership. It must actively shape land, rental, finance, planning, and regulatory systems so that housing supply aligns with social need. The way forward is not to reject private investment but to discipline it through clear public-interest obligations. A more valuable housing policy would measure success not only by units sanctioned or capital deployed but also by whether people can live affordably, safely, and close enough to opportunity.

[1] Olga Tellis v. Bombay Municipal Corporation 1986 AIR 180

[2] Real estate and construction bridging the urban housing shortage in India, https://www.naredco.in/notification/pdfs/Urban-housing-shortage-in-India.pdf

[3] https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2086105&utm_&reg=48&lang=2

[4] https://pmay-urban.gov.in/uploads/guidelines/Operational-Guidelines-of-PMAY-U-2.pdf

[5] https://investor.sebi.gov.in/understanding_reit_invit.html?utm_

[6] Urban PMAY, https://pmay-urban.gov.in/

About the Author:

Hitendra Hiremath is a Senior Associate specializing in real estate, RERA compliance, and litigation. With over nine years of professional experience in real estate, litigation, and RERA-related assignments, he has been involved in complex real estate transactions, including providing title opinions; preparing title reports; dispute resolution; extensive legal drafting; registration of real estate projects; and ensuring compliance with the provisions of the Real Estate (Regulation and Development) Act, 2016, read with the Karnataka Real Estate (Regulation and Development) Rules, 2017.

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The right to housing and the commercialisation of real estate need not be irreconcilable. The challenge is to design markets so that they serve public purpose rather than displace it. Several strategies deserve serious consideration: mandatory inclusionary zoning that requires a share of new residential development to be affordable; stronger use of land-value capture and Transferable Development Rights (TDR) with binding accountability; vacancy taxes or higher holding costs for long-term vacant units in high-demand areas; expansion of professionally managed public and social rental housing; and better integration of housing policy with mass transit, employment centres, schools, health services, water, and sanitation.

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Government’s Directives on Untangling the Process of Land Conversion in Maharashtra

Pursuant to the Maharashtra Land Revenue Code (Second Amendment) Act, 2025 dated December 31, 2025 (“Amendment”), the Revenue and Forest Department has issued a Government Resolution dated February 10, 2026, bearing number NAP-2025/Pra.Kra.177/Jamin-01A (“GR”), directing the Revenue officers, Regional Officers and Citizens to implement the amendments made to the Maharashtra Land Revenue Code, 1966 (“Code”) specifically in relation to the permission for non-agricultural use of agricultural land and requirement of Sanad within the State of Maharashtra.

 

Brief Background:

Under sections 42, 42A, 42B, 42C, 42D, and section 44-A of the Code, provisions were enacted from time to time in the years 1994, 2014, 2017, and 2018 providing that, in certain cases, no permission was required for the use of land for non-agricultural purposes. Under these provisions, landholders were required to obtain a deemed non-agricultural use Sanad (certificate) upon payment of non-agricultural tax in order to put the land to non-agricultural use. It was brought to the notice of the Government that the procedural requirements and the time involved in obtaining such Sanad were similar to those required for obtaining non-agricultural permission itself.

Further, as per the provisions of Maharashtra Regional and Town Planning Act, 1966 (“MRTP Act”) if the Planning Authority had granted development permission or approved building plans on the land, the requirement of separate permission from the Revenue Department for non-agricultural use, as well as the provision for a non-agricultural use Sanad was rendered redundant. Accordingly, it had become a necessity of the time to amend these provisions for the convenience of citizens. To that end, it was necessary to eliminate the dual permission requirement one from the Planning Authority under the MRTP Act and another from the Revenue Department under the Code.

While obtaining non-agricultural permission, landholders within the jurisdiction of Municipal Corporations and Class “A” Municipal Council areas across the State were required to pay a one-time conversion tax to the Government. Additionally, the Revenue Department levied an annual non-agricultural tax on land with non-agricultural use throughout the State. Over and above this, local self-government bodies also levied Property Tax on properties constructed on such lands. Due to such dual taxation, there was a persistent demand for the abolition of non-agricultural tax.

Salient Features of the Amendment:

  1. By virtue of the Amendment the previously incorporated complex sections namely, sections 42, 42A, 42B, 42C, and 42D of the Code relating to the procedure for non-agricultural use permission and Sanad have been repealed and a new simplified section 42 has been substituted in their place.
  2. In connection with the abolition of the conversion tax for non-agricultural use of land and the annual non-agricultural tax levied thereon, the erstwhile section 47, section 47A, and Chapter VII (sections 108 to 120) of the Code have been repealed and a new provision has been substituted under section 47, providing for the levy of a one-time conversion premium based on the current market value of the land as determined pursuant to the current Annual Statement of Rates, calculated on a slab basis according to the area of the land.

Key Directives of the GR issued in accordance with the Amendment:

  1. No requirement of separate non-agricultural use permission: Pursuant to the newly substituted section 42 of the Code, where the concerned Planning Authority permits development or approves building plans on any land for any purpose permissible under the provisions of MRTP, a separate non-agricultural permission from the District Collector under the Code shall not be required.
  2. Application procedure: For the non-agricultural use of land, the concerned landholder may directly apply to the relevant authority designated under section 18 of the MRTP Act. Such application may be submitted online through the Building Permission Management System (BPMS), Auto DCR, or any other computerized system as may be prescribed by the Government from time to time.  Where no online computerized system is in operation, the application may be submitted offline in accordance with the procedure prescribed by the Urban Development Department. Whether the applicant’s land is Class-I or Class-II occupancy land, there shall be no bar on applying for building/development permission.  However, mere grant of construction permission shall not result in any change in the status of Class-II occupancy or leasehold land.
  3. Lands held under restricted tenures: Lands other than those held by Class-I occupants are held under restricted tenure, and such lands are held subject to specific conditions for specified purposes in accordance with the relevant laws, rules, or government orders. Where any change in the purpose of use of such land is sought or construction is proposed thereon, prior to obtaining development/building permission from the Planning Authority under the MRTP Act, the landholder shall, where necessary, obtain the approval of the Government or the concerned competent officer/authority and pay the prescribed nazarana/premium in accordance with the provisions of the relevant laws, rules, or government orders pertaining to such lands. In the event of failure to do so, nothing herein shall preclude the District Collector or the concerned competent authority from initiating action against the said landholder in accordance with the provisions of the relevant laws, rules, or government orders.
  4. Applicable Premium: At the time of granting permission for non-agricultural use of land by the Planning Authority under the provisions of the MRTP Act, a one-time Conversion Premium shall be recovered from the said landholder at the rates specified below, and thereafter, development/building permission shall be granted by the Planning Authority.

Area of Land

Premium Rate (% of Current Market Value)

Up to 1,000 square metres

0.1%

Above 1,000 square metres up to 4,000 square metres

0.25%

Above 4,000 square metres (Above 1 Acre)

0.5%

  1. No requirement of Sanad for availing loan: Since a separate non-agricultural permission shall no longer be required where the concerned Planning Authority has granted development permission/building/layout plan approval for any purpose permissible under the MRTP Act, for the purpose of sanctioning any loan or other facility by any bank/financial institution on such land, a non-agricultural use Sanad (certificate) shall not be required. No bank or financial institution shall insist upon the same. The District Collector shall bring this provision to the notice of all banks and financial institutions within their respective jurisdictions.
  2. Annual N.A. Tax: As per the Amendment, the annual non-agricultural tax levied on properties that have been converted to non-agricultural use shall not be levied. Furthermore, exemption is hereby granted from the recovery of outstanding annual non-agricultural tax accrued up to the date of the Amendment. However, in respect of properties that were converted to non-agricultural use on or before December 31, 2001, in lieu of the annual non-agricultural tax, the concerned property holder shall be required to pay the premium amount (as specified in Paragraph 4 above), within one year from the date of issuance of this GR. Thereafter, the said amount shall be recovered along with penalty and interest. In respect of properties that were converted to non-agricultural use on or after January 1, 2002, in lieu of the annual non-agricultural tax, the concerned property holder shall be required to pay the premium amount (as specified in Paragraph 4 above), on the current market value of the land as determined pursuant to the Annual Statement of Rates for the year in which development/building permission was granted, within one year from the date of issuance of this GR. Thereafter, the said amount shall be recovered along with penalty and interest.

Comparative Analysis:

Particulars

Position Prior to the Amendment

Position After the Amendment

Collector’s Permission

Prior permission of the Collector was mandatorily required under section 42 of the Code for conversion of agricultural land to non-agricultural use.

No permission of the Collector is required, provided the proposed non-agricultural use is permissible under the applicable Development Plan/Regional Plan under the MRTP Act.

Deemed Conversion Provisions

Sections 42A, 42B, 42C, 42D and 44A were the key provisions on permission required from the Collector on change of use of land under Development/Regional Plans, Integrated Township Projects and on bona fide industrial use.

Sections 42A, 42B, 42C, 42D and 44A are omitted and as per amended section 42, no permission of the Collector for change in use of land from agricultural to non-agricultural is required, if such permission is permissible under sanctioned development and regional plans.

Sanad Requirement

Even where prior permission was deemed or granted, issuance of a non-agricultural Sanad by the Collector was required.

The requirement of obtaining a separate Sanad or non-agricultural permission has been dispensed with upon grant of development permission by the Planning Authority.

Non-Agricultural Assessment

Annual non-agricultural assessment leviable under sections 47, 47-A and Chapter VII of the Code.

The system of annual assessment has been abolished and substituted with a one-time premium payable at the stage of conversion.

Regulatory Authorities Involved

Two separate authorities were involved:

(i)             Revenue Department (for conversion permission and Sanad) and;

(ii)           Planning Authority (for development and building approvals).

Single Authority:

Planning Authority exclusively grants development permissions and building plan approvals upon payment of single time premium.

Revenue Records

Changes in revenue records were mutated upon issuance of Sanad by the Collector.

Updated directly upon grant of development permission or building plan approval by the Planning Authority.

The Takeaway:

The Amendment represents a meaningful step forward in simplifying land conversion administration in Maharashtra by eliminating the Collector’s role, doing away with the NA permission, abolishing the layered structure of conversion-related levies, and introducing a one-time premium. The substitution of section 42 vests the planning authority with the power of granting development approvals. Further, through amendment of section 47 replaced non-agricultural assessment with a single one-time premium determined on the basis of plot area and Annual Statement of Rates based market value which helps to remove the cost unpredictability and ease of project planning for landowners and developers.

Contributed by – Arati Sawant, Group Head – Real Estate & Infrastructure, Mumbai & Pune and Sushma Gowda, Associate- Real Estate & Infrastructure, Mumbai.

 

 

We hope you find the above informative and in case of any queries or clarifications kindly feel free to reach out to us at – mumbai@foxmandal.in

* * *

*Disclaimer: This article is for informative purposes only and no part of it shall be construed as legal advice.

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The Amendment represents a meaningful step forward in simplifying land conversion administration in Maharashtra by eliminating the Collector’s role, doing away with the NA permission, abolishing the layered structure of conversion-related levies, and introducing a one-time premium.

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CIRP Reforms: Homebuyers Can Now Get Possession of Flat

The resolutions under the Insolvency and Bankruptcy Code, 2016 (IBC), span across all sectors, from large steel manufacturing companies and real estate projects to small FMCG companies. The sector-agnostic approach of resolution processes under the Code allows distressed entities of all types to gain access to feasible solutions to their financial distress.[1] The IBC is considered the most favoured remedy for the real estate sector, ahead of the two other options, the Consumer Protection Act, 2019, and the Real Estate (Regulation and Development) Act, 2016.[2] However, challenges persist in resolving stalled real estate projects under the Code.

Over the years, efforts in the form of government initiatives, recommendations, amendments and so on have been made to address the issues faced in the insolvency processes of real estate projects. An expert committee constituted in 2023 was tasked with suggesting ways to complete the legacy-stalled real estate projects. The committee’s report highlights that the primary reason for stress in real estate is the lack of financial viability of the projects, resulting in cost overruns, and project and time delays.[3] Its recommendations pertaining to reforms in IBC encompass project-wise corporate insolvency resolution process (CIRP), transfer of ownership or possession to allottees during the resolution process, etc.

The Insolvency and Bankruptcy Board of India (IBBI) has been implementing amendments based on various recommendations. One such amendment was notified on February 3, 2025, involving changes to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. These changes aim to streamline the CIRP, with a particular emphasis on addressing issues related to real estate projects.

New amendment enables handing over possession of flats to homebuyers

Upon the homebuyer’s request, the resolution professional can hand over possession of plots, apartments, buildings, or instruments agreed to be transferred under the real estate project and also facilitate registration while the resolution process is still ongoing. This is as per the newly added provision, Regulation 4E, and is subject to obtaining approval of the committee of creditors with not less than 66% of total votes and the homebuyer performing his part under the agreement.

This amendment will certainly bring relief to distressed homebuyers who would no longer be left in the lurch in case of stalled real estate projects, after having performed all their obligations under the agreement. It is also expected to minimise disputes before the adjudicating authority. However, the financial institutions which have funded the project may have more than 34% voting rights in the committee; in such cases, the mandate of obtaining 66% of total votes will not be met, defeating the intent of the new Regulation. In view of this, our article on IBBI’s November 2023 discussion paper suggested that the voting percentage for passing a resolution for handover could be reduced from 66% to 51%.

In a notable deviation from the draft released in November 2023, the new amendment does not take into account the scenarios where allottees opt to take possession of units on an ‘as is where is’ basis and would get the remaining development or interiors of their home finished from balance funds not paid by them.

Other changes at a glance

  • Facilitators may be appointed for sub-classes within large creditor classes

The Amendment Regulations envisage the appointment of facilitators for sub-classes within large creditor classes (i.e., with more than 1,000 creditors). This is subject to conditions enumerated in Regulation 16C(1). As per Regulation 16D, the facilitator would be required to facilitate communication between the authorised representative and the creditors of the sub-class, providing clarifications to creditors about the insolvency resolution process, etc.

  • Competent authority under RERA may be invited to attend committee meetings

Regulation 18(4) specifies that the resolution professional may be directed to invite the competent authority as defined under the Real Estate (Regulation and Development) Act, 2016, related to the corporate debtor’s real estate project to attend committee meetings. Consequently, inputs would be obtained from land authorities such as NOIDA and HUDA on project development matters. However, these authorities would not have any voting rights.

  • RP to prepare report on real estate development rights and permissions

Regulation 30C requires resolution professionals to prepare a report detailing the status of development rights and permissions required for the development of the real estate project. This report is to be submitted to the committee for its comments. Thereafter, the report along with the committee’s comments has to be submitted to the adjudicating authority.

  • IRP costs to include facilitator’s fee

As per the Amendment Regulations, the fee payable to facilitators will form part of the insolvency resolution process costs. This change has been effected by adding Sub-regulation (ac) to Regulation 31.

  • Invitation for expression of interest to contain details of CD’s registration status as MSME

The invitation for expression of interest has to provide details of the corporate debtor’s registration status as a micro, small, or medium enterprise (MSME) in accordance with the Micro, Small and Medium Enterprises Development Act, 2006. This is as per Regulation 36A(4)(e). In line with this, a new row has been added in Form G under Schedule I to the 2016 Regulations.

  • Relaxations including criteria for prospective resolution applicants may be extended to an association of allottees

Certain relaxations may be extended to an association or group of allottees representing not less than 10% or 100 creditors out of the total number of creditors in a class, whichever is lower. These relaxations are with respect to a) eligibility criteria for submission of expression of interest, b) conditions regarding the refundable deposit, and c) performance security. This is as per provisos to Regulations 36A(4) and 36B(4A) respectively.

  • Implementation of resolution plan: monitoring committee to submit quarterly reports on status

Amendments to Regulation 38 now require committees to consider setting up a monitoring committee for the monitoring and supervising of the resolution plan’s implementation. The adjudicating authority has to be updated on the status of such implementation in the form of quarterly reports to be submitted by the monitoring committee.

Comments

Enabling the handover of possession of units to homebuyers during the resolution process is a welcome change. Moreover, following amendments introduced last year, properties that homebuyers have taken possession of are excluded from the purview of the corporate debtor’s liquidation estate. As a result, liquidators cannot sell these properties as part of the liquidation estate during the liquidation process. These measures clearly demonstrate a commitment to protecting homebuyers who invest their hard-earned savings in purchasing properties.

However, the appointment of facilitators for sub-classes within large creditor classes may raise concerns as it could complicate decision-making and lead to increased costs. Furthermore, including land authorities in committee meetings could introduce additional obstacles, potentially slowing down the resolution process.

References:

[1] https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf

[2] https://www.indiabudget.gov.in/budget2024-25/economicsurvey/doc/echapter.pdf

[3] https://mohua.gov.in/upload/whatsnew/64e31f9e36e0creport.pdf

Image Credits:

Photo by yentl jacobs on Pexels

Enabling the handover of possession of units to homebuyers during the resolution process is a welcome change. Moreover, following amendments introduced last year, properties that homebuyers have taken possession of are excluded from the purview of the corporate debtor’s liquidation estate. As a result, liquidators cannot sell these properties as part of the liquidation estate during the liquidation process. These measures clearly demonstrate a commitment to protecting homebuyers who invest their hard-earned savings in purchasing properties.

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Tamil Nadu Allows Self-Certification for Instant Building Permits

The state government has notified amendments to the Tamil Nadu Combined Development and Building Rules, 2019, to permit applicants to secure instant building permits via self-certification.[1] Accordingly, applicants can submit online applications and pay fees to receive instant permits valid for five years, extendable by up to three years.

This development follows the state budget announcement made earlier this year signalling the introduction of a new module in the single window system for facilitating the sanction of building permissions based on self-certification without the need for completion certificates.[2]

Self-certification under the new Amendment Rules

The declaration issued by the applicant while making the application for self-certification should be to the effect that the building plan and site plan for the construction or reconstruction of self-certified buildings are in accordance with the applicable provisions.[3]

Under the amendment, an online application has to be filed through the self-certification module to obtain planning permission and building permits for self-certified buildings. As per Rule 6(1-A), applicants have to submit online applications through the said module and the regulations for self-certified buildings will be per Annexure XXVI. This new Annexure elaborates on the planning parameters and the building rules applicable to self-certified buildings. It also includes provisions pertaining to the procedure for submission of applications, random verification, etc.

Applicability

This new route does not apply to all buildings. As per the eligibility criteria (as specified in Annexure XXVI), building plans under the self-certification scheme can be submitted by applicants intending to construct a building in a plot of size up to 2,500 sq ft and a built-up area of up to 3,500 sq ft for residential purpose up to two dwelling units having ground or ground plus one floor. The definition of self-certified buildings, as contained in Rule 2(105-B), also provides that the building height should not exceed 7 m.[4]

Also, to apply under the scheme, only the plots in approved layouts, layouts regularised under the Tamil Nadu Regularisation of Unapproved Layouts and Plots Rules, 2017, approved sub-division plan, natham, and those plots registered by a deed before October 20, 2016, are eligible.

Areas excluded from applicability of the scheme

The scheme does not apply in the following areas:

  • Coastal Regulation Zone (CRZ), Hill Area Conservation Authority (HACA) regions, and development prohibited or restricted areas under Rule 19 Annexure XVII of the 2019 Rules; and
  • Lands classified as agriculture, institution, special and hazardous, non-urban, open spaces and recreational zones, as well as sites falling in street alignment, road widening, roads, areas reserved for public purposes in the master plans, new town development plans, detailed development plans, grids of roads plans in planning areas.

Applicable fee

The necessary charges or fees at the prescribed rates will apply and on payment of the same, the approved plan and proceedings along with the QR code and applicant’s e-sign will be instantly generated online. However, the scrutiny fee will not be applicable considering that self-certified building applications are not scrutinised.

Random verification

Though these applications are not scrutinised, a random verification of records submitted online will be carried out and the selection of applications for this purpose will be system-generated. Additionally, the competent authority may check the building plans or construction at any stage.

Comments

As mentioned above, buildings located in areas falling under CRZ, HACA, etc., and lands classified as agricultural, institutional, special & hazardous, or non-urban are not eligible under the self-certification scheme. This effectively restricts self-certification to areas classified as residential use zones in urban areas. Self-certification, as defined, is applicable only to buildings that do not exceed a built-up area of 3,500 sq. ft. and are not over 7m in height.

Additionally, Paragraph ‘X’ of Annexure XXVI stipulates that Section 236 of the Bharatiya Nyaya Sanhita, 2023, will apply when a person commits fraud by misrepresenting information while making an application under self-certification. Applicants, therefore, must be mindful of these penal provisions when submitting their applications to the concerned authority.

Overall, the rules allow for a hassle-free procedure for securing building permission.

References:

[1] The notification can be accessed here.

[2] Budget speech can be accessed here.

[3] Rule 2(105-A) defines self-certification as the self-certification or declaration issued by the applicant to the effect that the building plan and site plan for the construction or reconstruction of self-certified buildings are in accordance with the provisions of the Act or rules made thereunder or any other law for the time being in force.

[4] Rule 2(105-B) defines self-certified buildings as buildings in a plot of area up to 2,500 sq ft and built-up area of up to 3,500 sq ft for residential purpose up to 2 dwelling units having ground or ground plus one floor up to a maximum of 7 m in height.

Image Credits:

Photo by John Foxx on Canva

Under the amendment, an online application has to be filed through the self-certification module to obtain planning permission and building permits for self-certified buildings. As per Rule 6(1-A), applicants have to submit online applications through the said module and the regulations for self-certified buildings will be per Annexure XXVI. This new Annexure elaborates on the planning parameters and the building rules applicable to self-certified buildings. It also includes provisions pertaining to the procedure for submission of applications, random verification, etc.

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Evolution of Land Transfer Regulations under the Karnataka PTCL Act

In the former State of Mysore, the grant of government lands to citizens was regulated by the Mysore Land Revenue Code and Rules, as well as the Mysore Land Grant Rules. The concept of “restricted tenure” appears to have emerged to facilitate the swift disposal of darkasths (land grants) and to protect certain members of the Depressed Classes (did not include all communities classified as Scheduled Castes/Tribes). Under this concept, grantees were required to hold the land for a specified period, which was later extended from 10 to 20 years, and were prohibited from alienating the land without the prior permission of the Deputy Commissioner1.

Furthermore, with the repeal of Rule 30 of the Karnataka Land Grant Rules, 1968, and Rule 93-A of the Karnataka Land Revenue (Amendment) Rules, 1967, and the introduction of Rule 29A on September 17, 1974, a new legal framework was established, stipulating that no alienation of granted land could occur without prior permission or sanction from the government1. In line with this development, the Legislature enacted the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 (PTCL Act) on January 1, 1979. This act was designed to protect the interests of Scheduled Castes and Scheduled Tribes grantees, ensuring that the purpose of the land grants was upheld and that these communities were safeguarded from exploitation.

The statute came into force on January 1, 1979, with a succinct 12 sections that comprise an array of provisions pertaining to the transfer, alienation, resumption and restoration of lands granted to the Scheduled Castes and Scheduled Tribes communities, hereinafter referred to as SC/ST communities.

A Few Key Provisions of the PTCL Act:

 
Definition of grant land under the PTCL Act:

Section 3(b) of the PTCL Act defines “Granted Land” as any land provided by the government to an individual belonging to a Scheduled Caste or Scheduled Tribe. This definition also includes land allocated or granted under existing laws related to agrarian reforms, land ceilings, or the abolition of inams, excluding those related to hereditary offices or rights. The term “granted” is to be understood in this context. 

Prohibition on Transfer of Grant Lands under Sections 4 and 5 of the PTCL Act:

Section 4 reinforces the grantee’s right to hold the land by imposing a restriction on transferring the granted land without prior government permission. Section 5 grants the Assistant Commissioner the authority to take possession of any such land that has been transferred, including evicting those in possession if necessary, and to declare the transfer null and void. In essence, the Assistant Commissioner is empowered to reverse the transfer and restore the land to the original grantee.

A Slew of Circulars by the Government of Karnataka on Alienation, Transfer and Sale Permission:

The Government of Karnataka, through a circular dated February 21, 19892 directed the Deputy Commissioner to provide appropriate recommendations for grantees seeking to alienate their land, provided that the non-alienation period had been completed. Additionally, a condition was imposed on the grantees to use the sale proceeds to purchase agricultural land. Further, in a circular dated January 11, 1990, the Deputy Commissioner, Assistant Commissioner, and Tahsildar were instructed to ensure that purchasers were not disqualified from holding agricultural land under the existing land reform laws.

In 2006, the following guidelines for granting sale permission were implemented through a circular:

  • Applications within the first 5-year period were to be rejected, as land granted within this duration was not eligible for alienation.
  • For granted lands held between 5 and 25 years, each case was to be evaluated individually, taking into account the grantee’s family needs. If the Deputy Commissioner decided to permit the alienation, the grantee was required to pay an amount equal to fifty percent of the market value of the land, as determined by the Deputy Commissioner, to the government on the date of sanction, in accordance with Section 9(1)(i) of the Karnataka Land Grant Rules, 1969.
  • For cases where the stipulated time had been fulfilled, permission to alienate could be granted, considering the grantee’s family needs. However, such alienation was to be conditioned upon the grantee purchasing agricultural land using the proceeds from the sale. Granting permission in these cases was at the discretion of the Competent Authority and not mandatory.

Subsequently, a checklist was issued through a Circular dated December 27, 2010, outlining over 20 criteria for landowners seeking permission to sell land under the provisions of the Karnataka Scheduled Castes and Scheduled Tribes (Prevention of Transfer of Certain Lands) Act, 1978. Following this, a Circular dated March 10, 2011, bearing No. RD880 LGP 2010, was issued, requiring the proper documentation of the non-agricultural income of landowners seeking sale permission and mandating the rejection of applications that did not meet the specified criteria.

Additionally, a Circular dated January 1, 2020, introduced new conditions, which included:

  • Mandatory land purchase: The grantee was required to use the sale proceeds to purchase land.
  • Submission of Sale Deed: The grantee had to submit the Sale Deed for the purchased land, after which the Sub-Registrar would permit the registration of the sale of the grant land.
  • Khata transfer: The Revenue Inspector or Village Accountant was responsible for transferring the khata of the grant land to the prospective purchaser, following verification of the Sale Deed for the land purchased by the grantee.

Furthermore, on the directions of the Hon’ble High Court of Karnataka, the following advisory was issued:

  • The grantee or their legal heirs were required to submit applications before the competent authority.
  • The advance payment made during the Agreement to Sell needed to be verified as part of the sale process.
  • It was mandated that all transactions during the sale process be conducted via Account Payee Cheque or Demand Draft.
  • Pursuant to the Order dated August 12, 2021, and the Order in W.P. 14746/2020 (SCST) by the Hon’ble High Court, the State Government was directed to ensure that an updated list of granted lands be provided to registering officers under the Indian Registration Act, 19082.
Circular on Period of limitation to invoke PTCL Provisions:

A circular dated February 15, 2022, offering a perspective on applications for restoration made more than 25 years, clarified that the authorities under the PTCL Act, 1978, should deal with the application for resumption according to the facts and circumstances of each case. Given the absence of a prescribed limitation period for such applications, Civil Appeal No. 1390/2009 (Nekkanti Rama Lakshmi vs. State of Karnataka) was decided in favor of the purchaser. The circular also included excerpts from the advisory issued by the Law Department, as outlined below:

“…..Even Hon’ble Apex Court in Nekkanti Rama Lakshmi case has not indicated as to how much time is ‘reasonable time’ to invoke the provisions of PTCL Act. The term reasonable time depends on the facts and circumstances of each case. Hence, fixing a particular period of time so as to apply to all types of matters, irrespective of the facts and circumstances of the case, to invoke the provisions of the PTCL Act may not appear proper. However, if the administrative department wants to fix the limitations/time to invoke the provisions of the PTCL Act, as far as the period of limitation/time to be fixed is concerned, administrative department may take its own decision after going through the above noted materials.” Based on this, the circular directed competent authorities to consider the case explicitly without deviating from the purpose of the provisions of the PTCL Act2.

Amendments to PTCL Act

The PTCL Act was amended in 1984, 1992, and most recently in 2023. The 2023 Amendment to the Act introduced changes to Section 5 by adding clauses (c) and (d), which stated that there was no time limitation for invoking the provisions of the Act, regardless of any other law. Further, the provision applied to all cases pending before competent authorities and courts adjudicating under the section. In effect, the amendment specified that there will be no time limit for the grantees to approach courts and reclaim assets transferred to others without the government’s approval.

Although no constitutional challenge to the Amendment has been raised yet, the Karnataka High Court, in its judgment in the case of Jayalakshmamma and Ors. v. Deputy Commissioner, Tumkur and Ors., rejected a request to restore land under the PTCL Act. The rejection was based on the fact that the application was filed more than 25 years after the PTCL Act’s enactment, and the Supreme Court’s ruling in Nekkanti Rama Lakshmi v. State of Karnataka and Anr. as shared above established that proceedings under the PTCL Act must be initiated within a’reasonable time’. The judgment indicates that the Karnataka High Court did not consider the recent amendment to the PTCL Act and dismissed the writ appeal accordingly.

Further, in Basavraj v. Deputy Commissioner, the high court said that once an application filed by the grantee under Section 5 of the PTCL Act is rejected, the only option available is to challenge such an order, and no fresh application can be filed by such a grantee and/or their legal heirs.

Introduction of Rule 6 in the PTCL (Amendment) Rules, 2024

The Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) (Amendment) Rules, 20243, introduce the addition of Rule 6 to the Karnataka Scheduled Castes and Scheduled Tribes (Prevention of Transfer of Certain Lands) Rules, 1979. These amendments will take effect from the date of their publication in the Official Gazette.

Rule 6 outlines the process for obtaining permission to transfer or acquire grant land under Section 4(2) of the PTCL Act, as follows:

  1. Application Submission: The grantee or their legal heirs must submit an application to the Office of the Tahsildar.
  2. Tahsildar’s Role: The Tahsildar will investigate, verify the submitted documents, and prepare a report based on their findings, which will then be submitted to the Assistant Commissioner (AC).
  3. Assistant Commissioner’s Review: Upon receiving the Tahsildar’s report, the AC may conduct further inquiries to ensure there is no coercion, misrepresentation, fraud, or incorrect valuation of land. The AC will then provide recommendations to the Deputy Commissioner (DC) on whether to approve or deny the transfer request.
  4. Deputy Commissioner’s Actions: The DC will review the recommendations and reports, verify the records, and forward the application to the Revenue Commissioner (RC).
  5. Revenue Commissioner’s Recommendations: The RC will examine the application and provide recommendations to the Principal Secretary (Revenue). Based on the recommendations from the AC, DC, and RC, the Principal Secretary may approve the transfer. The RC will then issue an order granting permission, and the AC will remove the PTCL tag from the land to facilitate the transfer.
  6. Right to Appeal: Sub Rule 10 allows applicants who are aggrieved or denied permission to file representations before the Principal Secretary (Revenue) for a review within 30 days of the order.

Conclusion

The Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) (Amendment) Rules, 2024, are introduced to address the skepticism and ambiguity surrounding grant lands under the PTCL Act. These rules eliminate the requirement for a No Objection Certificate for the sale of lands covered by the PTCL Act. However, the government has yet to establish digital platforms for the implementation of services outlined in Rule 6 of these amended rules.

Also considering the fact that in the Basavraj case cited above, the revenue authorities were forced to determine the issue of the lack of required documents, the court also issued general directions, including digitisation of records related to land grants. The court said:

“Once the said documents are digitised, all the documents are to be hyperlinked with each other so that all the documents are accessible from any particular document or location, going historically backward or forward. Entries relating to the grant with reference to the grant and concerned documents are to be entered into the RTC, and the documents are to be accessible by way of hyperlinks. A master e-registry is to be prepared in respect of each survey number village-wise, with the documents being accessible by hyperlinking. Search to be capable of, on the basis of the name of the district, village, survey number, grantees name, etc., the facility to apply and obtain e-certified copies of all the documents to be made available.”

To streamline the process, the Government of Karnataka has introduced the Karnataka Land Revenue (Second Amendment) Act, 2024. This Act creates a Revenue Commissionerate at the state level and establishes the position of Revenue Commissioner (Revenue, Land Acquisition, Resettlement and Rehabilitation, and Social Security) within the I.A.S. cadre. The objective is to improve efficiency and decentralize administrative powers.

References:

  1. Indian Kanoon, https://indiankanoon.org/doc/245136/ 
  2. Land Grants 1 of Revenue Department, Government of Karnataka, https://kandaya.karnataka.gov.in/storage/pdf-files/Land%20grants%201/PTCL%20%E0%B2%95%E0%B2%BE%E0%B2%AF%E0%B3%8D%E0%B2%A6%E0%B3%86%E0%B2%AF%20%E0%B2%95%E0%B3%81%E0%B2%B0%E0%B2%BF%E0%B2%A4%E0%B3%81%20%E0%B2%B8%E0%B3%81%E0%B2%A4%E0%B3%8D%E0%B2%A4%E0%B3%8B%E0%B2%B2%E0%B3%86%E0%B2%97%E0%B2%B3%E0%B3%81.pdf 
  3. Karnataka Rajayapatra, https://erajyapatra.karnataka.gov.in/WriteReadData/2024/7340.pdf 

The Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978 (PTCL Act) was enacted on January 1, 1979  to protect the interests of Scheduled Castes and Scheduled Tribes grantees, ensuring that the purpose of the land grants was upheld and that these communities were safeguarded from exploitation.

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Government’s Directives on Deemed Non-Agricultural Use of Lands in Maharashtra

On March 13, 2024, the Revenue and Forest Department of the Government of Maharashtra issued a circular bearing no. NAP-2023/Pra. Kra.64/J-1A (“Government Circular”) directing the revenue officers to implement the amendments made to the Maharashtra Land Revenue Code, 1966 (“Code”) specifically in relation to the change of use or non-agricultural use of agricultural land within the State of Maharashtra.[1] 

Previous Amendments to the Code in Brief

  1. Insertion of Section 42B and Section 42C in the Code vide Maharashtra Land Revenue Code (Amendment) Act, 2017 [Act No. 30 of 2017] (“2017 Amendment”):
  • Section 42B of the Code inter alia provides that, upon publication of the final development plan as per the provisions of the Maharashtra Regional and Town Planning Act, 1966 (“MRTP Act”) and subject to payment of any conversion tax, Nazrana/ premium, Government dues etc., the use of any land comprised within an area specified in the development plan, shall be deemed to have been converted to the use as shown in such development plan. Hence, no separate permission under Section 42 or Section 44 of the Code shall be required for the use of such land for the permissible use under such development plan.
  • Section 42C of the Code inter alia provides that in case a land which is situated in an area, for which a notice of the draft/ approved regional plan and/ or development plan has been published in the Official Gazette, then, subject to payment of any conversion tax, Nazrana/ premium, etc., the use of such land shall be deemed to have been converted to corresponding non-agricultural use, once development permission on such land under Section 18 of the MRTP Act is granted.
  1. Insertion of Section 42D: The Maharashtra Land Revenue Code (Fifth Amendment) Act, 2017 [Act No. 12 of 2018] (“Amendment Act of 2018”), provides that in case any land which is situated in an area within 200 metres from the limits of a village, or of a town/ city where the land adjacent to such town or city is allocated as developable zone in the draft or final regional plan, the said land shall be deemed to have been converted to non-agricultural use for residential purpose or the purpose admissible as per draft/ final regional plan, subject to the provisions of the Development Control Regulations, as may be applicable to such area.

Gist of the Resolutions referred in the Government Circular

  1. Government Circular dated April 13, 2022: With a view to undertake ‘Ease of doing Business’, the Maharashtra Government had issued directives for the revenue officers and authorities to effectively implement the provisions of the 2017 Amendment and Amendment Act of 2018.
  1. Government Resolution dated May 23, 2023: This government resolution provided that subject to the provisions of the MRTP Act, in case the permission for construction has been granted or plans have been sanctioned by the competent authority, no separate permission is mandatory to be obtained by the owner/ developer for the non-agricultural use of such land and such land parcels are deemed to be converted to non-agricultural lands. It is further provided that conversion tax shall be collected as required in the Building Plan Management System and the ‘Sanad’ (i.e., Grant for the non-agricultural use) shall be granted along with the development permission.

Challenges in the Implementation of Previous Amendments

Despite the various amendments/ government circulars/ government resolutions, as mentioned hereinabove, the revenue officers/ competent authorities continued to insist on filing for separate permission for non-agricultural use along with the application for granting construction permission. Hence, the Government of Maharashtra was highly criticized for the lack of implementation of existing laws.

Directives of the Government Circular Issued in accordance with the Provisions of the MRTP Act to Overcome the Challenges

In view of the 2017 Amendment, Amendment Act of 2018, the Government Circular of 2022 and the Government Resolution of 2023, the Government Circular has categorically directed as under:

  1. No requirement of separate non-agricultural use permission: No separate non-agricultural permission is required if the non-agricultural use is permitted under the development plan/ regional plan.
  2. Deemed non-agricultural use permission: If the permission for construction has been granted or development plans have been sanctioned by the competent authority in relation to agricultural land, such land shall be deemed to be classified as non-agricultural.
  3. Grant for non-agricultural use: Revenue Authorities should issue Sanad (Grant) for non-agricultural use of land, basis the construction permission or approved layout for any land. Further, the planning authorities shall not insist on submission of non-agricultural use permission prior to granting of any construction permission.

The above provisions are applicable to Occupancy Class-I land parcels. However, with respect to Occupancy Class-II lands, No Objection Certificate should be obtained from the competent revenue officers prior to obtaining development permission/ construction permission from the planning authority.

The Takeaway

The issuance of the Government Circular insists on the implementation of the previous amendments made to the Code for using agricultural land for non-agricultural purposes, which is vital for the state of Maharashtra considering the tracts of agricultural land available for development. The directives provided under the Government Circular can help reduce the woes of developers who are caught up in meeting compliances that have in fact been simplified and thus accelerate the process of acquiring land parcels for development. It is hoped that these directives will also encourage landowners to make their lands available for development to the developers as they stand to benefit from the swifter process of procuring approvals.

 

We hope you find the above informative and in case of any queries or clarifications kindly feel free to reach out to us at – mumbai@foxmandal.in

* * *

*Disclaimer: This article is for informative purposes only and no part of it shall be construed as legal advice.

References:

[1] Available at: https://gr.maharashtra.gov.in/Site/Upload/Government%20Resolutions/English/202403131215351619.pdf

Image Credits:

Photo by Sveta Fedarava on Unsplash

The issuance of the Government Circular insists on the implementation of the previous amendments made to the Code for using agricultural land for non-agricultural purposes, which is vital for the state of Maharashtra considering the tracts of agricultural land available for development. The directives provided under the Government Circular can help reduce the woes of developers who are caught up in meeting compliances that have in fact been simplified and thus accelerate the process of acquiring land parcels for development. It is hoped that these directives will also encourage landowners to make their lands available for development to the developers as they stand to benefit from the swifter process of procuring approvals.

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CIRP Amendments: Positive Stride Towards Enhancing Framework

The Insolvency and Bankruptcy Board of India (IBBI), vide notifications dated February 12, 2024, and February 15, 2024, amended the IBBI (Liquidation Process) Regulations, 2016,[1] and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016,[2] respectively, in order to streamline and optimise the insolvency resolution process.

The key amendments brought in, and their potential implications are as follows:

  • Mandatory for separate bank account to be operated for each real estate project

Regulation 4D has been introduced in the 2016 Regulations, requiring the operation of separate bank accounts for each real estate project. This requirement aligns with the standards set forth by RERA, granting the resolution professional financial autonomy in managing the project affairs. By doing so, it delinks the liabilities of each project from others under the corporate debtor, thereby providing independent financial autonomy or management for each project.

  • Resolution professional can invite resolution plan for each real estate project

Under the amendment regulations, the resolution professional is enabled to invite a resolution plan for each real estate project or group of projects of the corporate debtor. For this purpose, the committee’s approval has to be taken beforehand. This is made possible through the addition of a clarification to Regulation 36A(1). The said Regulation provides for the publication of particulars of the invitation for expression of interest from prospective resolution applicants.

The project-wise CIRP ensures that a tailored resolution process is made available for each project or phase of construction that lies in the hands of the corporate debtor. However, it is important to observe that a larger committee of creditors decide the outcomes of each project-wise CIRP, defeating the decentralised approach as adopted under the latest amendments.

  • Valuation methodology to be explained to committee members

To enhance transparency and minimise disputes regarding valuation, the amendment regulations now include a proviso in Regulation 35(1)(a), requiring the resolution professional to organise a meeting where the registered valuers will elucidate the methodology used for valuation to the members of the committee of creditors before finalising the estimates. 

  • Setting up of monitoring committee to oversee implementation of resolution plan

The IBBI, vide Regulation 38(4), has permitted the establishment of a monitoring committee, facilitating the involvement or participation of technical experts in overseeing the completion of real estate projects of the corporate debtor. This amendment will aid in ensuring the quality and standards of the projects, thereby safeguarding the interest of homebuyers.

  • Electronic voting – period of opening of voting window to be determined by committee

Previously, the resolution professional was required to seek votes from members (who did not vote) by electronic voting, which remained open for 24 hours after the circulation of the meeting minutes. By way of amendment to Regulation 25(5)(b), the voting period has been extended to a minimum of 24 hours and a maximum of 7 days from the circulation of minutes, which would enable effective participation of all the members of the committee, fostering inclusive participation and promoting transparency in the decision-making process.

  • Monthly meetings of the committee of creditors

Prior to the amendment, the resolution professional was allowed to convene a meeting of the committee of creditors at his discretion. However, Regulation 18(1) now mandates that such meetings should occur at least once every 30 days, subject to the discretion of the committee of creditors to extend the interval between meetings, but a minimum of one meeting per quarter is mandatory.

  • Exclusion of assets handed over to allottees from liquidation process

Regulation 46A introduced in the IBBI (Liquidation Process) Regulations, 2016, stipulates that completed developments where the corporate debtor has handed over the possession of the units to the homebuyers result in those units being exempted from the liquidation process. This exemption does not extend to ongoing construction projects where possession has not yet been handed over to homebuyers. As a result, homebuyers involved in such ongoing projects remain unprotected by the provisions of this regulation.

Additionally, the draft amendment regulations, released in November 2023, expressly stated that the unit in possession of an allottee as “defined under clause (d) of section 2 of the Real Estate (Regulation and Development) Act, 2016” was to be excluded from the corporate debtor’s liquidation estate. It is unclear whether the omission of this portion from the finalised regulations is deliberate.

Conclusion

The amendments demonstrate IBBI’s commitment to proactively reign in working towards a more efficient and workable CIRP process, in view of the dynamic changes of the fast-growing market. These amendments signify a positive stride towards enhancing the current CIRP framework rendering it more efficient and transparent.

References:

[1] https://ibbi.gov.in/uploads/legalframwork/790016d91e25c04925c7b57c179c9e7a.pdf

[2] https://ibbi.gov.in/uploads/legalframwork/88458173f47fbda03d775370a420f307.pdf

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Regulation 46A introduced in the IBBI (Liquidation Process) Regulations, 2016, stipulates that completed developments where the corporate debtor has handed over the possession of the units to the homebuyers result in those units being exempted from the liquidation process. This exemption does not extend to ongoing construction projects where possession has not yet been handed over to homebuyers. As a result, homebuyers involved in such ongoing projects remain unprotected by the provisions of this regulation.

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Govt Notifies Leasing Rules for Offshore Wind Energy Projects

The Central Government has notified the Offshore Wind Energy Lease Rules, 2023, to regulate the grant of lease of offshore areas for offshore wind energy and wind transmission projects.

These rules would be administered by the Ministry of New and Renewable Energy which is the nodal ministry for the development of offshore wind energy as per the National Offshore Wind Energy Policy, 2015.[1]

In September 2023, the said Ministry published a Strategy Paper for Establishment of Offshore Wind Energy Projects which outlined three models to accelerate the process of development of offshore wind farms in India. One of the models envisaged providing central financial assistance in the form of viability gap funding whereas the other two models proposed under the paper did not involve any such funding. Certain components, with modifications, of Model – B described in said paper have been incorporated in the 2023 Rules. In the same month, a tender was issued by the Ministry for offshore wind energy projects at seven sites off the Tamil Nadu coast.

Leasing out of offshore areas

Rule 5 specifies that offshore areas within the exclusive economic zone (EEZ) of the country, which extends up to 200 nautical miles from the coastline, may be leased out by the Central Government for offshore wind energy and wind transmission projects provided that the prescribed conditions are fulfilled. On execution of the lease agreement, rights over seabed within the EEZ would be granted to the lessee for a fixed term against payment of the lease amount.

A lease would cover 25 to 500 square kilometres of area depending on the project’s size and would be valid for 3 years for resource measurement and related study or survey activities. The term of the lease is extendable by 2 years. Any assignment or transfer would require written permission from the Central Government. The lessee has to hand over the lease area upon termination of the lease and comply with other requirements as laid down under Rule 17. Further, several obligations have been cast on the lessee, such as indemnification of the Central Government or its assignees from liabilities, insuring the equipment, men and third parties during operations, etc.

The Central Government is authorised to cancel the lease if the lease period remains unpaid for more than 3 months. To ensure compliance with the rules, an agency may be nominated by the Central Government, which would also assume specified supervisory functions.

Dispute resolution through arbitration

According to the 2023 Rules, an attempt has to be made to amicably resolve the disputes and after the matter is considered by a committee, it would be referred for arbitration.

Takeaways

Our Partner, Sushant Shetty shares his views: “In light of the fact that India does not presently have any offshore wind energy projects, these new landmark rules will be vital in pioneering this new untapped form of renewable energy. Apart from covering lease-related points regarding the lease tenure, rights of lessee, payments of deposit and annual fees, termination etc. as well as other points of a technical nature, the rules also allay any security and environmental concerns by providing for prior clearances from the Ministry of Defence, Ministry of Home Affairs, Ministry of External Affairs, Ministry of Environment, Forest and Climate Change, Department of Space and Ministry of Ports, Shipping and Waterways. Like any new legislation, we expect that the rules will likely undergo various changes and amendments in the time to come, but for now, this appears to be a welcome first step in the right direction.”

References:

[1] Available at https://cdnbbsr.s3waas.gov.in/s3716e1b8c6cd17b771da77391355749f3/uploads/2022/12/2022122033.pdf

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A lease would cover 25 to 500 square kilometres of area depending on the project’s size and would be valid for 3 years for resource measurement and related study or survey activities. The term of the lease is extendable by 2 years. Any assignment or transfer would require written permission from the Central Government. The lessee has to hand over the lease area upon termination of the lease and comply with other requirements as laid down under Rule 17. 

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TN Govt Revises Stamp Duty Rates: Implications for Homebuyers

On December 1, 2023, the Tamil Nadu State Government came out with a Circular, dispensing with the traditional dual agreement model which mandated a separate sale deed for the undivided share of land and a construction agreement for the built-up area. This conventional model has been replaced with a single instrument i.e. sale deed based on the composite value of both the undivided share of land and the superstructure, aligning with the practise prevailing in other States.

Further, the said Circular outlines a revised fee structure ostensibly proposing a ‘reduction’ of stamp duty and registration fee for the first sale of flats, while in reality, the proposed revision would cost the prospective homebuyers (except with respect to flats valued below Rs.50,000.00) more.

In order to understand the implications of the Circular and its cascading or rippling effects better, we have undertaken a numerical comparison between the earlier fee structure and the revised one as outlined below: –

Stamp duty on dual agreement form

Stamp duty on composite agreement form

Stamp duty | Tamil Nadu

 

It appears that the revised composite model would result in a substantial increase in stamp duty and registration fees which the prospective homebuyers need to be mindful of.

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The new Circular does away with the dual agreement model and introduces revised stamp duty rates for the first sale of flats. It appears that the revised composite model would result in a substantial increase in stamp duty and registration fees which the prospective homebuyers need to be mindful of.

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