• Additional Area Allocation To MC Members in Redevelopment

Our society is currently undergoing redevelopment, and all prescribed procedures have been followed. The developer has submitted the redevelopment plans to the BMC. However, upon reviewing the plans, we have discovered that the Society’s Chairman and Secretary have been allotted additional carpet area over and above their entitled area.

This allotment or purchase of additional area by the Chairman and Secretary was never disclosed to the General Body, nor was it approved by the General Body at any stage. Further, the rate at which this additional area has been allotted has not been disclosed to the members.

At the same time, certain other members have purchased additional area with the full knowledge and approval of the General Body, and at a rate that was openly communicated and uniformly applied.

In this background, I seek your legal opinion on the following points:

Is a developer legally permitted to allot or sell additional area to office bearers (Chairman/Secretary) without disclosure and without General Body approval?

How to find out if the developer has allotted additional area free of cost or at a preferential rate to select members, especially society office bearers?

Is a developer legally allowed to sell additional area to different members at different rates in a redevelopment project?

Does such preferential allotment, if done without disclosure, amount to illegality, conflict of interest, or breach of fiduciary duty by the Managing Committee?

What remedies are available to an individual member to ensure transparency and fairness in the redevelopment process?

What would be the appropriate next steps — If its found out that these additional areas have been allocated for free?
Asked 7 hours ago in Property Law
Religion: Hindu

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6 Answers

You appear to be a disgruntled member seeing the number of queries you have posted on this platform taking contradictory stands 

I'd like to know if any extra area was purchased by you from the builder in addition to your entitlement area

If the answer to the above is in the negative then be it known that any legal action that you may be ill advised to take against the builder will badly backfire against you and the court will not hesitate to impose exemplary and deterrent costs on you 

Only if you have purchased extra area and have discovered or have reason to believe that a preferential rate is offered to other members or that free extra area is provided to them, can you raise a grievance. Otherwise the court will question your locus and may come down  on you heavily 

The only way to know if any special discounted rate is offered to certain members is by obtaining certified copy of the PAAAs from the sub registrar office unless such special rate was transacted in cash in which case it will be very difficult to prove that there is some differential treatment given to certain select members 

Yusuf Rampurawala
Advocate, Mumbai
7932 Answers
79 Consultations

t: All benefits, including additional area (above the mandatory 10 sq.m. or 15% incentive area), must be disclosed in the development agreement, which is signed by all members. 

2) Differential rates for similar types of additional space, designed to benefit a select few, constitute discrimination and breach of trust.

 

3)complain to registrar against the managing committee for malpractices in redevelopment.

 

4) Send a  legal notice to the developer and the managing committee demanding transparency and cancellation of illegal, undisclosed benefits. 

Ajay Sethi
Advocate, Mumbai
100058 Answers
8169 Consultations

The PAAA is registered prior to the member handing over possession of their old flat

 The registered document is then filed with the sub-registrar, confirming the new carpet area, rent, and corpus, ensuring legal protection for the owner.

 

  this usually aligns with the 4-5 month mark after submission to the BMC when initial approvals are in place. 

Ajay Sethi
Advocate, Mumbai
100058 Answers
8169 Consultations

In a cooperative housing society redevelopment in Mumbai, the developer is not legally permitted to allot or sell additional carpet area to Managing Committee members (such as the Chairman or Secretary) in a non-transparent manner or without the knowledge and approval of the General Body. Office bearers stand in a fiduciary position and are legally bound to act in the best interest of all members. Any personal benefit obtained by them in connection with redevelopment must be fully disclosed and approved by the General Body.
Where some members have purchased additional area with open disclosure, uniform rates, and explicit General Body approval, while office bearers have been allotted extra area without disclosure, the differential treatment itself becomes suspicious. The law does not prohibit the sale of additional area per se, but it does prohibit preferential treatment, secret allotments, or undisclosed benefits to committee members.
Regarding your question on timing of PAAA (Permanent Alternate Accommodation Agreement):
In practice and law, individual PAAAs are usually executed after plans are sanctioned by the BMC, but before handing over possession of the existing flats to the developer. However, the final carpet area, including any additional area, is already reflected in the sanctioned plans and draft PAAAs well before registration. Copies of executed PAAAs are submitted to the Sub-Registrar at the time of registration, not months later. If the Chairman and Secretary have additional area reflected in the plans, it means a corresponding agreement or understanding already exists with the developer, whether disclosed or not.
To determine whether the additional area was allotted free of cost or at a preferential rate, you can legally proceed as follows: • Obtain certified copies of the sanctioned redevelopment plans from the BMC and compare entitlement vs allotted carpet area
• Demand inspection of redevelopment-related documents from the society under the Maharashtra Cooperative Societies Act
• Seek copies of draft and final PAAAs of all members (or at least office bearers) through a formal written request
• Compare rates at which other members purchased extra area versus the implied consideration (or absence of consideration) in the office bearers’ allotment
• If cash transactions are suspected, the absence of disclosed consideration itself strengthens your case of illegality
A developer is not permitted to sell additional area at different rates in a discriminatory or secret manner, especially where the beneficiaries are Managing Committee members. Preferential rates given to office bearers, without disclosure, constitute: • Breach of fiduciary duty
• Conflict of interest
• Misconduct under cooperative law
• Potential criminal breach of trust and corruption, depending on facts
If it is established that additional area has been allotted free of cost, or at a rate substantially lower than what was disclosed to other members, the legal consequences are serious. Such allotment can be challenged as void, and both the developer and the concerned office bearers can be proceeded against.
Your legal remedies include: • Filing a complaint before the Deputy Registrar of Cooperative Societies seeking inquiry into misconduct of the Managing Committee
• Seeking directions for disclosure and transparency in redevelopment documents
• Challenging the redevelopment process before the Cooperative Court
• Seeking cancellation or rectification of preferential allotments
• If evidence of illegal gratification or forgery exists, initiating criminal proceedings
• In appropriate cases, approaching the High Court for writ relief to protect members’ rights and prevent irreversible third-party rights
Given that plans have already been submitted to the BMC, this is the correct stage to act immediately, before registration of PAAAs and creation of irreversible rights. Delay will weaken remedies.
If you wish, the next logical step would be to issue a formal legal notice to the society and developer demanding disclosure of allotment details, rates, and approvals, followed by statutory proceedings if they fail to comply.

Yuganshu Sharma
Advocate, Delhi
1157 Answers
4 Consultations

A developer is generally not permitted to allot or sell additional area to office bearers (or any member) without transparency and General Body (GB) approval. The redevelopment agreement, typically sanctioned by a special GB resolution, is a contract between the society and the developer. Any material variation, especially benefits to Managing Committee (MC) members in their personal capacity, must be disclosed and approved by the GB to ensure fairness and avoid conflicts of interest.

To ascertain if preferential treatment occurred, you must scrutinize the Development Agreement, Power of Attorney, and most critically, the Permanent Alternate Accommodation Agreement (PAAA). The PAAA, which details the flat entitlement and any additional area purchase, is usually executed and may be submitted to the sub-registrar around the time of or after obtaining the IOD (Intimation of Disapproval) or commencement certificate from BMC, but crucially, it should be provided to each member for execution. You can formally request the society and developer for copies of all executed PAAs. Discrepancies in rates or terms will be evident here. If denied, you may seek them under the Right to Information Act from the BMC, as these documents are often submitted for approvals.

Selling additional area at different rates to different members is highly irregular and potentially illegal, as it can be construed as a secret profit or a kickback, violating principles of equitable treatment. For MC members, obtaining such a benefit without GB knowledge constitutes a clear breach of fiduciary duty and conflict of interest, which can attract legal action under cooperative society laws and the Maharashtra Ownership Flats Act (MOFA).

Your remedies are multi-pronged. First, raise the issue formally in writing with the MC, demanding an explanation and a special GB meeting. If unsatisfied, you can complain to the Deputy Registrar of Cooperative Societies, who has the power to investigate and take action against the MC for mismanagement. Simultaneously, you can send a legal notice to the developer for unfair practices. If cash is involved or a preferential rate is proven, it strengthens a potential case for cheating, criminal breach of trust, and corruption. You may need to file a civil suit for injunctive relief and/or a criminal complaint with the police for criminal conspiracy.

Your appropriate next steps, if free allocation or a grossly undervalued sale is proven, are to immediately escalate to the cooperative authorities and consider legal action to have such allotments declared null and void, ensuring the additional area is either surrendered or made available to all members at a fair, uniform rate. Preserving all documentation and correspondence is vital for building your case.

Lalit Saxena
Advocate, Sonbhadra
160 Answers

It’s illegal you can file a writ petition and challenge the illegality 

Prashant Nayak
Advocate, Mumbai
34726 Answers
250 Consultations

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