NEW DEVELOPER wants that NOC from the OLD Developer for redevelopment Is it Valid? - its been 40 years now. the old developer has already lost his rights. but the new developer would anyway want a noc for the purpose of submission to MHADA and BMC to show that there is no cloud on his title. However, if you approach the old developer to give the noc, obviously he will not give. in that case it will be a deadlock for the new developer. you have to tell him that the old developer already lost his rights to the FSI for extension of the old building and if you still insist for his noc, then i cannot do anything because he is refusing. so you either take the development rights on 'as is where is basis' or find another plot

Also NEW DEVELOPER wants separate document mentioning that PROPERTY TITLE SUBJECT TO ONGOING SUIT .IS IT RIGHT STEP - yes this is valid since the suit is pending. in the event you lose, the new developer's rights would be in jeopardy. 

in the DA that you will execute with the new developer clearly specify that there is a pending suit and if the old developer claims or litigates seeing new construction activity then it will be the responsibility of the new developer to tackle him including all legal expenses and costs and the owner will be indemnified and protected in respect thereof

A NOC is not legally required for title transfer if rights were limited solely to FSI extension, however the terms of agreement will prevail under such circumstances.Since the 1981 agreement granted only vertical construction/FSI rights (to extend up to the 5th floor) without transferring land title, ownership, or development rights to the underlying land, the old developer retains no right or interest in the real property. New developers typically ask for an NOC simply to avoid potential third-party litigation or injunctions from an old contractor. However, coercing you to fetch an NOC from a defaulting developer (especially one involved in a pending suit) is legally unnecessary.

The request to state that the property title is subject to the ongoing suit is legally accurate and mandatory under Indian Property Law. Under section 52 of TP: act, any transfer, development agreement, or creation of third-party rights over a property while a civil suit is pending in a court of competent jurisdiction is automatically subject to the final outcome/decree of that suit.

Under section 14 of the specific relief act, a development contract for construction that was abandoned and resulted in a recovery suit cannot be specifically enforced by the old developer after a delay of over 40 years.

Section 79A of the Maharashtra Housing and Area Development (MHADA) Act, 1976: Governs redevelopment of cessed buildings. It permits building owners or registered tenant associations to redevelop dilapidated/cessed structures without interference from defaulting past builders.

Draft a Custom Indemnity & Covenant Clause in the New Agreement: Insert an explicit clause stating that the new developer indemnifies you against any financial or legal claims raised by the 1981 developer or their legal heirs. Clarify that the recovery suit of 1983 pertains strictly to monetary recovery/damages owed to you, and does not create any charge or encumbrance in favor of the old developer over the land or property.