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Developers in Mumbai have sought some leeway in payment of development charges for the redevelopment of old buildings on land owned by the Maharashtra Housing and Area Development Authority (MHADA) after the Bombay High Court ruled that they were not exempt from paying such charges. The Confederation of Real Estate Developers' Associations of India (CREDAI) - Maharashtra Chamber of Housing Industry (MCHI), the apex body of developers, has requested MHADA to not levy development charges until the stage of granting occupation certificate. In a letter to MHADA, it has also asked authorities to not levy penalty and interest as the payment of development charges was discontinued owing to stay orders from the Bombay HC.
Seven years ago, the developers had challenged the collection of development charges by planning authorities, including Brihanmumbai Municipal Corporation (BMC) and MHADA, for the redevelopment of buildings on land owned by them citing a section of the MRTP Act. According to rough estimates, developers owe more than Rs 800 crore to the authorities. MHADA, one of the biggest landlords in Mumbai, owns 104 big layouts in the city and had given several land parcels on long leases varying from 50 to 60 years.
Section 124 F of the MRTP Act states that "No development charge shall be levied on institution of use or of change of use, or development of, any land of building vested in or under the control or possession of the Central or State Government or of any local authority. Citing the law, more than 100 developers had filed writ petitions in the Bombay HC challenging the levying of development charges by the authorities, in the case of redevelopment of old buildings where land is owned by authorities.
However, the Bombay HC, in its order in October 2022, ruled that developers undertaking redevelopment on state-owned land will not be exempted from paying development charges under the MRTP Act. Development charges are imposed to provide public amenities and for the improvement of the area. Only planning authorities undertaking such development would be exempt from such charges under the provision, the Bombay HC had said.
The developers contended that the payment of development charges was not imposed by authorities as it was under challenge in the Bombay HC. Owing to this, during the payment of development charges, the interest or penalty part should not be charged, and the balance should be collected only before granting of OC.
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