The housing authority has failed to collect compensation from developers, despite the State Anti-Corruption Bureau (ACB) uncovering evidence that Maharashtra Housing and Area Development Authority (MHADA) officials and developers colluded, leading to a significant loss to the state exchequer in the redevelopment of the city’s cessed structures.
Following a 2019 Bombay High Court ruling that called for a formal complaint against negligent MHADA personnel, MHADA has petitioned the Supreme Court (SC) to overturn the decision. Activist Kamlakar Shenoy, in his submission to the Supreme Court, described the housing authority's actions as "illegal and bad in law," accusing it of withholding crucial information and failing to approach the court with "clean hands."
The High Court's directive to Mumbai police's Economic Offences Wing (EOW) to file a formal complaint, or First Information Report (FIR), stemmed from allegations that MHADA officials neglected to reclaim surplus areas from defaulting developers, resulting in losses estimated at INR 40,000 crore during the 1990s. Shenoy, a 65-year-old who was a victim of a builder’s property scam, discovered the larger scheme and has since submitted written arguments to the SC, urging it to dismiss MHADA's special leave petition challenging the HC ruling.
In 1991, the Maharashtra government amended the Development Control Rules to incentivize private developers and landlords to rehabilitate stalled projects. Builders were awarded additional Floor Space Index (FSI) on the condition that they accommodate existing tenants in new buildings and allocate a specific share to MHADA. However, in 2019, the HC ordered the EOW to file an FIR, alleging that MHADA representatives failed to recover surplus areas from defaulting builders.
This oversight has reportedly cost the state INR 40,000 crore since the 1990s. MHADA appealed to the Supreme Court, prompting Shenoy to expose the alleged scam, noting that several builders sold units designated for MHADA on the open market, depriving the agency of assets valued at least INR 40,000 crore.
Through Right to Information (RTI) requests, Shenoy discovered that, as of March 14, 2014, 379 builders had defaulted on their commitments out of 1,728 projects for which MHADA had issued redevelopment NOCs. Shenoy filed a public interest lawsuit in the High Court in 2017. After MHADA appealed the HC's 2019 ruling to the Supreme Court, Shenoy received a notice of the appeal.
The activist has now requested the dismissal of MHADA's petition, arguing that the HC's ruling merely requires the trial court to proceed as per the law once it acknowledges the offense. Shenoy warned that overturning the HC decision could set a dangerous precedent, potentially encouraging further negligence among public officials, thereby exacerbating losses to the exchequer.
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