Cessed and Non-cessed Buildings -- basics

A lot of people don't know the exact meanings of cessed and non-cessed buildings. Especially when it comes to redevelopment, repairs and reconstruction, or simply, transforming the ownership of a building, these terms are commonly used.


This is simply because the Maharashtra Housing and Area Development Act, 1976 (MHADA) makes special provisions for repairs and reconstruction of "cessed" buildings. So what is a cessed building?


A logical deduction would imply that a building that pays cess -- a tax commonly referred to as the "repair fund"- is termed as a cessed building. And it's ironic that the law outlines plenty of provisions for undertaking repairs and reconstruction for/ of cessed buildings but not a single one deals with that of non-cessed buildings. This lacuna of law, has led to a lot of legal advisors to conclude that any building which does not pay cess, is a non-cessed building, and whatever provisions are applicable to a cessed building, the same is not extended to a non-cessed one.


I know this interpretation is not without faults, and there are people (even those who are not of a legal background) are asking the government to clarify the status of non-cessed buildings. What do they do if they need funds for repairs? Is it a clear divide of funds between the tenants and the landlords, under the Transfer of Property Act, 1882 or is it the clear demarcation of responsibilities between the landlord and the tenant under the Maharashtra Rent Control Act, 1999?


It is high time that the government comes out of the shadows and sheds some light on this.


Now, back to cessed buildings. Under MHADA, different provisions are applicable to different categories of cessed buildings. What an overdose of legal bifurcation! The bifurcation basically happened so as to understand the amount of cess leviable on buildings as per their date of creation/ existence.


S. 84 of MHADA says:
Category A of cessed buildings - building erected before 1 September 1940

Category B of cessed buildings - building erected between 1 September 1940 and 31 December 1950 (both days inclusive)

Category C of cessed buildings - building erected between 1 January 1951 and 30 September 1959

Conversion of Ownership - Cessed and Non-cessed building

An existing cessed building which has got tenants already can be converted into an ownership building by forming a society of tenants, under the provisions of the Maharashtra Housing and Area Development Act, 1976 (MHADA).

A written majority of about 70% of the occupiers/ tenants is required to be submitted to the Mumbai Housing and Area Development Board, requesting to move the State Government to acquire land together with the existing building in the interest of its better preservation or for new construction of a building. [S. 103B of MHADA, 1976]

Since there is acquisition of land involved, the owner of the land will be paid an amount for transferring his rights in the land, as determined by the Land Acquisition Officer. [S. 46 and S. 96, MHADA].

The MCGM will not be required to be paid any premium, since it is the State Government that is acquiring the land. There is no question of extension of lease here by the BMC, since it is a proper acquisition of land under S. 103B of the MHADA.

Even if the owner of the building does not own the land but holds it as a lessee or licenses, even then the 70% of the occupiers can request the Board to move the State Government to acquire the land.

They need to also intimate their willingness to pay the charges as mentioned under Chapter VIII of the MHAD Act, for the purpose of such acquisition and bear the costs of reconstruction of the new building.

The Board will then consider the application and after the necessary verification and scrutiny of the proposal, approve it. It will then direct the proposed CHS to deposit within a specified time limit with the Board, 30% of the approximate amount that would be required to be paid to the owner, in case if the land is acquired. It will also intimate the owner about the same.

If the State Government approves the proposal, the Board will forward the proposal of land acquisition to Land Acquisition Officer for initiating the process as per S. 93 (3), (4), (5) and S. 96 of the MHAD Act. [S. 103B (5) of the MHAD Act, 1976] Since the land will be acquired from the owner/ lessee of the land, there is no question of lease involving the BMC.

A non-cessed building will attract the provisions of Maharashtra State Co-operative Housing Societies Act, 1960, and its bye-laws for the same process.

Since there is no legal provision for non-cessed buildings as of now, the provisions of the Maharashtra State Co-operative Housing Societies Act, 1962, and its bye-laws will be applicable.