SRA Amnesty Scheme – Withdrawal of Benefits of Financial Institution – Section 34A Slum Act

Judgment dated 2.11.2026 of the High Court of Bombay in Writ Petition No.8052 of 2026 of JC Flowers Asset Reconstruction Pvt Ltd   Vs.  State of Maharashtra and others with connected matters

By these Petitions under Articles 226 and 227 of the Constitution of India, the Petitioners take exception to an order dated 20 April 2026 passed by the Apex Grievance Redressal Committee (AGRC) in Appeal No.357 of 2025 whereby the AGRC made the following recommendations :

 “a) Recommends to the Hon’ble State Government for necessary action to withdraw benefits of amnesty scheme to the Financial Institution and allowing SRA for floating the tenders for appointment of new Developer;

1. b) Further, in the meantime, SRA shall use all deposits from the subject S.R.scheme as well as Bank Guarantee (submitted by erstwhile developer in SRA) for payment of rent to the eligible slum dwellers under subject S.R.Scheme, to the extent possible and pro-rata.
2. c) Also, there are transit tenements, SRA may keep some part of the deposits or Bank Guarantee for maintaining these for the period before new Developers gets appointed.”

On 25 May 2022, the State Government issued a Govt. Resolution introducing a scheme for the initiation of measures to complete the stalled SR schemes. It, inter alia, provided that, the financial institutions who have made investments in the stalled SR schemes, may be granted benefits under the amnesty scheme and such financial institutions be reckoned as the co developer and allowed to implement the stalled schemes. 3.7 The Petitioner in WP No.8052 of 2026 expressed an intention to avail the benefit of the aforesaid amnesty scheme. By an order dated 24 September 2024, the Committee constituted for the implementation of the amnesty scheme approved the proposal of the Petitioner to appoint Aspect Buildcon LLP as the developer for the subject SR scheme and directed the SSP CEO, SRA, to initiate proceedings under Section 13(2) of the Slum Act, 1971. 3.8 On 6 January 2025, the CEO, SRA, passed an order thereby terminating the appointment of M/s. Omkar Ventures Pvt. Ltd., and the connected entities as developers of the subject SR scheme and confirmed the appointment of the lender / joint developers M/s. Piramal Capital and Housing Finance and the Petitioner along with the developer authorized by the lender, M/s. Aspect Buildcon LLP, in terms of the order passed by the State Government under the amnesty scheme. The financial institutions, including the Petitioner were directed to take necessary steps including the compliance of Circular No.210 of the SRA, regarding the payment of the transit rent.

On a plain textual reading of Section 34A of the Slum Act, 1971, the AGRC is empowered to exercise the powers and perform functions in two capacities. First, as the Appellate Authority against the orders of the Chief Executive Officer, SRA or any officer to whom the powers are delegated by the CEO, as provided under that Act. Second, as the authority to which any issues or matters are referred by the State Government.

This judgment strengthens the regulatory tools available to the State and SRA in dealing with stalled slum rehabilitation projects, particularly where lenders step into the shoes of defaulting developers under the Amnesty Scheme.

A financial institution cannot avail the benefits of the Amnesty Scheme solely to protect its security interest while postponing rehabilitation obligations. If slum dwellers continue to suffer due to delay, the State is justified in taking corrective measures, including withdrawal of amnesty benefits and appointment of a new developer.

• A large slum rehabilitation project involving approximately 7,200 eligible slum dwellers was originally allotted to Omkar Ventures Pvt. Ltd. (later restructured as Manomay Ventures Pvt. Ltd.).
• The project remained substantially incomplete for over 18 years; transit rent remained unpaid and rehabilitation buildings were unfinished.
• Yes Bank Ltd. had advanced approximately ₹780 crores to the developer. Its debt was subsequently assigned to JC Flowers Asset Reconstruction Pvt. Ltd., an ARC registered under the SARFAESI Act.
• Pursuant to the Government Resolution dated 25 May 2022 (Amnesty Scheme for stalled SRA projects), JC Flowers was permitted to step into the project through a developer, Aspect Buildcon LLP.
• Aspect Buildcon LLP subsequently withdrew from the project.
• Despite repeated opportunities, JC Flowers failed to appoint a replacement developer.
• Complaints regarding non-payment of transit rent and non-implementation of the scheme led the State Government to refer the matter to the Apex Grievance Redressal Committee (AGRC) under Section 34A(2)(ii) of the Slum Act.
• AGRC recommended:

1. Withdrawal of amnesty benefits granted to the financial institution.
2. Permission to SRA to float tenders for appointment of a new developer.
3. Utilization of project deposits and bank guarantees towards transit rent.

The ARC and erstwhile developer challenged these recommendations

Financial institutions availing amnesty benefits assume corresponding obligations

The Amnesty Scheme was introduced to enable lenders to recover value from stalled projects.

However, the Court held that benefits under the scheme are accompanied by obligations:

• appointment of a competent developer,
• payment of transit rent, and
• implementation of rehabilitation works within prescribed timelines.

Ratio

A lender cannot invoke the Amnesty Scheme merely to safeguard its financial exposure while neglecting rehabilitation obligations imposed by the scheme

A lender or ARC stepping into a stalled SRA project under the Amnesty Scheme must prioritize rehabilitation obligations and cannot indefinitely defer implementation on the ground of pending insolvency or recovery proceeding