Short Answer

Yes, members are protected against fraud or false promises made by the developer during redevelopment under multiple legal provisions — primarily Section 74 of the Gujarat Cooperative Societies Act, 1961, Section 12 and Section 18 of the RERA Act, 2016, and the Gujarat Ownership Flats Act, 1973. These laws ensure that developers are held accountable for misleading representations, delays, or non-performance.

Detailed Explanation

The redevelopment of a cooperative housing society involves complex legal and financial commitments between the society and the developer. To protect members from fraud, false claims, or unfulfilled promises, several statutory safeguards are in place.

• Protection under the Gujarat Cooperative Societies Act, 1961:

Section 74 mandates that the society’s managing committee act transparently and in the best interest of all members.

The committee must verify all proposals, documents, and developer credentials before signing the redevelopment agreement.

If any fraud or misrepresentation by the developer comes to light, the committee can terminate the agreement with the approval of the Registrar and take legal action to protect the society’s interests.

• Protection under the Real Estate (Regulation and Development) Act, 2016 (RERA):

Section 12 – Misleading Advertisement or Prospectus:

If a developer makes a false promise or publishes misleading information about the project (for example, extra floor space, amenities, or possession timelines), buyers or members can file a complaint with GujRERA and seek refund, interest, and compensation.

Section 18 – Failure to Complete or Deliver Possession:

If the developer does not honor agreed timelines or deliver as promised, members are entitled to compensation and can demand a refund with interest.

Section 31 – Complaint Mechanism:

Members can file complaints directly with GujRERA online, even individually, without needing society approval.

• Protection under the Gujarat Ownership Flats Act, 1973:

Section 11 requires the promoter (developer) to disclose all details of the project, including sanctioned plans, carpet area, FSI utilization, and amenities.

Concealment or falsification of any such information is considered a criminal offence and can lead to prosecution.

• Preventive Measures for Societies:

To safeguard against fraud, societies should:

Conduct due diligence on the developer’s financial background, past projects, and RERA registration.

Ensure the redevelopment agreement is registered and contains penalty clauses for false commitments or delays.

Retain legal and technical consultants to verify all promises against actual approved plans.

Demand a bank guarantee or performance bond from the developer before vacating premises.

• Remedies in Case of Fraud:

If the developer fails to honor promises or engages in fraud:

The society can terminate the agreement through a resolution and approach the Registrar of Cooperative Societies for intervention.

Members can file a RERA complaint under Sections 12 or 18 for compensation.

In serious cases, the society can initiate criminal proceedings under the Indian Penal Code (IPC) for cheating or misrepresentation.

Real-world Scenarios

Scenario 1: A developer in Ahmedabad promised a swimming pool and gym in the redevelopment plan but failed to construct them. The society filed a complaint under Section 12 of RERA, and the Authority ordered the developer to either build the promised amenities or pay compensation.

Scenario 2: In Surat, a developer falsely claimed 1.8 FSI approval to lure members. The society verified the documents and found the claim false before signing the agreement, preventing potential fraud.

Scenario 3: In Vadodara, the builder delayed possession by 18 months and refused rent payment. Members approached RERA under Section 18 and received both delay compensation and interest.

References

Section 74 of the Gujarat Cooperative Societies Act, 1961: Official PDF

Section 12, 18, and 31 of the RERA Act, 2016: Gujarat RERA Act

Section 11 of the Gujarat Ownership Flats Act, 1973: Official PDF

Urban Development and Urban Housing Department Redevelopment Guidelines, Government of Gujarat (2019).