The Ultimate Legal & Strategic Guide for Plot Buyers, Creditors, Developers & Insolvency Stakeholders
In Maharashtra, several real estate projects were launched on land held in the names of promoters or directors—while the actual project and RERA registration were in the company’s name. This gap has led to serious legal, regulatory, and practical issues when:
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Land is still agricultural,
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The company enters insolvency or CIRP,
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Buyers await registry and possession, and
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Resolution Professionals seek to monetize or revive the project.
This guide outlines the applicable laws, practical strategies, and resolution mechanisms for companies, promoters, homebuyers, RPs, ARs, and planning authorities.
Legal Background
| Area | Applicable Law |
|---|---|
| Agricultural land ownership | BTAL Act, 1948 (Section 63) |
| NA Conversion | Maharashtra Land Revenue Code, 1966 (Section 42) |
| Land ownership records | Maharashtra Land Revenue Rules – 7/12 Extract |
| Layout planning | Maharashtra Regional and Town Planning (MRTP) Act, 1966 |
| Unauthorized layouts | Gunthewari Act, 2001 |
| Homebuyer rights | RERA Act, 2016 |
| Corporate insolvency | IBC, 2016 (Sections 5, 18, 31, 60(5), 66) |
| Hidden ownership cases | Benami Transactions Act, 1988 and Indian Trusts Act, 1882 |
Understanding the 7/12 Extract
The 7/12 Extract (also known as Satbara Utara) is an official land record in Maharashtra that combines:
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Form 7: Records land ownership,
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Form 12: Shows the land use and crop pattern.
It helps identify:
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Whether the land is in the company’s or promoter’s name,
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Whether it is agricultural or non-agricultural,
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Whether there are encumbrances or mutation entries,
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Whether layout or NA conversion has been recorded.
If the builder’s name or company name does not appear on the 7/12 Extract, the land is not legally in their possession, and registry or RERA registration may not be valid.
Access it online at: https://bhulekh.mahabhumi.gov.in
Agricultural Land Requires NA Conversion
Under Section 42 of the Maharashtra Land Revenue Code, no development or sale is permitted on agricultural land unless it is converted to Non-Agricultural (NA) use.
NA Conversion Process:
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Apply to the Collector or SDO,
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Submit: 7/12 extract, registered title deed, planning NOC, architect sketch,
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Pay conversion charges,
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Obtain conversion order and update mutation entry.
Time: 3–4 months
Cost: Based on area and ready reckoner value
Legal Methods to Transfer Land from Promoters to Company
| Method | When to Use | Stamp Duty |
|---|---|---|
| Gift Deed | Promoter transfers land without consideration | 3% |
| Sale Deed | Company pays consideration for land | 6% |
| Development Agreement | Promoter grants development rights | 1% |
| NCLT Order | Promoter uncooperative; RP seeks order | Court-mandated |
| Benami Route | Land purchased with company funds | Declared company asset |
Layout & RERA Registration
Once NA conversion and title transfer are complete, the company must:
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Obtain layout sanction under the MRTP Act from local planning authority (CIDCO/MMRDA/TPA),
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Register the project under RERA if area exceeds 500 sq.m. or number of plots exceeds 8,
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Execute registered sale deeds with buyers post-RERA approval.
In Insolvency- Steps for RPs, ARs, and Buyers
For Resolution Professionals (RPs):
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Identify ownership via 7/12 Extract and funding trail,
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Secure affidavits and registered transfer deeds from promoters,
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Apply for NA conversion and layout approval,
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Include land in asset pool under the resolution plan,
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If promoters obstruct, file under Sections 60(5) or 66 of IBC,
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Where applicable, initiate proceedings under Benami law.
For Authorised Representatives (ARs):
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Gather buyer information and claims,
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Engage with RP to ensure land inclusion in the resolution,
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Represent buyer interests before CoC and NCLT.
For Buyers:
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Demand documentary proof: 7/12 extract, NA order, layout sanction, RERA certificate,
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Insist on registered deeds only post NA conversion and legal layout,
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In CIRP, participate through AR and file claims,
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Where fraud or misrepresentation is suspected, file complaints before RERA/NCLT.
Practical Scenarios and Resolutions
| Scenario | Legal Route |
|---|---|
| Promoter cooperates | Gift/Sale Deed → NA → Layout → RERA → Registry |
| Promoter allows DA | DA + GPA → Layout → RERA → Conditional allotment |
| Promoter uncooperative | RP approaches NCLT under IBC Sections 60(5)/66 |
| Company funded land | Use Benami/Constructive Trust doctrine |
| Surplus land exists | Monetize via resolution plan with CoC/NCLT approval |
Legal Checklist for Buyers and Creditors
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Obtain and examine the 7/12 Extract,
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Verify NA conversion order and mutation entry,
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Insist on layout sanction under MRTP Act,
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Check for valid RERA registration,
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Confirm land is in the company’s name via registered deed,
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Avoid registry of plots on unconverted/agricultural land,
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Engage with AR/RP in case of insolvency or delays.
Strategic Insight
Promoter-held land is not merely a legal irregularity—it is often the only usable asset in stalled projects. If regularized early through proper title transfer and NA conversion, it can unlock RERA registration, project completion, and even resolution funding. If left unresolved, it stalls everything: registry, revival, and resale.
Legal Disclaimer
This guidance note summarizes laws applicable in Maharashtra as of July 2025, including the BTAL Act, Maharashtra Land Revenue Code, MRTP Act, RERA, IBC, and related regulations. Readers are advised to seek professional legal advice specific to their project and factual circumstances. This note does not constitute legal representation or opinion.
