The order is issued under Section 79A of the Maharashtra Co-operative Societies Act, 1960. It supersedes the 4 July 2019 resolution. Paragraph 13 lists the points the agreement must contain. The bank guarantee is the second of those points.

Only the general meeting can fix the amount and the form

Paragraph 13(2) is short and clear. The decision as to what proportion of the total cost of the redevelopment project, and in what form, the bank guarantee from the developer should be, shall be taken with the approval of the general meeting.

The committee does not decide this alone. The developer does not propose a figure that the committee simply accepts. The general meeting must approve both the proportion and the form. Once approved, those terms go into the agreement the managing committee signs with the developer. The same paragraph requires that agreement to be entered within three months, on the terms and conditions the general meeting has approved, under the guidance of the architect or project management consultant.

A bank guarantee fixed outside that meeting is not the guarantee this clause describes.

What the guarantee is meant to secure

The order does not list every situation in which the guarantee may be invoked. It treats the guarantee as a security the developer must give, with the amount and form left to the members.

In practice, the guarantee is the society’s protection if the developer fails to perform. The same paragraph already caps ordinary completion at two years from the foundation certificate, and three years only in exceptional circumstances. It also requires the developer to arrange alternative accommodation, monthly rent and deposit, or a transit camp. The guarantee is the instrument that can be called if those obligations are not met, or if the project stalls, or if the agreed carpet area is not delivered. The exact triggers depend on what the general meeting approves and what is written into the agreement. The order itself fixes neither a percentage nor a standard wording.

Why the members, and not the committee, must decide it

A bank guarantee is the main financial cushion the society has once members leave their flats. If the amount is too small, or the form is weak, the cushion fails when it is needed. The order places that decision with the general meeting so that the people who will live with the consequence approve the security before the agreement is signed. Leaving it to the committee, or accepting whatever the developer offers, is the gap the clause closes.

The preamble of the same order lists the complaints that reached the government, including projects that remain incomplete and members who do not receive what was promised. The bank guarantee is one of the contractual tools meant to address that risk. Paragraph 16 adds that if the order is violated, or if members’ interests are prejudiced in collusion, the responsible office-bearers and committee members are liable to action under Section 79A(3) and Section 78A. Settling the guarantee without the general meeting’s approval sits inside that sentence.

When the decision must be taken

The decision is taken at the general meeting that approves the terms of the development agreement. The committee must then enter into the agreement within three months of the developer’s selection, carrying those approved terms. The bank guarantee is not a detail to be filled in later. It is one of the points the agreement is required to contain, and it must already have the general meeting’s approval when the agreement is signed.

Members who want a particular proportion or a particular form must raise it at that meeting. Once the agreement is signed on different terms, the clause has already been bypassed.

Also Read: Society Redevelopment Part 5: No Proxy, No Private Vote, Registrar’s Officer in the Room

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