Statutory slum rehabilitation powers survive insolvency resolution, and transit rent defaults can justify developer replacement.

Approval of a resolution plan under the Insolvency and Bankruptcy Code does not extinguish a slum rehabilitation authority's independent statutory powers under the Maharashtra Slum Act, because action under Section 13(2) is regulatory and remedial rather than debt recovery. The obligation to pay transit rent to slum dwellers is statutory in character, arising from the approved rehabilitation scheme and its regulatory conditions. On the facts, prolonged non-payment of transit rent and stalled implementation justified invocation of Section 13(2) and termination of the developer's appointment, while the appellate process was not fatally unfair. The challenge to removal substantially failed, though a final limited opportunity to submit a workable proposal was warranted.

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Issues: (i) whether approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016 extinguished or restricted the Slum Rehabilitation Authority's powers under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971; (ii) whether the obligation to pay transit rent to slum dwellers is statutory or merely contractual; (iii) whether invocation of Section 13(2) of the Slum Act and termination of the petitioner's appointment as developer was legally justified; and (iv) whether the appellate decision suffered from procedural unfairness or illegality.

Issue (i): whether approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016 extinguished or restricted the Slum Rehabilitation Authority's powers under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971.

Analysis: The resolution process under the Insolvency and Bankruptcy Code settles pre-resolution monetary claims, but it does not erase independent statutory duties arising under welfare legislation. The Slum Act operates in a distinct field and serves the public purpose of rehabilitation of slum dwellers. The Authority's power under Section 13(2) is regulatory and remedial, not a debt-recovery mechanism. Accordingly, the non-obstante effect of the Insolvency and Bankruptcy Code does not bar the Slum Rehabilitation Authority from acting to protect slum dwellers and ensure completion of the scheme, provided the action is not aimed at recovering pre-resolution dues.

Conclusion: the resolution plan did not override the Slum Rehabilitation Authority's statutory powers, except that pre-resolution monetary claims dealt with in the plan could not be separately enforced.

Issue (ii): whether the obligation to pay transit rent to slum dwellers is statutory or merely contractual.

Analysis: Transit rent is part of the mandatory framework of an approved slum rehabilitation scheme. Though implemented through agreements and letters of intent, it arises from the statutory scheme and the regulatory conditions attached to redevelopment permission. It is not an ordinary private commercial covenant, but a performance obligation owed to a protected class of beneficiaries under a welfare regime.

Conclusion: the obligation to pay transit rent is statutory in character.

Issue (iii): whether invocation of Section 13(2) of the Slum Act and termination of the petitioner's appointment as developer was legally justified.

Analysis: The record showed prolonged delay in implementation and persistent non-payment of transit rent, both of which adversely affected slum dwellers. Delay by itself, in light of revised letters of intent and extended timelines, was not the decisive factor; however, continued default in transit rent remained a serious breach of the scheme's core obligations. Section 13(2) permits corrective action where a developer fails to perform and the project stalls. On the merits, the Authority's decision was based on relevant material and was within the statutory framework.

Conclusion: the invocation of Section 13(2) was substantively lawful and justified.

Issue (iv): whether the appellate decision suffered from procedural unfairness or illegality.

Analysis: The petitioner had notice and was heard. The later corrections to the order were treated as clerical or incidental and did not alter the core decision. No mala fides or fatal jurisdictional error was established. However, in fairness, after the petitioner's revival under the resolution plan, a final and time-bound opportunity ought to have been afforded before completing replacement of the developer, confined to a concrete proposal to address the grievances of the slum dwellers.

Conclusion: the decision was not vitiated by any fatal procedural illegality, but a limited further opportunity to the petitioner was warranted.

Final Conclusion: the challenge to the developer's removal substantially failed, but the matter was moulded by granting a final, limited opportunity to the petitioner to present a workable proposal before the Authority proceeds with induction of a new developer.

Ratio Decidendi: approval of a resolution plan under the Insolvency and Bankruptcy Code does not bar a welfare authority from exercising an independent statutory power to replace a defaulting developer under slum rehabilitation law, because such action is regulatory and not a recovery of pre-resolution monetary claims.

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