State directs performance audit of Slum Act to reform regulatory capture and prioritize public housing over commercial exploitation.

Following the Supreme Court's directive in Yash Developers v. Harihar Krupa Co-Operative Housing Society Ltd. (2024), the Bombay High Court initiated suo motu proceedings to perform a "performance audit" of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971.

The Act, intended as an intermediary measure to eradicate slums, had instead generated a critical mass of litigation (over 1,600 cases pending) and failed to achieve its objectives over five decades.

The court invited submissions from various stakeholders, including slum dwellers, developers (CREDAI-MCHI, NAREDCO), NGOs (NAGAR), and the Slum Rehabilitation Authority (SRA) to identify systemic fault lines.

1. Whether the current statutory framework and implementation of the Slum Act effectively fulfill the legislative intent of slum eradication and individual dignity.

2. Whether systemic reforms are needed regarding the identification of slum dwellers, selection of developers, land apportionment, and effectiveness of statutory remedies.

3. Whether the State should be directed to constitute an expert committee for a comprehensive performance audit of the Act.

The court applied the "Performance Audit" doctrine established in Yash Developers v. Harihar Krupa Co-Operative Housing Society Ltd., which empowers the judiciary to nudge executive reforms when a statute fails to ameliorate the conditions of its beneficiaries.

It applied the "Public Trust Doctrine," holding that government land is a public resource that cannot be surreptitiously diverted for private commercial exploitation under the guise of rehabilitation.

The court also relied on the constitutional right to housing under Article 21 and the Directive Principles (Articles 38, 39, 43, 47) regarding public health and standards of living.

The court utilized Section 3A to 3W of the Slum Act (Chapter I-A) regarding the implementation of rehabilitation schemes.

The court found that the 1971 Act had become a "developer-driven" paradise where the public good was subordinated to private profit.

It observed that "in-situ" rehabilitation on public land often rewards illegal encroachment, incentivizing a cycle of "trespass-regularize-redevelop" that siphons off scarce public resources.

The lack of a "maximum density cap" led to the creation of "vertical slums"—high-rise buildings with poor light, ventilation, and fire safety.

The court scrutinized the selection process for developers, noting that slum societies—often manipulated by builders—lack the expertise to vet financial or technical capacity, resulting in over 500 stalled projects.

The judicial review was deemed an ineffective long-term solution because the statutory grievance redressal bodies (AGRC and GRC) lacked judicial expertise and held infrequent sittings, causing a massive backlog.

The court held that it is high time for a comprehensive review of the statute and directed the State Government to constitute an "Expert Committee" within four weeks for a performance audit.

The committee is ordered to submit its report within ten months to enable systemic reforms on issues including a "freeze" on cut-off dates, developer selection, and the creation of a public housing pool; all interim applications were disposed of, and individual writ petitions were returned to regular benches.