Sunday, May 26, 2013

FSI NORMS FOR REDEVELOPMENT ACROSS MUMBAI

FSI NORMS FOR REDEVELOPMENT ACROSS MUMBAI
FSI or Floor Space Index means the area of construction allowed on a particular plot of land as per the Development Control Rules. In Mumbai, the permitted FSI varies in various locations depending upon the land and type of existing residence whether a Slum, Tenanted, MHADA, Cluster or a Co-operative Society and also the project to be redeveloped.

As per Development Control Rules 33(7) of Mumbai, in the case of cess building, every tenant who is having less than 300 sq ft carpet area shall be given minimum of 300 sq ft ownership flat and the tenants having 300 to 753 sq. ft area, the existing area. Any area above 753 sq. feet will not be granted to the tenants.

Of course, the maximum ceiling was 2.5 Floor Space Index (FSI) under this category of buildings. Many of the old buildings in areas like Girgaum, Grant Road, Parel, Byculla, Dadar were not becoming viable under the above rules and therefore, the government took a decision to increase the same to 3 FSI. This has now encouraged the landowners and developers to come forward and redevelop such buildings.
For information, the cess building is one where the landlords of tenanted buildings do not care to maintain the same in case of need, have been taken over by the Mumbai Repair and Reconstruction Board for maintenance by charging a nominal amount as repair cess every month.

In case of redevelopment of plots under the above category, the builder gets incentive FSI of 50% or 60% of FSI over and above the FSI consumed to re-house the existing tenants. In such cases FSI goes beyond 6 or 7. There is no limit. For MHADA layout, the FSI is 2.5. In case of projects approved by MMRDA in Mumbai Metropolitan Region other than Mumbai under Rental Housing scheme, the FSI allowed is 4.
In other words, now in suburbs, private buildings will get 2.7 FSI including fungible and in cess buildings and slums FSI of 4.05 (335% of 3) including fungible will be available. The fungible FSI now can be included in the flat and thus the area of the flat will go up. Therefore, redevelopment activities are in full swing with every other building surrounded by tins.

Further, under the amended DCR effective from 06/01/2012, a developers will be getting fungible FSI of 35% free of premium to the existing tenants and on sale portion 35% fungible FSI by paying a premium. The fungible FSI can be included in the flat and thus the flat area can be further increased.
The existing flat owners and in the other redevelopment like slum, cess buildings etc, the existing tenants will be given fungible FSI for construction free of FSI and on the sale portion, the developer has to pay the premium of 60% of the Ready Reckoner Rate for residential construction area of Fungible FSI and for commercial 80% of the Ready Reckoner Rate as the premium.

With regard to the FSI allowed for slum related projects, the Slum Rehabilitation Authority (SRA) has declared certain areas occupied by slum as the land on which SRA scheme can be redeveloped in which the existing occupiers in slum gets 269 sq ft carpet area free of charge with a restrictive clause that they should have been settled in such slum before 1995. There is a proposal to relax the said clause that the term of settling down in such slum may be extended to 2000. However, the confirmation to this effect is awaited.

The state government has formally increased the floor space index (FSI) for slum rehabilitation projects from 2.5 to a maximum of 4.
The state urban development department issued a notification under section 154 of the Maharashtra Regional and Town Planning Act (MRTP), 1966 stating that projects involving all high-density slums-those having over 650 tenements per hectare-are entitled to an FSI of 4, whereas those with lower tenement density are entitled to 3. Senior officials from the urban development department said that the notification highlights that all procedural formalities concerning the higher FSI move are now complete.

FSI is a development tool that determines the extent of construction permitted on a plot. It is a ratio of permissible built-up to the total area of the plot. A higher FSI would allow developers additional construction on slum land. As per the notification, approvals for redevelopment projects with higher tenement density will be cleared by the state government. The Slum Rehabilitation Authority retains powers to approve schemes with lower tenement density.

Dilip Shah
Senior Counselor and Analyst for Redevelopment of Housing Societies and Society Laws
9819825752, 32411533
www.redevelopmentofhousingsocieties.com
www.redevelopmentofhousingsociety.com



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Friday, January 11, 2013

Senior Counselor and Analyst for Redevelopment of Housing Societies and Society Laws


                               REDEVELOPMENT OF HOUSING SOCIETIES
We are experienced and Senior Counselors and Analysts for Redevelopment of Housing Societies and Society Laws since last many years with in-depth study of integral techniques and are exclusively skilled in the various areas of Redevelopment of Housing Societies and Society Laws. The Resident Members / Managing Committee Members of Housing Societies gain valuable insights about the fundamental guiding principle of various laws applicable in the process of redevelopment.
Our professional competence in the field of redevelopment is the outcome of skilled application of our knowledge and expertise. This includes interviewing and counselling skills, negotiation and mediation skills, research and writing skills, communication and advocacy skills, drafting skills, fact gathering and articulation skills, time and stress management skills, etc. all of which can be acquired through our guidance on entire process of redevelopment supported by theoretical learning.

It is indeed our pleasure to introduce our exceptionally unique websites distinctively designed to educate the adolescent Members, Managing Committees and Tenants of thousands of Co-operative Housing Societies and Tenanted Buildings who like to learn what is redevelopment and its built-in intricacies. The addresses of our two websites are as under:


With prior appointment on 9819825752 or 32411533, our consultancy slots of two hours for the Meetings are from 12.00 noon to 2.00 p.m. and in the evening from 6.00 p.m. to 8.00 p.m. on all the days of the week (Including Sundays and Holidays). If you wish to avail our services, call on us between 12.00 noon and 2.00 p.m. or in the evening between 6.00 p.m. and 8.00 p.m. for an appointment.   

We hold direct interaction with the Resident Members / Managing Committee Members / Tenants on the various parameters that are involved in Redevelopment of Housing Societies and solve most of their problems / provide adequate direction to represent their cases to various authorities. At present, we have around 70 to 80 Housing Societies including Cessed / Non-Cessed Buildings from Western / Central Suburbs and South Mumbai on our scroll that regularly avail our services at any point of need.
We are well practiced in major laws such as Transfer of Property Act, 1882, Registration Act, 1908, Indian Contract Act, 1872, CRZ laws, State laws like Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963, Maharashtra Co-operative Housing Societies Act, 1960, Stamp Duty Laws, Development Control Rules, Environmental Law, Tree Cutting Laws, Municipal Laws, Slum Redevelopment Scheme etc.
If there are serious irregularities in the process of redevelopment and when they are noticed halfway, they can jeopardize the redevelopment and the consequences can be severe as what the law does not permit, cannot be done either by the Builder / Developer or by the Society.
We are earnestly thankful to our Media Partners Times of India (Times Property), Hindustan Times (HT Estate), Navbharat Times, CW Property, Mumbai Mirror and First Post for awarding suitable coverage to our articles and publishing our expert comments encompassing various features ruling the Redevelopment of Housing Societies and Societies Laws.
The most important factors that bring out the successful results in any project of redevelopment and they are 1) The selection of correct Builder / Developer and 2) The precise drafting of legal documents governing the entire process of redevelopment.
The Housing Societies often get confused about choosing the best or right or so to say, one HONEST BUILDER / DEVELOPER. There are many cases where the dreams of Members of the Housing Societies are crashed when the terms of Development Agreement are breached and time schedule of completion of project is not maintained by such insatiable Builders / Developers.
There are types of voracious Builders / Developers of III tire who have abandoned or have delayed the redevelopment projects due to various reasons mainly due to paucity of inflow or diversion of funds from the assigned projects in order to acquire / pocket more and more projects beyond their financial means or are simply not capable to execute them due to lack of competency and precision.
Since the redevelopment of a property is an exigent issue now a days with offending Builders / Developers and their felonious and offending treats to inexperienced Managing Committees of Housing Societies, we especially impress our Client Societies to be vigilant on the issues like Delivery Delays, Broken Promises, Breach of Trust, Cheating, Unfair Trade Practice, Deficiency in Service, Abandonment of Redevelopment Projects half way, Corruption and Malpractice to pocket the Redevelopment Assignment, Illegal Constructions, Violation of Acts, Laws and Rules etc.   

Redeveloping a home is a major decision for the lifetime and one would not want to take chances. It is said that till you do not leave your Society, you are the KING. The day on which you handover your property to the Builder / Developer for redevelopment and leave your Society, the Builder / Developer is the KING.   

Our articles are published by numerous websites on Internet for the benefit of Housing Societies in Mumbai to educate their Members and caution them to be cautious from irregularities and illegalities in redevelopment by the Builders / Developers, targeting the na├»ve and innocent Members by major numbers of corrupt Managing Committees, Rampant Corruption in BMC, Flagrant violation of Rules and Regulations by the Builders / Developers and how to beware of Cheat and Fraud Builders / Developers and their dishonest acts.

We are well equipped with almost all the areas with regular updates of latest developments in Realty Sector and provide an exclusive knowledge to tackle unresolved problems and solutions for successful and winning completion of redevelopment projects which is a dream of the day for any middle class family man. However, there are numerous factors / questions that arise during the ongoing process of redevelopment and they are to be taken care of diligently by seeking advice / counseling from Redevelopment Experts who are abundantly conversant with Laws of Redevelopment.
We persistently endeavor our best by updating our website periodically to cater the unsurpassed knowledge of various aspects of redevelopment and unique articles written with exclusively powerful, precise and easy-to-understand content for every individual.
We request our beloved patrons of all Housing Societies / Apartment Owners / Cessed and Non Cessed Buildings in their apex interest to regularly visit / revisit our websites and stay updated on latest features covering up-to-the-minute topics including Govt. Policies on Realty Sector related to redevelopment.

A Redevelopment Agreement, as the name suggests, is Principal Agreement executed for the redevelopment of an old building, between the Office Bearers of Managing Committee / Landlords and the Builder / Developer. But it's not as simple as it sounds; the Housing Societies / Landlords need to exercise necessary caution to ensure that the residents' corporate interest is safeguarded.

The legal documents concerning the redevelopment projects are essentially to be precise and leaving no room for any ambiguity on the agreed terms. Documents drafted meticulously ensure that the parties truly agree on the contents and prevent future disputes caused by differing interpretations of the document. Drafting / Vetting of legal documents accurately is our privileged skill requiring close attention to terms and conditions to be documented in favour of the Society.

While it is easy to draft terms addressing the primary purpose of a legal document, the best documents anticipate all those possible events that might interfere with the client’s intent. We anticipate these events to help our Client Societies / Landlords to determine and arrest such eventualities in documentation.

We are well adept in Laws governing the Redevelopment of Housing Societies and distinctly experienced in DRAFTING / VETTING /  ANALYZING / SCRUTINY and INSPECTION of documents like Feasibility Reports, Tender Documents, Draft of Memorandum of Understanding, Development Agreement, Power of Attorney, Bank Guarantee and Individual Agreement to be executed with each member of the Society that are generally provided by the Builders / Developers to the Housing Societies which are drafted in a manner to provide escape areas / full protection to the Builders / Developers by neglecting the vital terms and conditions protecting the interest of the Society.
The venture of redevelopment of any property involves a massive volume of multi-crores of rupees as also the fate and future of all the Resident Members of the Society. Once the property is handed over to the Builder / Developer, the Society has only legal documents in their hand to rely upon, in case of any adverse situation in accomplishing the successful task of the redevelopment. Our approach in respect of drafting / analyzing all the legal documents pertaining to the redevelopment is scientific and systematic.
After precise and meticulous study, these drafts after methodically vetted, scanned and scrutinized theoretically by us and the gray areas / pitfalls and shortfalls are exposed and a written report is given to our Client Society apprising them the areas of alerts and awareness and impress upon the Builder / Developer to include / provide due coverage before finalizing all the legal documents of redevelopment in corporate interest and safety of the Societies to achieve the desired results.
The Housing Societies must study and understand and try to forestall the pitfalls under Financial / Legal and Technical areas to be termed in Development Agreement benefiting the Members as many of these areas are conveniently ignored / not documented in the Development Agreement and we impress upon the Housing Societies to impress upon and compel the Builder / Developer to add those ignored conditions in Development Agreement in the corporate interest of the Society to protect their hard earned homes.

We are prepared to provide in most flawless and impartial manner, our all-round competent consultancy services pertaining to redevelopment project of your Society including required comprehensive guidance online. All our Client Societies in Mumbai and Maharashtra have been successfully benefited by our all-round and timely assistance for successful completion of their redevelopment projects.  

At any point of need, our association with you shall remain online for any legal advice / clarification all the way through which would benefit your Managing Committee while negotiating the consequential and important terms with the Builders / Developers, sorting out multifaceted or intricate issues pertaining to the redevelopment project of your Society.

Dilip Shah
Senior Counselor and Analyst for Redevelopment of Housing Societies and Society Laws

Tuesday, February 28, 2012

REDEVELOPMENT OF OLD BUILDINGS AND AWARDING THE BCC BY LOCAL AUTHORITIES

REDEVELOPMENT OF OLD BUILDINGS AND AWARDING THE BCC BY LOCAL AUTHORITIES

What is a Building Completion Certificate (BCC)?
Once the project is completed, the Local Authority inspects the premise on the basis of the Building Plan and awards the Building Completion Certificate if it is satisfied.

During the construction of a building, the Builder is supposed to get No-Objection Certificates from various Departments of the Local Development Authority for basic amenities such as water and electricity, stating that the building construction is not violating any norms in the area.

According to Apartment Acts of various States, after completion of a project, it is mandatory for the Builder or the owner of a Stand-Alone Property to get a Building Completion Certificate from the Local Authority to ensure the supply of basic amenities.

The Builder then applies to the Departments yet again along with a copy of the Building Completion Certificate to get water, electricity connection and other basic amenities for the project.

Provisional Building Completion Certificate:

Sometimes Builders get a Provisional Building Completion Certificate to hand over the possession of Apartments in a newly constructed project. In the meanwhile, the Builder finishes the remaining work such as painting and landscaping. However, the Provisional Certificate is valid only for six months. After the expiry of this period, the Builder has to apply for the Final Building Completion Certificate.
Why is it important?

Apart from ensuring that basic amenities, such as water, electricity and drainage system are provided, a Building Completion Certificate ensures that the Builder/Owner has constructed the building according to the approved Building Plan. Without obtaining the Building Completion Certificate, the Builder cannot give the possession of the house to the buyer.

The Builder has to construct the building as per approved plan without any deviations and violations. Issuing of Building Completion Certificate will ensure that the Builder has constructed the building as per Approved Plan.
If the Builder cannot get the Building Completion Certificate, there could be trouble in terms of delay in possession. For instance, in the Commonwealth Games Village (CWG) in New Delhi, it was found during the process of awarding the Building Completion Certificate the Builder had violated norms of the Floor Area Ratio Limit by constructing on a larger area than mandated. While the Government is yet to decide on awarding the Building Completion Certificate and Regularization of the extra area, buyers in the project are waiting for possession.

What you can do?

In cases where your Builder has been unable to procure a Building Completion Certificate, you can directly ask the Local Authority to hand over the possession to you. You can apply to the Authority independently by forming a Residents’ Welfare Association (RWA). The Authority then becomes responsible to answer your application within 40-50 days of your applying. If the Authority also fails to offer you possession, you can approach the Court.

Dilip Shah & Associates
Senior Counsellors and Analysts for Redevelopment of Housing Societies
www.redevelopmentofhousingsocieties.com
dilip7shah@gmail.com
9819825752, 3241153

Sunday, July 3, 2011

UNHEALTHY AND UNLAWFUL PRACTICE BY CERTAIN DEVELOPERS IN REDEVELOPMENT OF HOUSING PROJECTS IN MUMBAI

REDEVELOPMENT OF HOUSING PROJECTS IN MUMBAI
UNHEALTHY AND UNLAWFUL PRACTICE BY CERTAIN DEVELOPERS IN REDEVELOPMENT OF HOUSING PROJECTS IN MUMBAI :
-( Aftermaths of Development Agreements executed with Societies)

Now a day, the Redevelopment proposals are grossly mooted by the Developers in old and dilapidated Cooperative Housing Societies in Mumbai Central and Suburbs.

As per the Plot area and the loadable TDR/FSI in permissible ratio i.e. 1:1, 1:1.3, 1:2 or 1:2.5 or as applicable, the Developers begin discussions with the Office Bearers/Architect/members of the Societies for the Redevelopment of Society’s property.

The Developers offer the members a bigger and posh dream houses with additional carpet area/rooms over the existing ones, displacement compensation for alternate accommodation, corpus fund and eye-catching amenities etc.

The Developers construct either additional flats or commercial joint on the remaining area available at their disposal on the same plot and sale it in open market to earn the surplus. The Development Agreements and the Power of Attorneys are finally executed between the Societies and the Developers to complete the projects.

Initially, to obtain the IOD/CC from MCGM, the Developers submit the plans to MCGM as per the agreed terms in the Development Agreements executed with the Housing Society.

It has been often noticed that thereafter, during the process of redevelopment, the terms of Development Agreements as agreed upon, the unhealthy attempts with ulterior motives are made by the Developers to twist and grossly violate the rules of MRTP and DCR by unlawful planning and constructing additional/unauthorized areas that are beyond their entitlement (i.e. beyond the plot FSI and the TDR/FSI loaded) for their hidden financial gains. The buyers of such unlawful flats/properties land themselves in deals that lead to litigation at a later date.

At this stage, the Developers submit the amended plans for additional structures to MCGM which are not in conformity with the Development Agreements executed and additional/unauthorized constructions are carried out without informing beforehand or seeking formal approval from the Society's architect/Society as per the rules and bye-laws or execution and registration of further necessary Agreements to this effect.

The ill- observance of MRTP/MCGM/DCR rules and guidelines are overlooked by the sympathetic officials of the MCGM and the plans so submitted, are sanctioned without verifying the eligibility or its conformity with the Development Agreements.

The Projects are completed and the Occupancy Certificates are issued without the proper inspection neither carried out by the MCGM officials nor taking pains to verify whether the actual measurement of the constructed areas tally with the final plans submitted.
It is further noticed that upon the completion of the projects, these additional/unauthorized constructions are silently regularized at the last moment by executing the Supplemental Agreements with the Office Bearers of the Societies with green handshakes/offering them handsome rewards.

Further, it is learnt that in many Societies, the Managing Committees, who execute the documents with the Developers, do not possess any legal holding as they have never filed/nor aware of filing the Indemnity Bond in Form M-20 on a Stamp required under Section 73(1AB) and Rule 58A of the Maharashtra Cooperative Societies Act 1960.
The members who fail to execute such Bonds within the specific period are deemed to have vacated his office as a member of the committee and no legal effects can be given to the documents executed by them with the Developers.

The gullible members of the Societies, unaware of the laws and rules, are taken for a ride by the Developers and the satisfied Office Bearers together with their interested associates once the projects are completed and since the members aim to get themselves re-housed in the redeveloped premises and on the other hand, the hidden financial benefits of such unauthorized/additional areas go to the Developers.

There are numerous news clips in various news papers with regard to Mumbai High Court’s reprimanding and lambasting severely the MCGM for violation of Development Control Act & Rules and are instructed to immediately issue the demolition orders to pull down such unauthorized/additional constructions and take stringent action against the erring officials for their lapses. Reference is necessary for the latest news appeared in Times City of Times of India Dated 12th Sept.2008-Illegal Constructions: HC blasts MCGM and MHADA for illegal and unauthorized constructions on Andheri-Versova- Jogeshwari belt have come under scanner of the Mumbai High Court.

Under the Development Control Rules, it has been stated that in case of unauthorized development, the Commissioner shall - (a) take suitable action which may include demolition of unauthorized works as provided in section 53 of the MRTP Act, 1966 and the relevant provisions of the Mumbai Municipal Corporation Act, 1888 and shall take suitable action against the licensed technical person or the architect concerned.

Upholding the law for the welfare of the community is more valuable for society than extra heap of cement and concrete. Plenty of judgments are overlooked by greedy Developers to earn extra money.

The members of the Cooperative Housing Societies in Mumbai are required to be vigilant
while handing over their Societies for redevelopment to such Developers who, by rewarding the Office Bearers and their associates, carry out the unauthorized/additional constructions for their hidden financial gains which they are not entitled to. When unauthorized constructions beyond the laws are the statutory norms of such Developers rather than the exception to the rules, the strict laws of the land have always to be upheld by taking stern actions under the laws.

Dilip Shah
Counselor and Analyst for Redevelopment of Housing Societies
dilip7shah@gmail.com
9819825752
32411533

Friday, July 1, 2011

REDEVELOPMENT OF HOUSING SOCIETIES: BUSTING OF REDEVELOPMENT PROJECTS OF HOUSING SOCIE...

REDEVELOPMENT OF HOUSING SOCIETIES: BUSTING OF REDEVELOPMENT PROJECTS OF HOUSING SOCIE...: "BUSTING OF REDEVELOPMENT PROJECTS OF HOUSING SOCIETIES The Redevelopment scheme within last few years that has hit Mumbai with great poten..."

BUSTING OF REDEVELOPMENT PROJECTS OF HOUSING SOCIETIES

BUSTING OF REDEVELOPMENT PROJECTS OF HOUSING SOCIETIES

The Redevelopment scheme within last few years that has hit Mumbai with great potential and has, by and large, seen disagreement from members of the Society time and again. Redevelopment projects have often collapsed due to the growing demands of the members in majority. There is a high level of diffidence amongst the members when the idea of Redevelopment is proposed. There is persistent fear of insecurity whether the Builder will deliver the redeveloped property or leave it intermediately.

As we all know that the Builder is earning generous amount out of a Redevelopment project and hence, the members start becoming more desirous at times. There are rounds of negotiations before a time to finalize the conclusive agreement is reached. The major reason for failure of many Redevelopment projects is that the members themselves don’t trust the Office Bearers and Members of their Managing Committee.

As the Managing Committee handles the entire process, often there is a suspicion of their being hand in gloves with the Builder and at times, it is assumed to have been true as the Managing Committee members also look forward for their personal gains rather than ensuring a fair deal for members of the Society.

First and foremost, the Housing Society members must ensure that their Office-Bearers and the members of the Managing Committee are elected as per the provisions of Maharashtra Co-operative Societies Act, Rules and Bye-Laws. In short, please ensure that the entire Managing Committee is lawfully formed.

Secondly, members of the Co-operative Housing Societies to please note that the entire exercise of redevelopment efforts will come to a zero if the mandatory filing of Indemnity Bonds in Form m-20 is not complied within 45 days from the date of election or within 15 days of their assuming the office whichever is earlier. Even a delay of one day and the entire Managing Committee including Office Bearers shall have no legal footing to run the Society!

There are several instances of disgruntled members filing cases against the Managing Committees for not having executed the mandatory bonds, to derail the process of redevelopment. The Managing Committee may even get caught or be slapped with fraud and forgery charges for entering into any Redevelopment Agreement with the builders as has happened with a Co-operative Housing Society on the Hill Road in Bandra., Mumbai.

The Society here entered into an agreement with a builder for redevelopment of their property without executing the mandatory bond in Form - 20 under Rule 58-A and Sub Section 73(1AB). When it realized the deal will fall through for not having executed the bond within fifteen days of their election, the elected Office Bearers resorted to trickery by purchasing stamp papers and back-dating the Indemnity Bonds. However an alert member found their trickery and registered cases against them under Sections 420, 465, 467 and 471 of the Indian Penal Code.

The Indemnity Bond in Form M-20 is to be filled in and submitted by each of the Managing Committee Members state that the he shall be jointly and severally responsible for all the decisions taken by the Managing Committee during its term relating to the business of the Society and shall be jointly and severally responsible for all acts and omissions detrimental to the interest of the Society as provided in Sub Section 73 (1AB) of the Act.
The member, who fails to execute such a bond within the specified period, shall be deemed to have vacated his office as a member of the committee. Bombay High Court too has upheld this MCS Act provision.

On one hand, it has also been experienced that though the members of the Society are no fools or illiterates but on the other hand, due to their peaceful nature and out of fear, are agreeing and resolving every un-constitutional and unlawful proposal of Redevelopment backed by ulterior motives moved by the present Office Bearers in various Meetings. Whoever tries to protest against their barbarism, the stooges of these Office Bearers and the Managing Committee members, are in a readiness to either snatch away the mike from hands of ordinary members who raise the voice or physically attack on the protesters in meetings.

It is learnt that many a times, even if the majority of members have agreed, a few members become trouble-makers and refuse to accept the terms of settlement and succumb to pressure tactics later and all these consume a lot of time. Redevelopment thus often suffers due to lack of harmony and understanding amongst the members themselves.

The another reason for the stagnation stage or a halt in Redevelopment project is that during the process of Redevelopment, the terms of Development Agreements as agreed upon, the unhealthy attempts with ulterior motives are made by the Builders/Developers to twist and grossly violate the rules of MRTP and DCR by unlawful planning and constructing additional/unauthorized areas that are beyond their entitlement (i.e. beyond the plot FSI and the TDR/FSI loaded) for their hidden financial gains.

The buyers of such unlawful flats/properties land themselves in deals that lead to litigation at a later date.

In most cases, the Developer negotiates the deal of restoring an old building with the Managing Committee of the society. In which case, the onus is on the Managing Committee to ensure that the interests of the members are protected and they need to take all the precautions. Lack of due diligence on the part of members of the Managing Committee can prove damaging in the long run and thus members need to be doubly sure before they agree for the Redevelopment and need to make sure that they too get maximum returns.

Another focal area is payment of rent by the Builder for transit accommodation. No buildings is completed within 18 months and hence, make sure that an advance rent of 24 months is received in advance and a suitable penalty clause in the Development Agreement is inserted on default in handing over the possession within the stipulated time.

A Redevelopment agreement (Known as Development Agreement), as the name suggests, is an agreement for the restoration of an old building, between the members and the Developer. But it's not as simple as it sounds; the Housing Society needs to exercise necessary caution to ensure that the members' interest is safeguarded. In other words, the Redevelopment agreement should be a members-friendly and not the in favour of the Builder.

It's always advisable to circulate the draft of the Development Agreement well in advance and then discuss the in detail at the General Body Meeting so as to arrive at a consensus about the terms and conditions in order to avoid the later hassles. Most important is to ensure that the Builder has a sound reputation with adequate financial footing to sustain through the entire process of Redevelopment. If possible, the members of the Society must visit the site of some of his previous projects so that they get first-hand information about the Builder.

Since the property of many members is at stake, it is advisable to engage professionals such as Lawyers, Technical Supervisor, Architects and Structural Engineers in getting a valuable counseling on taxation, legal or architectural issues connected to dealing that the Society is entering into.

The process of Redevelopment needs to be made more see-through right from the time the societies initiate to identifying, negotiating and selecting/finalizing the Builder. However, this rarely happens.

The guidelines as contained in the Circular bearing No. CHS 2007/CR554/14-C, issued by the Government of Maharashtra, Co-operation, Marketing and Textiles Department Date: 3rd January 2009 which contains a Directive under Section 79(A) of Maharashtra Co-operative Societies Act 1960 for all the Co-operative Housing Societies in the State of Maharashtra regarding the Redevelopment of Buildings of Co-operative Housing Societies has invariably to be followed strictly.

There some common issues that cause problems and they are greed of Managing Committee members, non-cooperation from members, disputes regarding the clauses in the agreements, income tax liabilities and unrealistic expectations from Builders etc.

The discussion over Redevelopment is endless; the perception on the whole is certainly beneficial, especially for a city like Mumbai. But one needs to take care that the common good is not sacrificed over individual interest.

Dilip Shah
dilip7shah@gmail.com
Senior Counselor and Analyst for Redevelopment of Housing Societies
9819825752, 32411533

Thursday, June 30, 2011

REDEVELOPMENT OF OLD HOUSING SOCIETIES IN MUMBAI: INDEMNITY BOND IN FORM M-20 UNDER THE MAHARASHTRA CO-OP SOCIETIES ACT: CONTRIBUTED BY DILIP SHAH

REDEVELOPMENT OF OLD HOUSING SOCIETIES IN MUMBAI: INDEMNITY BOND IN FORM M-20 UNDER THE MAHARASHTRA CO-OP SOCIETIES ACT

I take this opportunity to write something on Bond required to be executed by the members of the Managing Committee of the Co-operative Housing Societies within 45 days from the date of their assuming the office whichever is earlier, under the Maharashtra Co-operative Societies Act 1960.

The provision is important because if the bond is not executed within 45 days from the date of their assuming the office whichever is earlier or if the member fails to execute the bond he shall be deemed to have vacated his office as a member of the Managing Committee.

Now what happens to many housing societies, where Managing Committees are unaware, ignorant or have simply ignored or not bothered about the bond? In such cases, according to Registrar’s office “we offer to disband the committee and call for fresh elections”
The member who fails to execute such a bond within the specified period shall be deemed to have vacated his office as a member of the committee. Bombay High Court too has upheld this provision of MCS Act.

Attention is also invited to the Bye-law no 136 of the old Model bye-laws and bye-law no 138 of the new Model bye-laws which lay down as under:
"The members of the Committee shall be jointly and severally liable for making good any loss which the society may suffer on account of their negligence or omission to perform any of the duties and functions cast on them under the Act, Rules and Bye-laws of the Society."

In addition to the above bye-laws, an amendment was inserted by Mah. 41 of 2000, S. 3 of the amending Act (w.e.f. 23-8-2000) to Section 73 by introducing Section (1AB) to the Maharashtra Co-operative Societies Act 1960. Similarly Rule 58-A was inserted by G.N. of 18-2-2002 in the Maharashtra Co-operative Societies Rules, 1961 and Form M-20 was also inserted by G.N. of 18-2-2002.

Section 73(1AB) of the Maharashtra Co-operative Societies Act 1960 is reproduced below:
"The Members of the Committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society. Every such member shall execute a bond to that effect within fifteen days of his assuming the office, in the form as specified by the State Government by general or special order.

The member, who fails to execute such bond within the specified period i.e. within fifteen days from joining the Managing Committee member, shall be deemed to have vacated his office as a member of the committee."

Further, the power to decide whether the losses incurred by the society are due to act or omissions of members of the committee is given to the Registrar
"Provided that, before fixing any responsibility mentioned above, the Registrar shall inspect the records of the society and decide as to whether the losses incurred by the society are on account of acts or omissions on the part of the members of the committee or on account of any natural calamities, accident or any circumstances beyond the control of such members."

Rule 58-A of the Maharashtra Co-operative Societies Rules 1961 is reproduced below:
"Every elected member of the Managing Committee shall execute a bond in Form M-20 within fifteen days of his assuming the office. Such bond shall be executed on the stamp paper as provided under the Bombay Stamp Act 1958. The expenditure on stamp paper shall be borne by the society. The Chief Executive Officer / secretary of the society shall receive such bonds and keep them on record of the society and accordingly inform the Registrar within Fifteen days from the formation of the Committee."

It is clear from above that the bond must be executed within fifteen days of assuming of office by each member of the Managing Committee in Form M-20 on a stamp paper. Failure will invite penal consequences.

INDIA: MANAGING COMMITTEE OF CO-OPERATIVE HOUSING SOCIETY MUST EXECUTE BOND
March 2008
Article by Dilip Shah

The legislature having experienced and realized that the members of the Managing Committee of different co-operative societies were acting in an arbitrary manner, with a view to have some accountability amongst the members of the Managing Committee, have enacted a provision in the Maharashtra Co-operative Societies Act, 1960 ("MCSA") mandating every member of such Managing Committee to execute a bond within 15 days of their assuming the office whichever is earlier.

If the committee member fails to execute the bond within the specified period, then such member shall be deemed to have vacated his office as member of the Committee. This provision has been given effect by Section 73(1AB) of the MCSA.

This legislation was recently challenged by a Writ Petition filed in the Bombay High Court (Writ Petition No. 457 of 2007) under Article 226 of the Constitution of India on the ground that the same is ultra virus. However, the Bombay High Court has upheld the legislature’s act.

The intention of the legislature is to make the members fully aware of their personal responsibility and liability towards the society and its members. The time limit laid down under Section 73(1AB) is mandatory and the elected committee members have to hand over the bond to the Deputy Registrar of Co-operative Society within such stipulated time.

This ruling of the Bombay High Court in the aforesaid writ petition emphasizes the basic principle of "ignorance of law is not an excuse" i.e. being unaware of the provision contained in Section 73(1AB) of the MCSA cannot be used an excuse for the failure to execute the bond within the stipulated time.

There are several instances of disgruntled members filing cases against the Managing Committees for not having executed the mandatory bonds to derail the process of redevelopment. The Managing Committee may even get caught or be slapped with fraud and forgery charges for entering into any redevelopment agreement with the builders as has happened with a Co-operative Housing Society on the Hill Road in Bandra, Mumbai.
Bandra building residents unearth Rs 100 crore fraud

A resident of Rachna co-operative housing society at Hill Road in Bandra has accused some members of the managing committee of resorting to forgery to strike an Rs 100 crore deal for redevelopment rights.

Mohammed Musaddique Shaikh, the resident, alleges the members resorted to forgery fearing the deal would fall through as the papers of the society were not in order.
“After the managing committee members entered into an agreement with the builder for redevelopment in December 2006, they realized that they had not filed the mandatory indemnity bonds,” alleges Shaikh.

When a managing committee is elected, it is mandatory for them to file indemnity bonds (before the registrar of societies) accepting responsibility for wrong-doing, if any, during their tenure. Without the indemnity bonds, the society cannot enter into a deal to redevelop the property.

“The election took place on May 25, 2004. The committee was constituted on the same day. The indemnity bonds ought to have been placed on record by committee members on or before June 9, 2004, which was not done,” alleges Shaikh.

His advocate Pradeep Havnur says, “Members not having filed indemnity bonds within 15 days of being elected cease to be part of the managing committee. All documents signed when they have ceased to be managing committee members are illegal and cannot be given effect to proceed in any matter pertaining to the society’s day to day affairs.”

“When residents of the society insisted on seeing copies of the indemnity bonds, the accused purchased stamp papers and prepared back-dated indemnity bonds,” alleges Shaikh. Another resident, S B Naik, moved the HC alleging fraud. The court asked the additional controller of stamps (Mumbai) to investigate. The investigation revealed that the dates on the indemnity bonds were forged. An officer at Bandra police station said a complaint was registered under Sections 465, 467 and 471 of the IPC.

HIGH COURT ORDERS FRESH ELECTIONS TO MANAGING
COMMITTEE OF INDUSTRIAL COOPERATIVE SOCIETY

Dilip Shah
Posted: Dec 25, 2007 - Article Directory, India

Mumbai, December 25 The Bombay High Court recently ordered fresh elections to the managing committee of an industrial cooperative society in Chunabhatti. Following their removal from the committee for non-execution of bonds under the Maharashtra Cooperative Societies Act, Deepak Rao and others had moved the HC contesting the order passed by the Divisional Joint Registrar as he was “facing corruption charges and his anticipatory bail application was rejected by the sessions court”.

The Managing Committee of the Shri Mahalakshmi Industrial Premises Cooperative Society Ltd was superseded by an order of the Deputy Registrar of Cooperative Societies on July 6. The members challenged the order before the Divisional Joint Registrar Shivaji Pahinkar — who is under suspension, according to Assistant Government Pleader G W Mattos. Pahinkar dismissed their appeal on October 23, following which the members moved the HC.

According to Mattos, the petitioners contested Pahinkar’s order as he had passed it on October 23, a day after his anticipatory bail application was rejected by the session’s court. The petitioners expressed apprehension that the order was “based on consideration other than merit”, according to Mattos.

According to Mattos, Justice A M Khanwilkar observed that if the petitioners' contention was accepted, the court would have to order an inquiry into the allegations and, if found true, the matter will have to be referred back to the appellate authority for fresh hearing.

Mattos contended before Justice Khanwilkar that the managing committee was removed on technical grounds as they ceased to be members for non-execution of bonds. Mattos submitted that instead of going into allegations and counter-allegations, it would be appropriate to hold fresh elections to the committee.

According to Mattos, observing that the removal was technically correct, the court directed that the three members of the seven who had executed the bonds should continue to function as the Board of Administrators (BoA) instead of the single administrator appointed by the Deputy Registrar of Cooperative Societies on July 6.

Mattos said the HC then directed the Deputy Registrar of Cooperative Societies to issue order in this regard by December 27. The court also directed that elections to the committee should be held within three months. The court has, however, asked the BoA not to take any major policy decisions during this period.

Dilip Shah
Counselor and Analyst for Redevelopment of Housing Societies
9819825752, 32411533
dilip7shah@gmail.com