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
Sunday, July 3, 2011
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
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
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