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REDEVELOPMENT OF HOUSING SOCIETIES IN MUMBAI

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REDEVELOPMENT OF HOUSING SOCIETIES IN MUMBAI Reviews

Dilip Shah June 2, 2011
REDEVELOPMENTOF HOUSING SOCIETIES.....WHAT IS REDEVELOPMENT THAT EVERY SOCIETY WANTS TO KNOW?
REDEVELOPMENTOF HOUSING SOCIETIES...WHAT IS REDEVELOPMENT THAT EVERY SOCIETY WANTS TO KNOW?

Redevelopment is the process of demolishing existing old society building and reconstructing it by appointing a good Developer who can construct and handover new flats to the society members free of cost with some additional benefits and make profit by utilizing balance plot potential by constructing additional flats and shops as per approval from M.C.G.M.

Today the societies are opting to go for redevelopment for certain reasons such as the repair work can increase life of the building by 3 to 4 years and the problems can reoccur after few years, the old buildings are designed with old construction norms and hence cannot withstand with new climatic and geographic conditions, for repairs members have to spend money and in old building the steel inside concrete beams and column starts corroding after 15-20 years which cannot be treated in repairs.

On the other hand, the redevelopment gives a new building for which no major repairs required for longer period, new building is constructed with new construction norms and hence can withstand with new climatic and geographic conditions, the members get benefits in terms of money as well as additional area with latest amenities.

The Redevelopment method though within last few years that has hit Mumbai with great potential but has, by and large, also 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 life time personal gains rather than ensuring a fair deal for members or the corporate interest 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, 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 and the entire exercise of redevelopment efforts will come to a zero if the mandatory filing of Indemnity Bonds in Form M 20 is not filed within 15 days of their assuming the office (within 45 days with effect from 14/1/2011). Even a delay of one day and the entire Managing Committee including Office Bearers shall have no legal footing to run the Society!
Redevelopment of Housing Societies is usually burdened with bitterness and complaints of high-handedness and corruption against the Managing Committee.

Hence, with a view to ensure transparency in societies seeking to undertake redevelopment projects, the state co-operative department has, for the first time, issued guidelines for societies to follow under section 79 (A) of the Maharashtra Co-operatives act, 1960.

The guidelines are issued by a committee comprising the co-operatives commissioner and CIDCO chairman pursuant to a deep study of complaints by members of Housing Societies undertaking the redevelopment of their property. According to an important feature in the guidelines, a redevelopment scheme has to be approved by the general body only if three-fourths of the society members are present at the meeting.

The special general body has to approve the bid of the successful bidder in a meeting attended by the registrar. The entire proceeding has to be video-recorded. Once the agreement is accepted in terms of area and corpus fund, it cannot be revised. The successful bidder has to give a bank guarantee equivalent to 20% of the total project cost to show his financial strength, and proof that he will not throw away the project midway.

The Developer has to complete the redevelopment project in two years, or a maximum of three years. The Development Agreement must be signed on carpet-area basis. Most importantly, if, for some reason, the successful Developer is unable to complete the project, he cannot sell or assign his redevelopment work to another Developer.

It has been often noticed that during the process of redevelopment, the terms of Development Agreements as agreed upon, are later twisted and grossly violated by the Developers and the ground rules of MRTP and DCR by unlawful planning are flouted by constructing additional/unauthorized areas that are beyond the 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 times, upon the completion of the Project, there are major inconsistencies and discriminatory features noticed in the approved plans v/s actual layouts, measurements and other aspects in respect of the constructions of residential area and the commercial area which may not be in conformity with the Development Agreement originally executed between the Society and the Developer.

Under Right to Information Act, the Housing Society can procure all the Plans and the related documentary evidences from MCGM duly attested by two Senior Engineers of the Building Proposals Dept. to study the anomalies which exist in execution of the entire redevelopment project even after the occupancy certificate is issued.

It has also been observed that the deviation of vital Rules and Guidelines of MRTP/MCGM/DCR are conveniently overlooked by few corrupt and dishonest but “Sympathetic Officials” of MCGM and the final plans with numerous anomalies so submitted by the said Developer are approved by them without verifying the justifiability or its conformity with the Development Agreement executed with the Society.

IMPORTANCE OF PROJECT MANAGEMENT CONSULTANT IN REDEVELOPMENT

Documents required to be furnished by the society to the Developer: Conveyance deed, Society Registration Certificate, General Body Resolution to go for redevelopment, List of member with their respective carpet areas. C.T.S. plan & property card for the plot, D.P. remarks, if the property is under TPS scheme then T.P. remarks and Copy of municipal approval plans.

The importance of Project Management Consultant in Redevelopment: A consultant is basically a team of Architects, Civil Engineers and Legal Advisors.

An Architect is required to prepare financial feasibility of project, Technical Analysis of offers of Developers, verifications of building plans prepared by the Developers and preparation of schedule of municipal process with Developer.

The civil Engineer is required to cross check R.C.C. drawings of the proposed building and check onsite quality of the construction.

Legal Advisor is required to prepare development agreement and individual MOFA agreements of society members of Developers and check other legal aspects of the proposal.

A well adept Project Management Consultant can guide the society through entire process of redevelopment so that the members can get the maximum benefits from the builder and at any stage of redevelopment members do not get cheated by the Developer. Some of the duties of Project Management Consultant are given hereunder.

Preparation of financial and technical feasibility report by studying existing building plans, consumed FSI, carpet area of existing members & available TDR/ additional FSI benefits so that maximum benefits the members can demand from the Developers.

Preparation of Tender document: "Tender" is a crucial document, which is to be designed meticulously to avoid any kind of misunderstanding/argument during the course of project. It contain various information to bidder, technical and financial specifications, general conditions and detailed specifications which makes it easier to evaluate the offers received since they are given on the same base.

Preparation of comparative chart of Developers: A chart showing the comparative analysis of all the offers is to be prepared to get the idea of the best offer received. Ranking shall be given to Developers.

Finalization of Developer: On the basis of ranking, the projects carried out by the Developers inspected, their market reputation checked and accordingly the best Developer is recommended to the society.

Preparation of Development Agreement: While preparation of Development Agreement between society and Developer inputs are given in terms of technical clauses which would Safe guard the interest of the society and safety of the project.

Finalization of building plans: The plans of proposed building prepared by the Developers are to be verified in respect of planning, carpet area, area calculations, legalization and authorization of the area allotted to the members.

Vacating the building after the builder obtains the necessary permission: The care taken that the necessary permissions are obtained and legal formalities are fulfilled to secure the project by the Developer before he ask the members to vacate the premises so that the project doesn't stuck up after demolition of the building.

Demolition and reconstruction of building: After demolition and during construction of building the regular inspection is carried out to check the quality and speed of the construction.

Possession and occupation of building: During construction of building co- ordination with the Developer shall be done to see that all the formalities for the occupation of the building are fulfilled and members get possession with the occupation certificate.

Preparation of Feasibility Report: A feasibility report shall be prepared by studying the plan, by applying the FSI & TDR rules, considering maximum benefits the member can demand from the Developers, a report will be submitted by the society.

Preparation of Tender for Redevelopment: "Tender" is a crucial document, which is to be designed meticulously to avoid any kind of misunderstanding/argument during the course of project. It shall contain an agreement, technical and financial specifications, general conditions and detailed specifications and only reputed builders are invited for the project bid.

Selection of Developer: After detailed study of various bids, considering technical and commercial angle a bid comparison chart is prepared and after short-listing some Developers for interview and negotiations and over mutually acceptable Developer is finally selected to carry out proposed work.

Project Planning: After placing of work order the Developer is asked to prepare a detail work schedule and the entire project is planned with deadlines.

Verifications: In most of the projects the Developer/builder shows some plans to the society and gets approved different plan; so afterwards society is left on the mercy of BMC officials. The Project Management Consultant would verify the plans of building prepared by the Developers for the society members in respect of planning, area calculations, legalization and authorization of the area allotted to the members. Any alteration in the plans of society building prepared by builder should be to the satisfaction of society members.

Quality controls: A regular visit of a project manager is required at least 3-4 times a week. Maximum emphasis is to be given on the quality of the constructions to avoid recurring expensive repairs afterwards. The project management consultant should supervise the quality of constructions and verify the structural plan, necessary instructions/specifications has to be issued to contractor as per the requirements of the structure to have long lasting durability.

Inspections: Inspecting whether the work has been carried out as per approved plans and as per commitments made by the Developer with the society and whether all the necessary approvals are obtained by builders at every stage of the works.

PROJECT MANAGEMENT CONSULTANCY SERVICES IN BRIEF:
 Arranging Soil Testing of the site
 Preparation of Detailed Brief for the preparation of concept proposals by the architect
 Selection/appointment of the architect, structural consultant, electrical consultant, sanitary consultant and execution of agreement with them
 Scrutiny of Concept Designs proposed by the architect and approval of the concept
 Arranging the coloured perspectives of the concept scheme and arranging Model
 Preparing Preliminary Cost Estimates for the total construction work
 Review/Approval of design work carried out by the architect and respective consultants.
 Co-ordination of design work between different consultants
 Monitoring the receipt of all the pre-construction NOCs, clearances permissions, sanctions from corporation, storm water, sewerage, electrical, garden, civil aviation, ULC, road and traffic dept. Etc
 Finalizing the specifications for the different items of work
 Arranging/co-ordination establishment of all temporary facilities at the project site
 Preparation/Review/Finalization of Bill of Quantities for different items of work in respect of all the trades
 Preparation/Review/Finalization of Detailed Tender Documents for all the trades
 Short listing / prequalifying the contractors for various trades
 Invitation of tenders, scrutiny of bides, clarification to queries, making comparative statements, negotiations with bidders, evaluation of prices and finalizing the contract for all the trades.
 Preparation of contract documents and execution of the same by the contractors
 Preparing schedules of materials in respect of items proposed to be procured by the employer/supplied to the contractors
 Managing procurement of the above stated materials, cement, steel, tiles and any other materials required to be issued to the contractors, including inviting quotations, negotiations, finalization of rate contracts, placement of purchase orders, inspection of materials and settling the bills of the suppliers.
 Detailed supervision of contractors works at project site.
 Co-ordination between different contractors
 Monitoring/expediting the progress of contractors through project management techniques
 Checking/certifying contractor's running and final bills and settlement of claims of the contractors
 Preparation of progress reports
 Arranging 'as built'/User Manual drawings, of all the trades
 Arranging all POST CONSTRUCTION APPROVALS

Apart from the above, the Project Management Consultants can also arrange and co-ordinate with Financial and Legal Services which are equally important for a successful completion of any Redevelopment project.

FINANCIAL SERVICES

 Preparation of Financial Feasibility Reports
 Managing Financing of the project from Financial Institutions
 Handling books of accounts up to finalization including profit and loss a/c and balance sheet
 Handling all accounting matters during the progress of Redevelopment
 Handling property and other taxation matters and filing of Returns.
 Budgetary Controls
 Ratio Analysis
 Preparation of Cash Flow Statements

LEGAL SERVICES

 Ascertaining correctness of Land ownership records (Title, P.R. Card, etc) in the name of the present owner.
 To get the road setback areas and other reserved areas transferred in the name of local bodies, as per local laws.
 To arrange conversion of land usage as per local laws
 To get NOCs, sanctions, approvals from Heritage Committee, as applicable
 To deal with Transfer of Development Rights matters, as applicable

NON-DESTRUCTIVE EVALUATION TESTS:

Non-destructive testing (NDT) are non-invasive techniques to determine the integrity of a material, component or structure or quantitatively measure some characteristic of an object. In contrast to destructive testing, NDT is an assessment without doing harm, stress or destroying the test object. The destruction of the test object usually makes destructive testing more costly and it is also inappropriate in many circumstances. NDT-CE, Non-Destructive testing in Civil Engineering plays a crucial role in ensuring cost effective operation, safety and reliability of reinforced concrete or pre-stressed concrete structures
Concrete Strength Assessment:

 Rebound Hammer Test
 Ultrasonic pulse velocity test
 Core sampling & Testing

Chemical Tests:

 Carbonation test
 Chloride content
 Corrosion potential assessment:
 Cover meter survey
 Half cell potential survey
 Resistively measurements

BEWARE OF MANIPULATIONS

It has been often noticed that during the process of redevelopment, the terms of Development Agreements as agreed upon, are later twisted and grossly violated by the Developers and the ground rules of MRTP and DCR by unlawful planning are flouted by constructing additional/unauthorized areas that are beyond the 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 times, upon the completion of the Project, there are major inconsistencies and discriminatory features noticed in the approved plans v/s actual layouts, measurements and other aspects in respect of the constructions of residential area and the commercial area which may not be in conformity with the Development Agreement originally executed between the Society and the Developer.

It has also been observed that the deviation of vital Rules and Guidelines of MRTP/MCGM/DCR are conveniently overlooked by few corrupt and dishonest but “Sympathetic Officials” of MCGM and the final plans with numerous anomalies so submitted by the said Developer are approved by them without verifying the justifiability or its conformity with the Development Agreement executed with the Society.

COMMENCEMENT CERTIFICATE

Demolition of the building: Once the members have shifted into their alternate accommodation, the demolition of the building will take place either all the wings simultaneously or phase wise depending upon the scheme of re-development. Usually about three months are given to the members from the date of execution of the development agreement before asking them to shift to the alternate accommodation.
Obtaining the CC: The IOD approval and demolition of the building will be followed by the issue of the CC (plinth level) by the MCGM which shall enable the Developer to start the construction work and after the plinth lines are verified by the MCGM officers, the further CC is granted for the complete building

DUTIES AND FUNCTIONS OF THE DEVELOPER

The Developer to demolish the building existing in the plot and construct new multi storied buildings taking into account the earthquake resistant factors as directed by The Municipal Corporation of Greater Mumbai. The new building should have stilt for car parking and should consist of _____ stories as per approved plans. The final plans are to be prepared after due consultation with the managing committee and understanding their requirements.

The Developer shall be responsible to obtain all the necessary approvals from The Municipal Corporation of Greater Mumbai and all other statutory and Government offices and departments which will include:

 Development Planning Remark or Town Planning Remark: MCGM (Dev. Dept.)
 Survey of the entire plot with regards to the area and topography of the plot, existing plot boundary and existing structures (Developer’s Architect)
 Intimation of Disapproval (IOD): MCGM
 Property Tax Assessment NOC: MCGM (Assessment Department)
 Hydraulic Engineer No Objection Certificate: MCGM (Hydraulic Department)
 Storm Water Drainage No Objection Certificate: MCGM
 Sewerage No Objection Certificate: MCGM
 Traffic Dept. of Municipal Corporation of Greater Mumbai No Objection Certificate: MCGM
 Urban Land Ceiling NOC: Competent Authority in Collector's Office
 Tree No Objection Certificate: MCGM (Tree Authority)
 Non-Agricultural Permission: Collector's Office
 Civil Aviation No Objection Certificate: Airport Authority of India
 Pest Control No Objection Certificate: MCGM (PCO)
 MTNL No Objection Certificate: MTNL
 Chief Fire Officer's No Objection Certificate: Fire Department Office
 Commencement Certificate: MCGM
 Lift Inspection No Objection Certificate: Inspector of Lifts, PW
 Occupation Certificate (OC): MCGM
 Water Connection Certificate under section 270A: MCGM
 Drainage Completion Certificate: MCGM (Water Department)
 Building Completion Certificate (BCC): MCGM
 TDR Loading: MCGM
 Building Demolition Work: Contractor appointed for demolition work
 Soil Testing Report: The Concerned Laboratory

Please ensure to collect all the listed certificates from the Developer/Developer as the same must be with the custody of the Housing Society once the redevelopment of the property is completed and the occupancy certificate is issued by MCGM to re-house the members.

BUILDING PLANS AND AGREEMENTS

Finalizing the plans with members: After due consultation with all the members, the plan will be made to suit the requirements of the existing members and will be approved by them before applying for sanction from MCGM. Society must have Architect to scrutinize and verify the building plans and municipal plans to safeguard society’s interests.

Agreement with the society: The execution of the Development Agreement will be done once the above two points have been cleared by both the parties and after the draft copy of the agreement have been approved by the solicitors of both the parties. It is possible to appoint a common solicitor so as to reduce the time in execution of the document

GUIDELINES AS PER Sect.79 (A) OF MCS ACT, 1960

Redevelopment of Housing Societies is usually burdened with bitterness and complaints of high-handedness and corruption against the Managing Committee. Hence, with a view to ensure transparency in societies seeking to undertake redevelopment projects, the state co-operative department has, for the first time, issued guidelines for societies to follow under section 79 (A) of the Maharashtra Co-operatives act, 1960.

The guidelines are issued by a committee comprising the co-operatives commissioner and CIDCO chairman pursuant to a deep study of complaints by members of Housing Societies undertaking the redevelopment of their property. According to an important feature in the guidelines, a redevelopment scheme has to be approved by the general body only if three-fourths of the society members are present at the meeting.

The special general body has to approve the bid of the successful bidder in a meeting attended by the registrar. The entire proceedings have to be video-recorded. Once the agreement is accepted in terms of area and corpus fund, it cannot be revised. The successful bidder has to give a bank guarantee equivalent to 20% of the total project cost to show his financial strength, and proof that he will not throw away the project midway.

The Developer has to complete the redevelopment project in two years, or a maximum of three years. The development agreement must be signed on carpet-area basis. Most importantly, if, for some reason, the successful Developer is unable to complete the project, he cannot sell his agreement to another Developer.

INDEMINITY BOND IN FORM M-20

Further, it is learnt that in many Societies, the Managing Committees, who execute the documents with the Developers, do not possess any knowledge of various laws governing the Housing Societies and hence, do not hold any legal holding in the Managing Committee as they have never filed/nor aware of filing the Indemnity Bond in Form M-20 on a Stamp paper 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.

OFFER THROUGH TENDERS

Offer letter to the society: The Housing Society is required to appoint Project Management Consultant/ Architect, prepare a Tender with their help and advertise in 2 leading news papers inviting the sealed tenders from the Developers and a Redevelopment Committee is formed to shortlist at least 3 Developers on merits and the comparative data is placed before the SPGM for final selection. The selected Developer is informed accordingly and his terms are invited in writing as an Offer letter to the society.

SELECTION OF GOOD BUILDER

One of the things that cause the most stress when any Housing Society starts a Redevelopment process, is finding a good and reliable Builder. Selecting a Builder, negotiating various terms and dealing with them and their team is one of the most stressful things is like organizing a wedding.

A good Builder is expected of lot of thoughtful process of redevelopment, knowledge, experience and expertise in design, planning, construction and executing the same with passion to deliver human friendly projects. The Builder selected, should be of unshakable reputation for quality, efficiency, trust, meticulous planning, top quality amenities, superlative designs, timely completion, guaranteed possessions and handing over of property of the Society for rehabilitation of its members.

RIGHT TO INFORMAITON

Under Right to Information Act, the Housing Society can procure all the Plans and the related documentary evidences from MCGM duly attested by two Senior Engineers of the Building Proposals Dept. to study the anomalies which exist in execution of the entire redevelopment project even after the occupancy certificate is issued.

STAGES OF APPROVALS

Sanction from MCGM in favour of the society: After the execution of the development agreement, plans are put up for sanction from MCGM with regards to the entire layout as well as the concession plans in favour of TWO FSI (i.e. plot area + TDR purchased from open market). This step makes the society feel safe and confident towards the Development.

Loading of TDR in favour of the society: On receipt of the plans from MCGM approving the loading of TDR, the Developer will purchase the TDR from the open market in the name of the society and get the same deducted and loaded from MCGM. This step is taken with the intention of making the society feel secure about the entire development process.

Obtaining the IOD: After the TDR is loaded, the IOD is obtained from the MCGM and the Developer then starts fulfilling all the conditions as mentioned in the IOD before obtaining the Commence Certificate.

Society must certify above mentioned stages approved from their Architects and ensure written approval before vacating the premises.

OCCUPATION CERTIFICATE INFRASTRUCTURE

Construction of the building: The building construction work will began in full earnest as per the approved plans by the MCGM taking into consideration the various safety factors to be considered during the construction work. The quality and the amenities will be provided as per agreed terms and conditions and duty of Project management consultant to ensure the same.

Obtaining the OC: The last step before the construction work is termed as complete is obtaining the Occupation Certificate enabling the Developer to allot the occupation to the old as well as the new member

Shifting the old members: On receipt of the Occupancy Certificate the Developer can lawfully allow the possession of the flats to be taken over by their owners

LATE POSSESSION OF FLATS

Builders and Developers play vital role in redevelopment of Housing Societies. Currently, the redevelopment mania of residential properties is booming in full swing and one finds in Mumbai that compound wall of every third property of a society is covered with tins as number of small time builders and real estate companies has joined the battle in an effort to grab a share of this fast rewarding pastry.
There is also likelihood of delay in completion of such projects followed by numerous complaints from the buyers when flats are not delivered in tine as documented. What do Developers do when apartments are not finished on time? Some pay back their clients as part of a penalty clause.

It is a long ending tussle between builders and home buyers that never seems to end delivering projects on time. There are umpteen cases where builders have taken extra time to finish projects while leaving home buyers to suffer fiscal setbacks.

The realty industry experts say that in the last few years, Developers have taken up 10 times more projects compared to what they have done in their total lifetime. Have they thought where the availability of the labour, brick, steel and cement is? How will they manage all this? However, there are well-known construction companies who are trying to get more advanced technology for construction to match their deliveries. However, the cost of adopting such technologies in India is still very high and not many Developers are able to benefit from it.

In case of delay, as there has been a breach of contract, the builder would attract penalty under both Consumer Protection Act and the Maharashtra Ownership Flats Act. The builders are careless about compensation because there is no detailed written down Real Estate Regulator from the Government as yet, for rigorous punishment to such builders. A consumer doesn’t want to get into a legal tangle and just wants his flat in hand and the unscrupulous builders take advantage of this helplessness.

The builder problems can’t justify the delay. The default on the part of the builder would attract penalty under both Consumer Protection Act and the Maharashtra Ownership Flats Act, 1963. Often, the builders have an agreement clause that assures buyers a daily damage for the delayed possession. The buyers must ensure that his agreement for purchase of flat includes the clause compensation from the builder for delay in possession.

If such compensation clause for delay in possession of flat is included as penalty clause in the agreement for purchase of flat entered between the buyer and the builder i.e. monetary compensation for per day's/per month’s delay, buyer can be sure to get the compensation.

REDEVELOPMENT RULES & REGULATIONS

STAGES OF REDEVELOPMENT

1. Offer letter to the society
2. Terms and conditions with the society
3. Agreement with the society
4. Sanction from MCGM in favour of the society
5. Loading of TDR in the society’s name
6. Obtaining the IOD
7. Shifting of the members
8. Demolition of the building
9. Obtaining the CC
10. Construction of the new building
11. Obtaining the OC
12. Shifting the old members

Offer letter to the society: The Housing Society is required to advertise in 2 leading news papers inviting the sealed tenders from the Developers and a Redevelopment Committee is formed to shortlist at least 3 Developers on merits and the comparative data is placed before the SPGM for final selection. The selected Developer is informed accordingly and his terms are invited in writing as an Offer letter to the society

Terms and conditions with the society: The first step towards the re-development is agreeing on the basic terms and conditions between the members and the Developer. The broad terms and conditions will include extra area, corpus money, shifting charges, alternate accommodation, time of re-development, amenities in the new building, etc.

Finalizing the plans with members: After due consultation with all the members, the plan will be made to suit the requirements of the existing members and will be approved by them before applying for sanction from MCGM

Agreement with the society: The execution of the development agreement will be done once the above two points have been cleared by both the parties and after the draft copy of the agreement have been approved by the solicitors of both the parties. It is possible to appoint a common solicitor so as to reduce the time in execution of the document.

Sanction from MCGM in favour of the society: After the execution of the development agreement, plans are put up for sanction from MCGM with regards to the entire layout as well as the concession plans in favour of TWO FSI (i.e. plot area + TDR purchased from open market). This step makes the society feel safe and confident towards the Develop

Loading of TDR in favour of the society: On receipt of the plans from MCGM approving the loading of TDR, the Developer will purchase the TDR from the open market in the name of the society and get the same deducted and loaded from MCGM. This step is taken with the intention of making the society feel secure about the entire development process

Obtaining the IOD: After the TDR is loaded, the IOD is obtained from the MCGM and the Developer then starts fulfilling all the conditions as mentioned in the IOD before obtaining the Commence Certificate

Shifting of the members: The members will feel lot more confident after the IOD is been obtained from the MCGM towards the entire development of TWO FSI. The members will now shift into their alternate accommodation as a pre-requisite before demolition of the building which is a must before obtaining the CC from MCGM
Demolition of the building: Once the members have shifted into their alternate accommodation, the demolition of the building will take place either all the wings simultaneously or phase wise depending upon the scheme of re-development. Usually about three months are given to the members from the date of execution of the development agreement before asking them to shift to the alternate accommodation
Obtaining the CC: The IOD approval and demolition of the building will be followed by the issue of the CC (plinth level) by the MCGM which shall enable the Developer to start the construction work and after the plinth lines are verified by the MCGM officers, the further CC is granted for the complete building

Construction of the building: The building construction work will began in full earnest as per the approved plans by the MCGM taking into consideration the various safety factors to be considered during the construction work. The quality and the amenities will be provided as per agreed terms and conditions

Obtaining the OC: The last step before the construction work is termed as complete is obtaining the Occupation Certificate enabling the Developer to allot the occupation to the old as well as the new member

Shifting the old members: On receipt of the Occupancy Certificate the Developer can lawfully allow the possession of the flats to be taken over by their owners

DUTIES AND FUNCTIONS OF THE DEVELOPER

1. The Developer to demolish the building existing in the plot and construct new multi storied buildings taking into account the earthquake resistant factors as directed by The Municipal Corporation of Greater Mumbai. The new building should have stilt for car parking and should consist of _____ stories as per approved plans. The final plans are to be prepared after due consultation with the managing committee and understanding their requirements.
2. The Developer shall be responsible to obtain all the necessary approvals from The Municipal Corporation of Greater Mumbai and all other statutory and Government offices and departments which will include:
1. Development Planning Remark or Town Planning Remark: MCGM (Dev. Dept.)
2. Survey of the entire plot with regards to the area and topography of the plot, existing plot boundary and existing structures (Developer’s Architect)
3. Intimation of Disapproval (IOD): MCGM
4. Property Tax Assessment NOC: MCGM (Assessment Department)
5. Hydraulic Engineer No Objection Certificate: MCGM (Hydraulic Department)
6. Storm Water Drainage No Objection Certificate: MCGM
7. Sewerage No Objection Certificate: MCGM
8. Traffic Dept. of Municipal Corporation of Greater Mumbai No Objection Certificate: MCGM
9. Urban Land Ceiling NOC: Competent Authority in Collector's Office
10. Tree No Objection Certificate: MCGM (Tree Authority)
11. Non-Agricultural Permission: Collector's Office
12. Civil Aviation No Objection Certificate: Airport Authority of India
13. Pest Control No Objection Certificate: MCGM (PCO)
14. MTNL No Objection Certificate: MTNL
15. Chief Fire Officer's No Objection Certificate: Fire Department Office
16. Commencement Certificate: MCGM
17. Lift Inspection No Objection Certificate: Inspector of Lifts
18. Occupation Certificate (OC): MCGM
19. Water Connection Certificate under section 270A: MCGM
20. Drainage Completion Certificate: MCGM (Water Department)
21. Building Completion Certificate (BCC): MCGM
22. TDR Loading: MCGM
23. Building Demolition Work: Contractor appointed for demolition work
24. Soil Testing Report: The Concerned Laboratory

Please ensure to collect all the listed certificates from the Developer/Developer as the same must be with the custody of the Housing Society once the redevelopment of the property is completed and the occupancy certificate is issued by MCGM to re-house the members.

3. The Developer should provide the following infrastructure after the completion of the re-development work:
a. Complete paving around the building finished with suitable materials
b. Storm Water Drain
c. Sewerage lines
d. Security arrangements
e. Garden and landscaping (wherever possible)
f. Pipe gas line (as per availability)
g. Internet facility (as per availability)
h. Society office
i. Adequate car parking spaces

The Developer has to provide extra area over and above the existing carpet area to all the members free of cost in the newly constructed building. The flower bed as open balcony area should be provided as permitted by The Municipal Corporation of Greater Mumbai. (Area will be approx sq.fts.)

4. The Developer should pay the society/individual member, a corpus fund of Rs……..towards granting of development rights. The above amount is helpful in paying all outgoings of the existing members in the newly constructed flats. The corpus amount is worked out on the basis of Rs……..per sq.fts on the existing carpet area.

5. The Developer should provide displacement compensation towards temporary alternate accommodation to the affected members during the construction work at the rate of Rs…… per sq.fts on the existing carpet area. The compensation has to be paid from the time the vacant possession is given by the members for demolition till the construction of the new building/s is/are complete and the peaceful possession of the new flats given by the Developer.

6. The society shall accept and admit the prospective/additional flat owners of the newly constructed building/s as members of the society and treat them at par with existing members.

7. The Developer should prepare a tentative layout of the new building which has to be shown to the members as and when required.

8. The Developer may tie up with leading financial institutions and banks and arrange for necessary approvals for housing loans for the existing members and prospective clients.

9. The Developer should complete the entire re-development work within a period of ___ months or as agreed with the Society after all the legal formalities and Municipal approvals are obtained. The initial Municipal approvals will take about three months depending upon the existing rules and regulations governing the re-development work.

STANDARD LIST OF AMEMITIES

Structure: The structure would be designed as Multi Frame Structure of RRC with provisions of Earth Quake resistance features.

Elevation and Planning: Exquisitely designed elevation features may be provided along with careful and detailed planning with plenty of light and ventilation in each rooms and minimum wastage space with proper co-ordination of all rooms. The building may be provided with sand faced plaster on the external face water proofing plaster and chicken mesh should be used as required

Entrance Lobby: The entrance lobby may be elegantly designed with Granite tile and POP false ceiling.

Doors: All the doors should be provided with Marine Flush Doors and CP frame with cover mouldings. The main door must be provided with good quality night latch, safety chain, tower blot and attractive handle. Internal doors may be provided by cylindrical mortise type locks.

Windows: All the windows of rooms and toilets should be provided with marbles frames with designed mouldings. Heavy section powered aluminium sliding windows with 5 mm tinted glass may be provided with imported bearings and fittings.

Plaster of Paris: Beautifully designed cornice has to be provided in living room. Walls of all the rooms to be finished with POP panning and grooves to be provided on top of the skirting

Electric work: All the electric wiring work must be done as per the norms of Reliance Energy using 1/18, 3/20, and 7/20 flexible wires with use of MCB and ELCB for safety of the flat owners. Latest available switches of reputed company must be provided.

Extensive electric layout comprising of the following points to be provided:
Spot Lights (living room and bed room), Tube lights, Fans, A.C. (living room and bed room), Geysers, Exhaust fans, Aqua guard, Mixers, Washing machine, Refrigerator, T.V. cable, Gas pipe line (if available), Refrigerator

Plumbing: All the plumbing pipes, fixtures and fittings should be strictly as per IS Norms. CP plumbing fixtures (ESS ESS or JAGUAR) should be provided in all toilets with matching sanitary ware of reputed company. Plumbing points should comprise of wall mixtures, showers, taps, washing machines and aqua guard.

Flooring and Tiling: Marble or granite or granite flooring should be provided with matching skirting of 3”. Toilets should have full dado height of coloured glaze tiles of reputed company of Indian or imported make with designer borders and motifs.

Kitchen: Granite kitchen platform comprising of cooking and serving platforms may be provided with moulded facia patti and vertical sides. Stainless steel sink has to be provided.

Colour: The entire flat should be painted with Synthetic enamel paint including doors and ceilings. The external walls of the buildings must be painted with good quality cement paint.

Lift: Lift of OTIS/Johnson make may be provided with all the safety features.

Terrace: The terrace should be finished with china chips and high parapet wall with corner lights and water points.

Compound wall and gates: New compound wall should be constructed with proper design and sufficient electric points.

The task of satisfactory completion of redevelopment of any Housing Society and to get back their members in their dream houses is not difficult provided the Office Bearers and the Committee Members are sincere and honest and justify their respective posts in the welfare and well being of the members of the Society.

The author of this article is an experienced counsellor and senior analyst for Redevelopment of Housing Societies with in-depth study of integral techniques with exclusively knowledge in the area of Societies Laws and Redevelopment of Housing Societies in Mumbai as also having many articles penned on Internet on various parameters under following titles. Just type the title in Google Search Window and you will find the text of whole article published by many websites. Please educate yourself and caution your friendly neighbours to be vigilant from Irregularities and illegalities in Redevelopment by the Builders, Illegal gratifications by Builders to corrupt members of Managing Committees, Rampant Corruption in BMC, Flagrant violation of Rules and Regulations by the Builders, how to beware of Cheat and Fraud Builders and their criminal and felonious act.

 Planning for redevelopment? Read this……Guidelines on Redevelopment of Housing Projects in Mumbai
 Format of Indemnity Bond in Form M-20
 Letter of Consent for Redevelopment of Housing Societies
 Mismanagement by Managing Committees
 Section 101 of Maharashtra co-op. Societies act 1960 for recovery of dues from defaulting members
 Unhealthy and Unlawful practice by certain Developers in Redevelopment of Housing Projects in Mumbai
 Importance of Indemnity Bond in Form M-20 For Managing Committees
 Code of Conducts for Developers: Redevelopment of Housing Societies and old Buildings in Mumbai
 Long Live Corruption in Redevelopment of Housing Societies in Mumbai
 Guidelines for Selection of a good Builder
 Busting of Redevelopment Projects of Housing Societies
 Redevelopment of Housing Societies: Cessed Buildings in South Mumbai: Bonanza of FSI of 3.0 etc.
 Code of Conduct for Builders Developers
 Compensation to be paid by the Builder for delayed possession of flat
 Corruption in Redevelopment
 Redevelopment and corrupt Managing Committee Members
 Redevelopment of Housing Societies and Sand Shortage
 Redevelopment of Housing Societies: are Govt. Guidelines really persuasive and convincing?

Dilip Shah
Counsellor and Analyst for Redevelopment of Housing Societies
dilip7shah@gmail.com
9819825752
32411533
Dilip Shah May 5, 2011
REDEVELOPMENT OF HOUSING SOCIETY AND COMPENSATION TO BE PAID BY THE DEVELOPER FOR DELAYED POSSESSION OF YOUR FLAT
REDEVELOPMENT OF HOUSING SOCIETY AND COMPENSATION TO BE PAID BY THE DEVELOPER FOR DELAYED POSSESSION OF YOUR FLAT

Builders and developers play vital role in redevelopment of housing societies. Currently, the redevelopment mania of residential properties is booming in full swing and one finds in Mumbai that compound wall of every third property of a society is covered with tins as number of small time builders and real estate companies has joined the battle in an effort to grab a share of this fast rewarding pastry.

There is also likelihood of delay in completion of such projects followed by numerous complaints from the buyers when flats are not delivered n tine as documented. What do developers do when apartments aren’t finished on time? Some pay back their clients as part of a penalty clause.

It is a long ending tussle between builders and home buyers that never seems to end delivering projects on time. There are umpteen cases where builders have taken extra time to finish projects while leaving home buyers to suffer fiscal setbacks.

Imagine a situation where you’ve booked a house in an apartment complex while paying hefty EMIs and also the rent for the temporary place that you currently occupy. Any delay in getting into your own house obviously means a financial loss.
The only change today is that builders now have a penalty clause in their agreements with buyers. But that is not mandatory yet. There have been cases earlier where people have contested builders in courts but in most cases that is a long prolonged battle which not many are willing to go through.

There are cases where people have complained about delayed possession of apartments but these are not highlighted because there are no effective machineries available to redress their grievances. However, the larger and top class developers have their image to protect and to fulfill their commitment they include a penalty clause in agreements.

There are numerous causes for delays such as late government approvals, getting the completion certificate after a long wait, raw material delays, cement and steel procurement, manpower delay to list a few. Getting local approvals is a harrowing task and the new Environmental Impact Assessment clearance that is now mandatory can even take up to nine months. At any point in time, there is a 50 to 60 per cent shortfall in unskilled manpower in the market. Civil contractors executing projects have so much on their plate that managing different projects is becoming more and more difficult.

According to industry watchers, most developers face project delays. About 85-90 per cent projects are delayed in some way or the other and that a lot of the delays are not in the developers’ control. The delays on account of various reasons do affect the overall budget of a developer, increases the construction and storage cost and hit the brand image and future of the company. Of course, it has a direct impact on end-users as well.

A project in which the buyer has given a minimal advance, the pressure on the developer is far less compared to heavy advance acceptances. The buyer’s capital is stuck and they can’t go anywhere. In such a situation, strict penalty clauses are imposed. This is one reason why clients rely on top class developers who are sure of their deliveries.

The realty industry experts say that in the last few years, developers have taken up 10 times more projects compared to what they have done in their total lifetime. Have they thought where the availability of the labor, brick, steel and cement is? How will they manage all this? However, there are well-known construction companies who are trying to get more advanced technology for construction to match their deliveries. However, the cost of adopting such technologies in India is still very high and not many developers are able to benefit from it.

The solution, it seems, lies in the urban development ministry’s plans to create a regulator for the real estate sector. The regulator would promote best practices and consumer interest. Where there is a delay, the regulator will ensure that penalty is paid by the developer. The regulator will also be considered as an ombudsman between the buyers and developers.

The housing societies often get confused about choosing the best or right or so to say, one “HONEST” builder. There are many cases where the dreams of members of the housing society are crashed when the terms of Development Agreement and time schedule of completion of project is not maintained by such opportune builders of III tier.

There are types of voracious builders of III tire who have abandoned or have delayed the redevelopment projects due to paucity of inflow or diversion of funds from the assigned projects in order to acquire more and more projects beyond their financial means or are simply not capable to execute the projects due to lack of competency.
Building 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 for redevelopment and leave your society, the builder is the KING.

With regard to the buying of flats/premises in projects other than redevelopment also, there is an upward trend for buying the property. The cut down in interest rate and easy registration process has attracted more property buyers to invest on their dream home.

Today real estate is one of thriving industries and demand for residential and commercial property is increasing day-by-day. There are number of builders and developers in city who offer or promise special features to attract prospective buyers. However, there are some builders or developers who delay the completion of project and the buyers suffer mentally and financially.

There are property buyers who say his/her flat’s possession has been delayed by six months or more. Even those of reputed builders get delayed unexpectedly. The properties buyers are the now considered consumers and finally have got a voice and a forum to air their grievances. Using consumer courts, buyers have been able to get back their money with interest or have been financially compensated besides allotment of flats by the sloppy builders.

In case of delay, the builder is liable to refund the amount paid with interest (for the period of delay) as there has been a breach of contract. A promoter, who constructs or intends to construct either commercial or residential building, shall specify in writing, the date by which possession of the flat is to be handed over.

In case of delay, as there has been a breach of contract, the builder would attract penalty under both Consumer Protection Act and the Maharashtra Ownership Flats Act. The builders are careless about compensation because there is no detailed written down Real Estate Regulator from the Government as yet, for rigorous punishment to such builders. A consumer doesn’t want to get into a legal tangle and just wants his flat in hand and the unscrupulous builders take advantage of this helplessness.

Many property aspirers buy an under-construction flat for the convenience of slab-wise payment and lower rates. But is it such a good idea? A Mumbai consumer says her flat's possession has already been delayed by six months. Like her, scores go through the harrowing wait for possession when housing projects-even those of reputed builders-get delayed unexpectedly. To add to their woes, consumers complain that builders rarely offer compensation, leave alone actually doing it out.

Now, consider the financial implications of delayed possession. A Mumbai consumer who was promised his flat in June 2007 says, "My agreement document clearly says that in case I intend to return the flat over delayed possession, the builder will refund the original amount with 9% interest from the day one he received the payment."
However, the flat purchaser calls this an impractical solution. "Prices have more than doubled since we booked the flat, so giving it up for just 9% interest does not make sense." Besides, he says, the interest rate on borrowed money has also seen a steep rise. During the unfortunate wait, buyers lose out in other ways too. One, if they don't own another property, they have to stay put in a rented place.

Two, if they have secured a home loan for the flat, its repayment schedule is treated as pre-EMI (equated monthly installment) till the buyer gets the property's possession. A buyer is entitled to tax rebate under sections 24 (b) and 80 (c) of the Income-Tax Act 1961, after securing possession of the property and thus commencement of EMI. Till then, he gets no tax relief on the pre-EMI.

Property buyer can present their own cases in consumer courts and do not need to engage a lawyer. The property buyer must file his complaint within two years of the dispute arising, after which it becomes outdated. A written complaint, can be filed before the District Consumer Forum for property value of up to Rupees twenty lakhs, State Commission for value up to Rupees one crore and the National Commission for value above Rupees one crore.

The builder problems can’t justify the delay. The default on the part of the builder would attract penalty under both Consumer Protection Act and the Maharashtra Ownership Flats Act, 1963. Often, the builders have an agreement clause that assures buyers a daily damage for the delayed possession. The buyers must ensure that his agreement for purchase of flat includes the clause compensation from the builder for delay in possession.

If such compensation clause for delay in possession of flat is included as penalty clause in the agreement for purchase of flat entered between the buyer and the builder i.e. monetary compensation for per day's/per month’s delay, buyer can be sure to get the compensation. The study of recent cases of delayed possession is re-produced below for the awareness of the flat/premises buyers:

BUILDERS CHEAT EARLY BUYERS, SAYS STATE COMMISSION

A "landmark judgment" recently delivered by a State Commission has ensured redress for a harassed Matunga couple. The Maharashtra State Consumer Disputes Redressal Commission directed Khar-based Monish Builders to pay Arti and Vikas Modi Rs 7.86 lakh as damages and hand over possession of the Chunabhatti flat they had bought in 2006.

The Consumer forum, while delivering the judgment, said that "When the purchasers complain, the builders show them provisions of the Maharashtra Ownership of Flats Act, 1963 and willingness to give full refund with interest at 9% from the date they received the money so that after using the flat buyer's money liberally for years, the builder can later sell the flat at much higher rate and pocket huge profit thereafter."

The Modis booked a 580 sq. ft flat in Mohan Mansion, Chunabhatti, for Rs 22.4 lakh. Over a period of time, the Modis paid the builder Rs 20.18 lakh. They were promised the possession of their flat before June 2007 but when the builder failed to deliver, Modis were forced to rent an apartment for five years.

The State Commission found the builders guilty of ‘Deficiency in Service’. In 2006, the Modis invested their life savings in a flat, and can't afford to buy one at the present rate, said the commission.

BUILDER FINED RS. 20 LAKH FOR DELAY: CONSUMER COURT

Mumbai: In an order that will cheer property buyers. As per the news item appeared in "Times of India, dated 14 June' 2010, Mumbai edition, page 01" the Maharashtra State Consumer Commission recently directed a developer to shell out Rs. 20 lakh at the rate of Rs. 2, 000 a day for a delay in giving possession of a shop premises to a purchaser.

The significance of the order passed by a three-member bench comprising president S B Mhase, S R Khanzode and D Dhamatkar—is that it is “among the first times’’ that “per day’’ damage, as was specified in the sale agreement, has been charged, according to lawyer Bindu Jain. The lawyer represented the aggrieved party, Dharshi Dedhia.

Often, builders have an agreement clause that assures buyers a daily damage for delayed possession, but few buyers, if any, invoke it, Jain said. The lawyer said the judgment comes as a boost to purchases of flats and other property across the state.

The commission said, “To issue notice for delivery of possession without an occupation certificate was an illegal act. We find that there is no ground to justify the delay.”

Dedhia possessed a shop and godown in Rajhans building in Thane as a tenant. The original landlord sold the premises to Padmavati Enterprises who decided to redevelop the property and agreed to give a shop of 366 sq ft to Dedhia at a subsidized rate. The agreement was made in June 2005 to hand over possession in October 2005, but the possession was given in June 2007 that too without an occupation certificate. As a result, Dedhia claimed damages for the delay at Rs. 2, 000 per day as stipulated in the agreement.

Dedhia’s other grievance was that a water connection wasn’t given to him. He took up the matter with the Thane district consumer forum, which ordered the builder to pay him Rs. 20, 000 as an additional compensation for the “mental agony and financial loss’’.

As already pointed out above, there have been innumerable decisions in Consumer Forums concerning builders and flat owners. These decisions have been rendered mostly on the ground of “deficiency in service”. Which expression has been defined in section 2(1) (g) and section 2(1) (o) of the Consumer Protection Act. In cases of delay in giving possession of the flats, the consumer forums have directed the refund of the amount deposited by the potential purchasers with the builder/housing board along with 18 per cent. In another case, besides issuing order for refund of the entire amount of Rs. 1, 09, 000/- deposited and payment of 18 per cent interest, the builder was also ordered to pay Rs. 1 lakh as further compensation.

BUILDER DIRECTED TO PAY COMPENSATION FOR DELAYED FLAT DELIVERY

Mrs Veena Khanna of New Delhi Vs M/s. Ansal Properties and Adharshila Towers, New Delhi: Before National Consumer Disputes Redressal Commission, New Delhi: Order dated 9th July 2007

Due to abnormal delay in handing over the possession of flat, the Complainant had demanded refund of the deposited amount with interest @ 18% which the Opposite party refused to pay. Complainant filed a petition before the State Commission, Delhi. By judgement and Order dt.06-12-2005, the State Commission directed the Opposite Party to refund the amount of Rs.15, 00, 000 with interest @ 13% p.a. from the date of deposit of the last instalment till the date of payment of refund. In the alternative it also directed that if the Opposite Parties choose to handover the possession of the flat, the order of refund with interest will not come into operation.

Against the above Order of State Commission, the Complainant Mrs. Veena Khanna filed an Appeal in the National Consumer Dispute Redressal Commission praying that the Opposite Parties be directed to deliver the possession of the flat and also compensation for delay in delivery or adequate compensation should be awarded so that she can purchase a flat of the size.

It was argued that as the afore-quoted order passed by the State Commission gave preferable alternative to the Opposite Parties, and the builder took undue advantage of it and refunded the amount deposited by the complainant with interest, as directed, because of the rise in the prices of the immovable properties.

Opposite Parties took advantage only because an option was given to either refund the amount or to hand-over possession of the flat and no adequate compensation was awarded. The National Consumer Dispute Redressal Commission commented that if such contentions of refunding of the money with payment of minimal interest is accepted, the builders would earn millions of rupees by delaying the delivery of the possession of the flat for months together for one reason or the other.

After considering the arguments of the counsels representing both the parties the National Consumer Dispute Redressal Commission decided that the Complainant is required to be compensated for delay in construction of the flat and for not allotting the same to her. Because of the delay in construction and delay in deciding the matter, it is practically impossible for a retired Govt. employee to purchase a flat at the present price.

The National Consumer Dispute Redressal Commission further stated that therefore, there are two alternatives – (a) one is to give adequate compensation for delay and to direct the Opposite Parties to hand-over possession of an alternative flat in the vicinity of the area where the flat was allotted to the Complainant; (b) or secondly, to pay adequate compensation to enable the Complainant to purchase a new flat of the same area in the same or similar locality.

The Opposite Parties were directed to pay a sum of Rs.7, 50, 000/- as compensation to the Complainant for the period she suffered financially. This was on the presumption that the value of the flat has escalated. However, if the builder considers that compensation of Rs.7, 50, 000/- (Rupees seven lakhs and fifty thousand) is more or excessive, it would be open to the builder to provide an alternative flat of the size and price agreed, in the same locality or near about, to the complainant for which an appropriate allotment letter will be issued by them in favour of the Complainant within a period of eight weeks from the date of the order. If the same is not issued, it shall pay compensation of Rs.7, 50, 000/- to the complainant, as directed.

The builder must deliver the project in time along with 100 per cent transparency in all the dealings. He must stick to the promised terms and conditions and pay penalty if the project delivery is late. Trust is the most important element in a society-builder relation and that should be well taken care of by the builder. Get all the promises or agreements made by builder in writing. It should outline the work to be done, date of completion, amenities or facilities promised.

Dilip Shah
Counselor and Analyst for Redevelopment of Housing Societies
dilip7shah@gmail.com
9819825752
32411533
Dilip Shah April 27, 2011
LONG LIVE CORRUPTION IN REDEVELOPMENT OF HOUSING SOCIETIES IN MUMBAI
LONG LIVE CORRUPTION IN REDEVELOPMENT OF HOUSING SOCIETIES IN MUMBAI

Many countries have beaten India in diverse fields. However, India has out-beaten all the countries in one field and that is widespread corruption for which every Indian is proud about his country being on the pinnacle since ages. One of the areas of this majestic achievement by established interests of the corporate field is redevelopment of old housing societies and commercial joints in metro cities.

In the name of redevelopment of old housing societies in Mumbai, the various authorities, in last few years have carpeted free ground to breed rampant corruption to benefit the private builders to sub serve their illegal objectives to garner huge money and members of the Managing Committees of Societies to enjoy the sleep with the builders for few greens and thrust redevelopment idea on the innocent members.

The benevolent Officials at MCGM always to be in readiness to approve any plan tabled, MMRDA, MHADA, Banks, Politicians and Senior Bureaucrats, Police, Local Goons and all concerned who are the core harvesters in most lucrative money spinning business involving multi crores of rupees in the name of redeveloping our mother land.

The entire lobby of these white collared mafias has strongly built a black economy in our country involving nearly 40% to 50% of unaccounted cash transactions from the small/large/corporate buyers of the properties. The menace of deadly nexus amongst these “BADDIES” have also beleaguered the licensing authorities of administration like MCGM, MMRDA, MHADA, Banks etc. for getting illegitimate approvals or legalize unauthorized constructions.

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 redevelopment projects when completed, 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, whether the use of FSI is legal, whether the basement areas are sold to commercial houses though they are free of FSI meant exclusively for car parking.

It has been often noticed that during the process of redevelopment, the terms of Development Agreements as agreed upon, unhealthy attempts with ulterior motives are made by the builders to twist and grossly violate the rules of MCGM, MRTP and DCR by unlawfully planning and constructing additional/unauthorized areas/floors 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. It is not viable to pull the builder to court and wait for years to get fair justice. Once the buyers sign on the dotted line and pay the cost, he is at the builder’s mercy.

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 and offering them handsome rewards.

The illegal gratifications and lavish spending by a large cartel of unscrupulous Builders entice the members of the Managing Committees of Cooperative Societies and provoke them to turn against their own members in the matter of giving consent and force implementation of redevelopment.

The corrupt members of the Managing Committees also resort to arm twisting, harassment and threatening method to the flat owners into submission as per the builder’s orders. Scared by such hounding tactics, most society members accept and offer their consent towards the redevelopment of their society without any protest and prefer to go along with whatever the members of the whole Managing Committee decides.

The members of the Cooperative Housing Societies in Mumbai are required to be vigilant while handing over their Societies for redevelopment to such builders who, by rewarding the unreliable members of the Managing Committees 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 builders 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.

On the front of Banks’ role to proliferate the corruption in recent years, the real estate market has helped increase realty frauds and other phony real estate financing by the Banks. The flourishing business of redevelopment in the present realty scenario invariably has brought in many unscrupulous and unsavory builders who, in connivance with certain corrupt bank executives and dishonest officers, secure bogus loans by allegedly executing spurious documents supported by fudged Balance Sheets, highly inflated/false financial data, fabricated information/statements and try to make some fast money through illegal routes.

Builders, Advocates, Chartered Accountants, Bank Executives, Branch Managers and officers nexus is believed to be the root cause of banks falling prey to realty frauds involving non-viable loans in billions of crores of rupees resulting in many fold increase in non-performing assets of Banks.

Quite a number of times, the approvals come from a single branch of a bank for sanction of loan to a blue-eyed builder of that bank, is the results of lack of thorough scrutiny and site inspection of the project by the bank officials. The recent bulletin published by the Banking Industry states that the builders confronting acute finance crunch, are under pressure and buying money at the rate of 24% or more to repay the bad loans which are estimated to the tune of Rs. 180 thousand crores.

It has also been noticed where a particular bank executive is transferred or posted from one branch to another, such immoral builders follow these bank executives to continue their illicit relations to avail more and more loans in crores of rupees which are sanctioned or got sanctioned from HO by such dishonest bank executives who act as carriers/agents to the top bosses at head office of that bank.

Complaints about mortgage frauds and predatory lending practices in banks have also grown many-fold as the economy has soured and increasing numbers of realtors face financial strains and even foreclosure. Reserve Bank is taking mortgage frauds increasingly seriously with assigning the task of investigations and prosecutions to Central Bureau of Investigation Dept. and Banking Section of Economic Offence Division against the disloyal bank executives and corrupt bank officials for rendering undue favors to the builders and acquiring disproportionate assets to their salaried income.

With regard to Law & Order, the Indian Police has always remained in forefront to protect the cold-blooded builders and milk them as often as needed. Even basic functions like lodging a FIR against the fraud and cheat builders is firstly not registered, victims are encouraged and even threatened for not to file an official complaint. If a case somehow gets registered, the police usually do not take any action. The con builders, corrupt politicians and policemen go like hand in glove, often resulting in exploitation of the gullible and naïve buyers.

It is not expected of a common man to analyze the hidden risks in a redevelopment scenario. His knowledge is zero to know the judiciary system and its intricacies. The builders on the other hands, have fleet of highly paid advocates and experts to advise and protect them.

Last, but not the least, the successful execution of any redevelopment project primarily depends on the management by the members of the Managing Committees with transparent efforts to protect the corporate interest of the society and 100% co-operation of each and every member. This, in turn is again depends on the capacity of the members of the Managing Committees who are entrusted with the management of entire process of the redevelopment with their honesty and integrity.

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

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