FLAT PURCHASERS BETRAYED: NO PROTECTION IN THE PROPOSED MAHARASHTRA HOUSING (REGULATION & DEVELOPMENT) BILL 2012
Hidden charges, Possession Delays, Broken Promises, Breach of Trust, Cheating, Unfair Trade Practice, Deficiency in Service, Abandonment of Redevelopment Projects half way, Corruption and Malpractice, Dishonest Strategies to pocket the Redevelopment Assignment, Illegal Constructions, Violation of Acts, Laws and Rules, Vanishing Builders…Such frustrating and iniquitous experience by and large are faced today while purchasing of a lifetime shelter by a middle class flat purchasers.
The Maharashtra Housing (Regulation & Development) Bill 2012 is strangely enough, drafted in gross dissimilarity and contrast to The Real Estate (Regulation & Development) Act 2011 enacted by Central Government though fallaciously proclaimed by the Maharashtra Government as the second protective umbrella being provided that touches the life of an adolescent and gullible flat purchasers.
The First protective umbrella of its kind was The Maharashtra Ownership Flat Owners Act (MOFA) enacted in 1963. Despite being a subject of scorn and a source of torment, the Real Estate Laws have so far been governed by a patchwork of Regulations that promote arbitrariness and leave plenty of corrupt and dishonest twists for offenders.
It is absolutely essential to have a Real Estate Regulator with stringent punitive provisions. The absence of a strict Regulator is the root cause of corruption, frauds, cheating and malpractice. It should be the Regulator’s job to ensure that Builders follow Rules, deliver the quality and take them to task if they fail. It’s why there is so much riding on this Law. It could make Builders accountable to property purchasers. It could pressure the Government to hold the Builders accountable. Unfortunately, the operative word here is ‘could’.
As per the age old scenario in Realty Sector, the cycle of corruption and black money starts from clearances given by various Government and Municipal Authorities. The choice for Builders is to pay bribes or endure a wait. If money paid, it doesn’t take long to get approvals whereas normally as per practice, the Builders get required approvals in two to four months. But it adds 20-30% to the Project Cost. Unfortunately, the Bill does not attack this link in the corruption chain. The Regulator Bill does not have any powers over State Bodies or Municipalities to check this delinquency.
It is awful to state that even without knowledge of several MLA, MLC and PUBLIC of the Maharashtra State a Bill known as “Maharashtra Housing (Regulation & Development) Bill 2012” was introduced in Maharashtra State Assembly on 11.04.2012 to be passed on 18.04.2012 without having due discussion or public participation. However, because of some opposition instead of getting it passed, the Assembly was forced to form a Joint Committee who invited public suggestion (latest up to 19.05.2012) by giving a small News Item in Loksatta, a Marathi Newspaper appeared on page 3 of 07.05.2012. It is quite evident that this entire process was done in suspicious and unfair manner contrary to principles of the largest democracy of the world.
There is a clear public opinion in Maharashtra State that the proposed Bill is a self-defeating of its very objectives and it will not only doom Reality Sector, cause irreversible damages to flat purchasers at large. However, it will surely facilitate the night by flyers operators in the Reality Sector causing irreversible and permanent damages to all.
There is sufficient reason to derive a conclusive evidence that the proposed Bill is nothing short of an attempt to initiate not only to overrule the exemplary decisions of the Supreme Court on the basis of the existing MOFA, there are glaring defects in the proposed Act. Such toothless propositions in the Housing Regulatory Bill will invite more litigation than helping the innocent flat purchasers.
It is entirely Builder friendly proposition in compromise with the interest of the needy flat purchasers; it has not been considered that the flat purchasers are interested to get their flats within the terms and conditions of the Agreement and not for the insignificant compensation from the Builders. It is undoubtedly evident that the Housing Department / Officer in association with the unruly Builder Lobby, have prepared this Bill and the same was approved by the Cabinet and is now before the Maharashtra State Assembly.
No single provision is incorporated in the Central Government proposed “Real Estate (Regulation and Development) Act, 2011 which could control and monitor the unfair manipulative and unscrupulous activities of the Builders. The same has also not been included in the proposed Bill of the Maharashtra State Govt.
MOFA, 1963 is in existence in Maharashtra for more than 4 decades and over the time, the Act has become so matured due to which the most of the unfair and manipulative practices of Builders were in control to a significant extent, has been completely repealed. The Housing Societies have strongly objected to repeal the existing MOFA which could be suitably amended with specific care not to allow any dilution of the rights and privileges already provided to the flat purchasers through the existing MOFA wherein there are uncompromising provisions to push the guilty Builders behind bars through the recourse of law.
The most surprising is that the Maharashtra State Bill is not made applicable to all the Stake Holders and also all the Authorities which undertake construction activities like MHADA, Repair Board, SRA and CIDCO whereas as per the Central Realty Regulatory Act, all the Authorities Including Government and Semi Govt are covered under the legislation. Does this not amount to diluting of the provisions of the Central Bill by Maharashtra Government to facilitate the dishonest and fraudulent Builders of the State?
The RIGHT to HOUSING is not provided in the State Bill whereas this Provision is already stipulated in the Central Realty Regulatory Act. The Regulator should have a power to appoint a Court Receiver, take the possession of the flat or the building and then complete the formalities of handing over the flat to the victim.
In case of delay of getting the possession of the flat from the Builder or cancelling the contract, there is no protection to flat purchasers to get the flat but refund of money with maximum rate of 15% interest. Flat purchasers may have to fight till Supreme Court to get the refund and interest thereon. In real estate, normally black money is accepted by the Builder at the time of executing the Agreement. If the refund has to be given, what will happen to the black money?
Further the value of the flat goes up so much that the flat purchaser needs to get the market value at the time of cancellation instead of refund of original amount with interest. The flat buyer needs to get the house and not the refund of money. The Regulator should be able to order to provide the house within the nearby area or pay the money at the applicable market rate. Unfortunately, there is no such provision in the Bill except paltry interest @ 15% on refund of money.
In fact, the Regulator should verify the applicable market value prevailing on the date of cancellation of contract and should be lawfully compensated with increased rate or the interest rate whichever is more and not based only on prescribed rate of interest@ 15%.
The Builder may knowingly delay the project and compel the flat purchasers to cancel the Agreement. In such cases, the Builder should be compelled to pay the rent double the prevailing market rate till the occupation is handed over after the expiry of the agreed date of handing over the possession. The asset of like value of the flat of the Builder should be attached or confiscated till the liabilities of the flat purchasers are discharged.
The Builder is permitted to sell the flat and receive 20% amount without executing the Agreement. He is required to only submit the proposed plan with his own signature or Architect signature to the Regulator/ Website of the Government. If the permission is given to upload the project on Website of the Government on the basis of Architect’s signed plan or on basis of self authenticated copy of Builder, he may recover the money up to 20% and then plan to refund the amount with interest on fictitious / fabricated reasons.
In such case, giving permission to collect deposit from the public in the name of booking the flat is against the RBI and SEBI Laws. The Website entry should not be given unless and until the plans are approved by the Local Authority and the various permissions which have to be obtained in due course by the Builder. Further the permissions obtained thereafter as per IOD should be uploaded on the Website within 3 days of receipt by them or the Local Authority should be asked to upload on the Website within three days of granting the permission.
In the present Bill it is stipulated that in a layout of having more than 1000 sq. m. & if the project is not completed within dye course, only Structural Conveyance will be given & Land Conveyance will be given only after completion of construction. This Provision is against the Judgment in the case of M/s. Jayantilal Investment V/s Madhuvihar CHS Ltd. The Complete Conveyance Deed should be executed as per the existing MOFA, 1963 within 4 months of formation of the Society. By permitting the Structure Conveyance, the Builder will misuse this provision and will never give the Conveyance of the Land to the Society or the Federation.
Another disgusting provision in favour of the Builders’ Lobby is that all the future FSI and TDR will be with the Builder till the Complete Conveyance is given to the Society or the Federation. If such provisions are made in the Act, the Builders are going to misuse the same for their advantages.
MOFA prescribes for sale of only carpet area and no common areas can be sold. With the introduction of the concept of independent area, restricted common area and utility area, the Builders will start designating the open areas or free of FSI areas as independent area, car parking area and utility area etc. and will start selling them to innocent flat purchasers.
Supreme Court has held that any area or car parking area which is not forming part of FSI and is not designated as flat cannot be sold. The proposed Law attempts to dilute this provision and will encourage the Builders to do further wrongs. The Development Control Rules were changed by BMC to plug this loophole but now this Bill is further going to give an opportunity to the Builders to sell even the open area called as independent area or utility area. The greedy Builders will certainly cash this blunder of the Government.
The Bill further announces that the Builder can change RG Plan; Garden Plan till the layout is not completed. The layout means 1000 Sq. Meters of the land. This provision is also against many of the High Court Judgements. The Builder should not be given permission to change the RG and playground without taking the permission from the flat owners who have already purchased the flats on the basis of disclosed information.
If the Builder either does not deliver or violates of Rules then in such cases, instead of imprisonment, he is required to pay only penalty ranging between Rupees One Thousand to Rs. One crores. Naturally, the penalty will be contested by the Builder till Supreme Court. In spite of having the provision of criminal proceedings against the Builder for violating the provisions of Law, the Builders are taking the flat purchasers for a ride. In the present Bill, the criminal proceedings against such scandalous and fraud Builders have been given up / dropped to protect such criminals so that the Government harvest their illegal revenues from the Builders’ Lobby.
In the New Bill, the Builder can disconnect essential services like electricity, water of the defaulter flat purchaser which is against Human Rights. This provision is also against the Essential Commodity Supply Act and the State cannot give power to such disreputable lobby to act against the innocent flat purchasers.
The Central Government has proposed that 70% of the amount collected from the flat purchasers to be kept in a separate escrow account till the completion of the project. This provision has been completely ignored by the State Government for the suspicious reasons best known to them.
The eminent and proficient personalities who have all the required expertise should judicially challenge the horrendous Bill by filing PIL in Mumbai High Court in common interest of the flat purchasers.
It is repulsive and undoubted fact that this Bill since having no impact despite the prima facie evidences against the criminals does not have the power of rigorous accountability requirements. This has resulted in to a massive ingress of corrupt elements in to the all-round system led by the Govt. and its Agencies.
An example of illusory and deceitful pronouncement of our Govt. under the pretence of providing protection to the flat cheated purchasers, passionately announced to inflict heavy fine including sending the criminal developers to jail. Please open the link below:
The Title says “State tightens screws on dodgy developers”
Has your Builder cheated you? Now send him to jail
https://www.mumbaimirror.com/index.aspx?page=article§id=15&contentid=20111114201111140902289679e9f61e5 Wherein it is stated that taking note of a growing number of complaints against crooked Builders; the State Government has decided to bring in amendments to the Maharashtra Ownership Flats Act that will ensure “heavier fines and jail terms” for rogue developers.
The article says that while earlier, disputes between home owners/purchasers and developers were directed to the consumer or civil courts (police stations have generally shied away from filing criminal complaints in cases relating to housing), under the new provisions Builders can be sent to jail for “between six months and a year” while fines will range from Rs 5 lakhs to Rs 10 lakhs.
Has anybody ever wondered that why suddenly, now in the final move, the Govt. has rolled back from the “jail terms” and is satisfied with camouflaged punishment of so-called “heavier” penalty of one crore?
The ubiquitous fact is the warm and silky relationships between the Builders and various agencies of Govt. cannot be at stake at the cost of protecting the flat purchasers by imposing stringent and inflexible laws on an assembly of golden goose laying the golden eggs. The populace of our country had never attained the desired significance in the eyes of the ruling party.
In MOFA, Form No: V refers to a Model Form of Agreement to be entered into between the Promoter and Purchaser of Flat with specific clauses to remain mandatory to the Provisions of Act and any violation or twisting in these clauses by a Builder is considered criminal under IPC.
Are we sure that on account of varied types of harassment meted out to the naive and gullible purchasers by fraud and cheat Builders since ages would be compensated by a paltry sum of Rs. One crore every year? Have we ever heard any buyer has cheated the Builder?
What is the value of one crore for an unprincipled and iniquitous Builder that too without any imprisonment? Will this amount ever go to the victims of fraudulent acts of the Builders or will it go to the Govt. Treasury at the cost of Flat Buyer’s burial?
Is it justified that a refund of booking money @ of 15% would compensate the agony and distress of common family man when the prices are soaring every month and leaving him high and dry to again undergo the entire process to find another shelter?
Numerous cases are on record where the dreams of innocent middle class families are crashed when the redevelopment assignments undertaken by Developers are neither accomplished in given time by such Builders nor are the promised facilities made available or never provided.
There are no rigorous provisions in the Bill as to how the justice would be meted out to the sufferers against varied offences of Breach of Trust, Cheating, Breach of Documented Terms, Manipulative and Unscrupulous Attitude, Unfair Trade Practice and Deficiency in Service which necessitate punishment nothing less than arduous imprisonment and set example for the rest of the Builders.
Every other day we read in News Papers that in addition to the unsolved and ever mounting cases, more and more number of cases of the aggrieved flat purchasers are being referred to various Courts like Civil Court, High Court, Criminal Court, Consumer Court, State Level Commission, National Level Commission, Tribunals and Supreme Court.
Now, all such cases will be referred to only one source i.e. Housing Appellate Tribunal. One can imagine what sort of an Administrative Infrastructure shall be made available to the HAT and whether would there be any unadulterated and rock-hard mechanism by which the HAT will be able to check the effective implementation of its decision. It is a matter of doubt whether a flat buyer will ever get justice to reach finality during the rest of the tenure of his life.
Dilip Shah
Senior Counsellor and Analyst for Redevelopment of Housing Societies and Society Laws
