In this blog post, Sagar Gursahani provides legal solutions to property disputes arising in flats located in Gujarat, Maharashtra, and Goa.
Introduction
The purpose of the development of flats at such an increasing rate is an acute shortage of land in a country of 1.25 Billion people. The land is less and families are more. Therefore, the construction of flats has increased at an enormous rate in the country. The construction of multiple units on a piece of land requires that the construction takes place in an organized as well as in a structured approach. Certain mandatory conditions are imposed on the Builders/developers by the competent authorities so that the construction does not violate the rights of any of the people.
The prices of the property are exorbitant in our times, and a civil dispute in a court of law takes not less than a decade. There are a lot of complications that arise between the builders, developers and the flat buyers before and after apartments have been constructed. The disputes that arise out of the apartments involve the banks, builders, end users, investors as well as government authorities. The builders/promoters usually take loans from the banks and provide the land itself as the security. Additionally, the builders might give them a personal guarantee or a bond signed by them. If the builders fail to repay the loan as per the loan agreements and terms of the guarantee, the banks usually resort to Debt Recovery Tribunal to recover its dues. Debt Recovery tribunal is a forum wherein the Banks and financial Institutions approach for expeditious adjudication as well as recovery of the debts. With the coming of SARFAESI Act in 2002, the recovery of debts due to banks and financial institutions has become more simplified, and the banks recover the money from their debtors without even knocking the doors of the court. Otherwise, the property disputes go on for decades in a civil court.
Due to the increase in malpractices, shams, dual sale by the builders as well as difficulties faced by the purchasers of property due to the irregularities in construction by the builders, a need was felt for the introduction of a statute whereby all the real estate related matters would be solved. Real Estate Regulatory Authority Act, 2016 is a strong step to maintain the transparency in the real estate sector as well as to create a check on the malpractices that are done by the builders while selling off the flats to the end-users as well as investors. The important provisions of the RERA Act have also been discussed in this guide.
One of the landmark amendments pertaining to the property law came via 44th Amendment in the Constitution. It was through this amendment that the ‘Right to property’ which was a ‘Fundamental Right’ made into a ‘Constitutional Right.’ The right to land was a fundamental right and thereby it was very difficult for the government to proceed with its socialistic agenda of reforms pertaining to land reforms. As part of the 44th Amendment, 1978, two articles 19(1)(f) as well as Article 31 were deleted from the constitution. Thereafter, a new Article 300A was inserted by the constitution. By the insertion of this Article; the right to property was made into a Constitutional Right. There were two exceptions that have been created by the 44th Amendment. Firstly, where the acquired property belongs to an educational institution established and administered by a minority, the state has to ensure that the amount fixed/determined for the attainment of such property would not abrogate the rights of the minority. Secondly, where the state has acquired any property, which is made for personal cultivation, and the land is within the ceiling limits as applicable under the law, then the state must pay compensation to the respective person at the market value for the land/building or the structure made on it.
Family Settlement
It is very important to understand what a family settlement is. A family settlement is an agreement between members of a family whereby they amicably and mutually decide to divide and distribute the family property amongst themselves. It is usually done so as to divide the joint property. Thereby a settlement agreement is usually drawn up, and bifurcation of the assets of the family is done.
The Supreme Court in the case of Ram Charan v. Girja Nandini[1] has tried to explain the purpose of a family settlement.
The court held that the word ‘family’ is not to be understood in a narrow sense of being a group of persons recognized in law having a right of succession in the property at the time of the dispute. It is actually the expectation that such a settlement would result in ensuring amity, goodwill and good relations amongst people having relationships. The object of a family settlement is to settle the existing as well as future disagreements arising amongst the members of a family.
What is necessary under a family agreement is that the people amongst whom the agreement takes place must be either related to each other, by love, affection, trust[2]. Another purpose of creation of family settlement is that the relations between the family remain amicable and peaceful and the settlement between the family is done without animosity and hatred. In Sadhu Madho Das v. Pandit Mukand Ram[3], the court stated that it was a well settled position that a compromise or family settlement is based on the assumption that there is an antecedent title of some sort in the parties and thereby the agreement acknowledges and defines what the title is, the rights of each of the party is recognized, and every party relinquishes all their claims to the property. The court further held that conveyance is not required as the title is not passed from one person to another.
Maharashtra
It would be appropriate to have a look at the position of flat regulations in the state of Maharashtra. Before 1963, the state of realty sector was despicable in Maharashtra as there were sundry abuses, malpractices as well as mismanagement issues relating to the construction, sale, management, and transfer of flats which were taken on ownership basis.
The Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale, Management, and Transfer) Act, 1963 (“the MOFA”) was enacted with a view to regulating the promotion, construction, sale, management and transfer of flats sold on an ownership basis in Maharashtra. It lays down the responsibilities of real estate developers/builders with respect to flats sold by them as well as the rights of flat buyers. The aim of the act was to safeguard the interest of the flat purchasers and show transparency as well as discipline by putting an end to malpractices.
It is very important to understand the definition of a flat. As per MOFA, 1963, a flat is “A separate and self-contained premises, which is used or is intended to be used as a Residence, Office, Show-room, Shop, Go down, carrying on any industry or business including a Garage and the premises forms part of a building.” The term flat also includes an apartment.
MOFA regulates the activities commencing from entering into an agreement with a builder (called promoter) with the intending buyers of the flats and ends with the transfer of the building and the land to the society or the company after such society or the company is formed wherein the builder/ promoter has to complete the necessary formalities for their formation.
Issues Pertaining to Maharashtra Ownership of Flats Act, 1963
A promoter[4] under the MOFA Act has been vested with a lot of responsibilities under the act. Basically, he is a person who constructs a building of flats which are sold by him. Under section 3 of the MOFA Act, the liabilities of the promoter are explained. First of all, a promoter is supposed to make full and true discloser of the nature of the title to his land wherever the lands are constructed/to be constructed and must be certified by an advocate and must have been entered in the property card or the extract of a village or another revenue record. A promoter must further disclose to the prospective buyers about all the encumbrances which exist on the land or which may occur in a future course of time. He is also required to give an inspection of the buildings built on a notice of seven days or sanctioned plans as well as specification of the building which has been approved by the local authority. The promoter must also disclose the nature of fixtures, fittings as well as other amenities provided or that would be provided. He must also specify in writing the tentative date by which the possession of the flat would be handed over. He should prepare the list of flats with the flat numbers which have been taken/agreed to be taken, the names and the respective addresses of the parties, the price charged as well as the terms and conditions of the flats. If some organization has taken the flats, he must also state in writing the nature of the organization of persons to be constituted, title to be passed as well as terms and conditions governing such organization who have taken the flat. A Promoter/developer must get the completion certificate from the competent authority before transferring/selling it to the buyer. This means that he is supposed to get no-objection certificates from various departments of the development authority for basic amenities such as water and electricity. The promoter must also disclose the extent of carpet area including balconies, the price of the flat with intervals of installments, nature as well as the description of common area and facilities. He is responsible for paying all outgoings including all the taxes in respect of flat until he transfers the property to the flat owners/society/company. In a case wherein the promoter fails to fulfill his promise and deliver the possession of the flat within the specified date in the agreement or any further agreed date or 6 months wherein it is beyond the control of the promoter, then he would be liable to refund the amounts received by him as well as 9% interest per annum till the amount is refunded. Once the agreement of sale has been executed, the promoter is not allowed to create any mortgage or any charge on the flat without the consent of the purchaser of the flat. The promoter is liable to execute a written agreement which would be registered under the registration act before he accepts any payments as an advance which would be not more than 20% of the actual sale price. The promoter also has to take steps for formation of a cooperative society or a company. The Application for the formation of the society must be submitted to the society within a span of 4 months from the date of possession of the flats. Other than the formation of a cooperative society, he is also liable to convey the title to the cooperative society of the flat buyers within a span of 4 months from the date of formation of the society. Under Section 5 of MOFA, the Promoter is supposed to have separate bank accounts of all the sums taken as advance or deposit.
It is very important to note that as per section 4A of MOFA, even if an agreement is not registered under section 4, it would be admissible as part of the evidence in a suit for specific performance or as evidence for part performance under section 53A of Transfer of Property Act.
The provisions of MOFA, 1963, as well as the provisions of the Maharashtra Co-operative Societies Act, 1960, the rules framed thereunder and the bye-laws of the society, run parallel to each other. If the promoter has surrendered the property to the provisions of the Maharashtra Apartment Ownership Act, 1970 (MAOA), registered a declaration u/s. 2 of MAOA, 1970 in that case, it is mandatory for the promoter to notify the Registrar of Co-operative Societies the fact of registering a declaration under the MAOA. In that case, it will not be legitimate to form a co-operative society or a company and each apartment owner gets rights to the exclusive ownership of his apartment in accordance with the provisions contained in the declaration by the promoter u/s. 2 of MAOA.
What happens when the Promoter fails to deliver possession on the date mentioned in the sale agreement?
As earlier stated, if the promoter is not able to deliver the possession of the flat as per the date which has been mentioned in the sale agreement or 6 months from the date in case of reasons beyond the control of the promoter, then the promoter shall be liable to refund the amount to the flat taker along with an interest of 9% interest per annum till the date of refund.
In the case of Debraj Chatterjee & Anr. Vs. M/S. Unitech Limited[5], the parties had entered into a Buyers Agreement dated 22.10.2008 with the Bengal Unitech Universal Infrastructure Pvt. Ltd., who were the builders having total consideration of Rs. 73,14,272/- wherein a flat which had a super carpet area of 2249 sq. feet was allotted to the complainant. As per the said agreement, subject to the force majeure clause, the possession of the flat was to be delivered to the flat taker by 30.09.2011. The opposite party, that is the builders, defaulted on their commitment of delivering the possession to the complainant till the aforesaid date and the complaints sought the refund of Rs. 55, 42, 279/- paid by them alongwith interest @18% per annum. The National Consumer Disputes Redressal forum held that there has been deficiency in service by the Builders in providing the service and thereby they are liable to refund the entire amount received from the complainants plus the compensation as simple interest @12 % per annum from the date when the payment was made to the date when the entire amount along with compensation is paid by virtue of the present judgment. The builders were also made to pay Rs 2 lacks as compensation to the complainants for the mental agony, turmoil as well as harassment to the complainants.
Conveyance of the Title
Section 10 of MOFA says that if the minimum number of persons required for forming a co-operative society or a company has acquired the flats, the promoter has to submit the application for the formation of a cooperative society within a span of 4 months from the date when the requisite numbers of people have taken the flats.
Offences
A promoter who is found guilty for contravention of section 3[6], section 4[7], section 5[8], section 10[9] or section 11[10], shall be liable, if found guilty, with a term up to 3 years and/or fine. It must be further noted that if a promoter commits a criminal breach of trust with respect to any advance or deposit given to him if found guilty, be punished for a term up to 5 years and/or fine. The penalty for contravening any other provision of the Act, if found guilty would be for a term of upto 1 year and/or a fine of Rs. 10,000.
Liability of a flat taker
It is very important to understand the liability of a flat taker when he purchases a flat. Under section 12 of MOFA, 1963, every person who has executed an agreement to take a flat would have to pay the price at the proper time and place as well as his proportionate share of Municipal taxes, water as well as electricity charges, the ground rent and other public charges in accordance with the agreement that have been done. Any person who has taken a flat, executed necessary agreement and who without any reasons, fails to comply, disregards and does not pay his dues, would be punished with a fine which may extend to two thousand rupees.
Deemed Conveyance
Deemed Conveyance came into scenario via an amendment to MOFA Act 2008 whereby sub-section (3) (4) and (5) to Section 11 of MOFA were inserted. It is a situation wherein the promoter fails to execute a conveyance in favor of the cooperative society. Sub-section (3) provides that if the promoter fails to execute the conveyance in favor of the society or the company or the association, the members of such organization may make an application in writing to the Competent Authority accompanied by the true copies of the agreement for sale executed by each individual member or the occupation certificate, if any, for issuing a certificate that such society/ company/ association is entitled to have a unilateral conveyance executed in its favor and to have it registered[11].
The unilateral conveyance was done by notification of the amending Rules under MOFA via Notification No. FOB 2008/CR 170/PR II dated 27th September 2010. The deemed conveyance is required to be registered as per 9(2) of MOFA Rules.
In the case of Chief Promoter vs. 5 The State Of Maharashtra, the High Court of Bombay held that it was the duty of the promoter to convey the title and execute the documents according to the agreement. If the promoter fails to perform his duty, then the competent authority steps in to fulfill it. The court further stated that if we read section 10 and 11 together and in harmonious construction, deemed conveyance is a unilateral act and it enables the flat purchasers to acquire the rights of the Promoter, his titles and the interest in the building/land. A lot of checks and safeguards are required to be done before issuing a certificate of unilateral deemed conveyance to the party. It is simply a grant of the conveyance to a party as per the agreement between the flat buyer and the builder/developer of land. The court held that because the builders have failed to perform their duty of conveying the title in favor of the buyer, the competent authority had to intervene. The court further observed that the word “unilateral” has some significance. Once the competent authority grants a unilateral deemed conveyance in favor of the applicant, he is entitled to have the execution of the certificate and avail all the rights, title and interests associated with the property.
The Cooperative Housing Societies were getting exploited by the owners of the property as well as the builders. Therefore it was the need of the hour to bring in the provision of deemed conveyance. However, it must be noted that it is the legal duty of the builder or the owner of the land to convey the title of the property in the name of Cooperative Housing Society.
The conveyance is a very important aspect of the reconstruction work or selling any units (Flats) of the Cooperative Housing Society can be done only once the conveyance has been done in favor of Cooperative Housing Society. Before the Conveyance can been done, the Cooperative Society only has the possessory rights without any legal rights of re-development or marketability.
Therefore, the Cooperative Housing Society can resort to deemed conveyance if the builder/developer has failed to convey the property in favor of the society.
To obtain deemed conveyance, the Cooperative Housing Society has to collect relevant documents which may include society registration certificate, Building Approved Plan, Property Card or the 7/12 Extract, ULC Order, Copies of Agreement for sale of flat purchasers, Non-Agricultural Order, City Survey Map, Stamp Duty paid Proof, Layout Plan, Registration Receipts, Draft Conveyance Deed, Architect Certificate about utilization of FSI and the proportionate land entitlement Occupation Certificates etc.
The Managing Committee prepares the Members of the Cooperative Housing Society for Deemed Conveyance by convening a Special General Meeting (SGM) of the society by giving a notice about the same and highlighting what is the agenda of the meeting. In the meeting, the committee notes down the difficulties that may be faced in obtaining the Conveyance from the Land Owners/ Developers of the Property. It also discusses the effects, procedure, advantages and disadvantages of transfer of conveyance to the members.
Certain Resolutions are also passed during the SGM, such as Resolution for going ahead with the Deemed Conveyance, the appointment of Authorized Representative to represent the case before the competent authority, Appointment of Legal Consultant for Deemed Conveyance, Contribution of each member. At this point of time, the society starts moving forward to the Documentation stage.
The Appointed Authorized Representatives needs to make an application before the Competent Authority which has been constituted by the Government of Maharashtra. The Co-operative Housing Society needs to make a Conveyance Deed and submit the same before the Collector of Stamps to pay Stamp Duty along with proof of payment of Stamp Duty by each of the individual occupants.
The concept of Deemed Conveyance has been of much importance in the recent past. Most of the Cooperative Housing Societies in Mumbai do not have a conveyance from the Builders/ Property Developers. Therefore the conveyance remains in the name of the builder himself. The situation has been alike in most of the Maharashtra including Mumbai. In order to ensure that the interest of the flat buyers and the Cooperative Housing Societies at large is taken care of, competent authorities have been appointed so that the aggrieved parties may be heard by them and thereby conveyance may be transferred in favor of the Cooperative Housing Society. Once the aggrieved parties approach the competent authority, it executes the conveyance deed in favor of the society on behalf of the builder/promoter/land owner. One of the major challenges for obtaining deemed conveyance is the collection of documents required from various government departments. There are instances when the land owner/developer/builder is not willing to sign the conveyance deed in favor of Co-operative Housing Society, then the District Deputy Registrar has the authority to sign conveyance deed as a promoter. The Co-operative Housing Society will have to make an application to the competent authority, i.e District Deputy Registrar in a format as mentioned along with all the necessary documents. Documents which are required to obtain deemed conveyance are as follows:
7/12 Extract, Village Form No. 6 and property card.
List of details of the purchasers of the flat as well as copies of registered agreements of sale entered by them with the promoter including the proof of payment.
Location plan as well as layout plan of the building that has been sanctioned by the appropriate authority.
Survey plan by the revenue department.
Architect certificate of the constructed areas as well as Floor Space Index details.
Details of all the common area, facilities as well as a structure constructed on the land.
Latest Title and the search report of past 30 years by a qualified advocate.
A Order
Copies of ULC Certificate(applicable under Urban Land Ceiling Act, 1976)
Copy of approval of building plan from BMC as well as other authorities
Details of the society registration
Occupation certificate, commencement certificate and completion certificate.
Power of attorney or development agreement or agreement of sale executed by the landlord with the promoters or the builders to develop the land.
Draft copies of the conveyance deed
Copies of the legal reminders sent to the builders or the promoters or any other interested parties responsible for executing the conveyance deed[12].
Procedure For Deemed Conveyance
Whenever the land or the property is conveyed to the Co-operative Housing Society, it implies that the property is legally transferred in his name and thereby all the municipal taxes would be drawn in the names of members. If the property has a legal title, the Cooperative Housing Society can take the benefits of the Floor Space Index. The Plot of land has some developmental potential in the Floor space Index (FSI). The FSI may vary depending upon the location and the user zone of the plot. Thus, when the legal title of the Co-operative Housing Society has been transferred, the society can take the benefits of Floor Space Index and therefore the potential development of a plot can be carried out. Most of the times, the builders deliberately don’t transfer the Conveyance in favor of the Cooperative Housing Society with a motive of making use of the Floor Space Index at a future point in time. It must be noted that conveyance is the right of the members of the Society as well as Cooperative Society on the whole. The procedure for obtaining the Deemed Conveyance is as follows:
The Managing Committee, first of all, prepares the members of the Co-operative Housing Society for the Deemed Conveyance.
Once the list of members has been prepared, the Managing Committee would collect, organize all the documents and prepare a case as required for the Deemed Conveyance.
The Cooperative Housing Society then files a case before a Competent Authority. It is contested out of which an order of Deemed Conveyance is issued.
Thereafter, the Inspection is done, and the scrutiny committee reports to the office of the Competent Authority and summons are issued giving notices to the Land Owners as well as the Property Developers to appear for the hearing. The purpose of sending such notice is to ensure that they are being given an opportunity to present their case and thereby, the decision is taken in a neutral manner.
A deed of deemed conveyance is adjudicated, stamped as well as registered and thereafter, the competent authority incorporates the name of the Co-operative Housing Society in the land revenue record.
Once the land, property or the building is conveyed in favor of the Cooperative Housing Society, the title of the property is recorded for property cards as well as revenue records. Once this has been done, the title is free as well as marketable.
Advantages of Deemed Conveyance
One of the biggest advantage of deemed conveyance is that the titles of the property is legally transferred from the owners of the property/developers of land to the ultimate owners/occupants who have paid the price for it. It would be appropriate to sought out the advantages of the Deemed Conveyance:
Legal Owner: As soon as the title of the property/land is issued in the name of Cooperative Housing Society, the Government recognizes the Cooperative Housing Society as the legal owner of the property. The Cooperative Housing society is a corporate body having perpetual succession and a common seal. Therefore, the property can vest in the name of the society.
Benefits of additional FSI: As discussed earlier, Floor Space Index is measured in terms of square meter and depicts the space area on the plot where construction can be done. The benefits of FSI can only be utilized once conveyance has been done. Most of the builders are hesitant to convey the title as they think about availing more Floor Space Index (FSI) at a later point in time.
Property becomes sellable and marketable: If the conveyance of the Co-operative Housing Society is not done, the entire property and all the flats appurtenant to it remain in the name of the original owner/builder/land developer and thereby the purchaser doesn’t have the legal right to sell the property. All the documents are vested in the name of the builder/land developer himself and thereby the land is not free or marketable. Once the conveyance has been done, the property is sellable.
Raising of loans as well as reconstruction of property: If the Cooperative Housing Society requires funds, it can raise funds by seeking a loan and mortgaging the property itself. If the property title is not in the name of the Co-operative Housing Society, it would not be able to secure loans and mortgage property as it is not the legal owner of property. Also, if the Society has the conveyance done, it can apply for no objection certificate from the town planning department and go for reconstruction of the building. In the case of Tushar Jivram Chauhan And Anr vs. The State Of Maharashtra[13], the Bombay High Court observed that the uncleared/without description/vague boundary description are a matter of issue when it comes to transfer of property between the parties. It also noted that the competent authority is under an obligation to see that the deemed conveyance and/or unilateral conveyance, must be confirmed as well as satisfied, based upon the written agreement between the parties before passing an order on any such applications.
Issue pertaining to Parking Facilities in a Cooperative Housing Society
A very important question that arose before the Supreme Court in the case of Nahalchand Laloochand P. Ltd vs. Panchali Cooperative Housing Society[14] was whether the ‘parking space’ in a flat is independently sellable or not. The court ruled in the favor of the buyer and held that builders and developers cannot sell parking areas independently as it formed part of the “common facilities” to the buyer. The developer has the obligation to provide the parking space under Development Control Rules when the carpet area exceeds 350 sq. metre. It is not an area which is in addition to the flat. It forms part and parcel of the apartment.
The court discussed the concept of garage-private[15] as well as garage public as given in the DCR Regulations and answered the question whether the stilted portion or stilt area of a building is a garage under MOFA. If a promoter has not disclosed the common areas and facilities provided as part of the flat, it will not cease to be part of the same just because he has not described the same as free in the apartment. The court further added that the ‘stilt parking space’ is neither ‘flat’ nor ‘garage’ and therefore not sellable. As per the mandate of MOFA, the promoter is required to describe the ‘common facilities and amenities’ in the advertisement as well as in the ‘agreement.’ Therefore, open to the sky parking area or stilted portion which can be used as a parking space is not a ‘garage’ and cannot be sold independently as a flat.
Maharashtra Slum Areas (Improvement, Clearance, And Redevelopment) Act, 1971
Slum Rehabilitation Scheme was an idea which came out during 1996 to get rid of Mumbai’s Slum Problem. As per the census of 2011, around 52.07 lakh people out of 1.21 crores, people reside in slums in Mumbai. Only 4 percentage of the total slum dwellers have been rehabilitated so far. A lot of activists feel that the basic problem behind the problem with the development of slum area is the casual approach of the government towards it.
It is an act to make improvement as well as clear the slum areas in the State of Maharashtra and their redevelopment. Under the act, a Rehabilitation Authority has been constituted which carries on Slum Rehabilitation Schemes. The competent authority under the Act creates the Slum Rehabilitation Schemes and publishes the same in the Official Gazette. A reasonable period of not less than thirty days is given to the general public for submission of objections and suggestions. The Chief Executive Officer of the Slum Rehabilitation Scheme would consider the objections and the suggestions and carry out the modifications as deemed fit and finally publish the same, with the approval of Chief Executive Officer of the Slum Rehabilitation Authority who shall consider the objections and suggestions, if any, received within the specified period in respect of the said Provisional Scheme and after considering the same, carry out such modifications as deemed fit or necessary, finally publish the said scheme, with the approval of the State Government or, as the case may be, the Slum Rehabilitation Authority in the Official Gazette, as the Slum Rehabilitation Scheme.
There are a few parameters or guidelines for declaring an area as the slum rehabilitation area. These are:
Basic and essential parameters of development of slum rehabilitation area under the Slum Rehabilitation Scheme;
provision for obligatory participation of the landholders and occupants of the area declared as the slum rehabilitation area under the Slum Rehabilitation Scheme in the implementation of the Scheme;
Provision relating to transit accommodation pending development of the slum rehabilitation area and allotment of tenements on development to the occupants of such area, free of cost.
Scheme for development of the slum rehabilitation areas under the Slum Rehabilitation Scheme by the landholders and occupants by themselves or through a developer and the terms and conditions of such development; and the option available to the Slum Rehabilitation Authority for taking up such development in the event of non-participation of the landholders or occupants;
Provision regarding sanction of Floor Space Index and transfer of development rights; if any, to be made available to the developer for development of the slum rehabilitation area under the Slum Rehabilitation Scheme;
Provision regarding non-transferable nature of tenements for a certain period, etc.[16].
Once the area is declared as a Slum Rehabilitation Area, the Slum Rehabilitation Authority determines to re-develop such land by delegating it to some agency.
The competent authority also has a duty to undertake the improvement works in any area, and if it is of the opinion that the occupiers should vacate their premises, it must give them the notice to vacate by a specified date and offer the occupiers alternative sites in any other areas. If the occupier fails to vacate and shift to the alternative site offered to him within the area specified to him, the responsibility of authority to provide him alternative site ceases. The authority after giving 15 days clear notice to the person who has been removed, affix a copy of the notice in the conspicuous place, remove, dispose of any property remaining on the premises via public auction. Once the property has been sold, after deducting the expenses of sale, the remaining sale proceeds would be paid as may be entitled to the same[17].
Transferable Development Rights (TDR)
In certain circumstances, the development potential of a plot of land may be separated from the land itself and may be made available to the owner of the land in the form of Transferable Development Rights (TDR)[18]. These Rights may be made available and be subject to the Regulations in Appendix VII of Development Control Rules[19]. It basically means the development potential of the land which was suspended because of the reservation of land in the Development Plan for Mumbai by the Government of Maharashtra.
The government has found out a special way of compensating the landowner under which the development potential of the land is detached from the reserved land, the land stands transferred to the government and the development rights equal to the development potential attached to the reserved land are transferred to the owner to be used in some other land as per the provisions of Development Control Rules. So, therefore the owner of the reserved land is compensated by additional Floor Space Index which can be used on some other land by the owner. These detached rights are called TDR, which are formalized by municipal commissioner via Development Rights Certificates (DRC). The owner of DRCs can transfer them like a negotiable instrument for valuable consideration. If a Developer/Builder surrenders his plot of land and offers to build homes free of charge for the slum dwellers, he gets the Development Rights proportionate to the plot of land surrendered by him northward of that plot. He could sell the property which has been developed by him. The Transferable Development Rights(TDR) serves as an incentive for the builders so that they construct homes for the underprivileged and the slum dwellers. Therefore, the builders make and develop residence for slum dwellers and earn the TDRs.
The grant of such TDR’s to the builders led to the construction of the buildings in an arbitrary and chaotic manner. Therefore, a city activist, one Mr. Bhagwanji Raiyani, who was the founder of an NGO called the Janhit Manch, filed a public Interest Litigation in the High Court of Bombay asking for a complete ban on the operation, allowing and use of Transferable Development Rights. Therefore in the present case of Janhit Manch And Bhagvanji v. The State Of Maharashtra[20], the question that arose before the court was whether the state, which was financially enabled to provide housing to encroachers on public and private lands residing in structures as well as the slum dwellers is justified in granting TDR’s to builders by permitting to increase the F.S.I. The objective of the state was to protect the slum dwellers as well as to evict the parks, gardens, footpaths and roads from encroachment.
The petitioner pleaded before the court regarding the concern for the open spaces and parking and about the manifold increase in the population and traffic congestion due to the indiscriminate use of Transferable Development Rights in the suburbs including areas of Vile Parle, Mumbai.
It was also pleaded by the petitioner that the discretion conferred upon the Municipal Commissioner was being exercised arbitrarily, irrationally and the open spaces have been reduced to 3 meters between the buildings, regardless of the height, which was more or less a mockery of the notion of side open spaces being sufficient to provide adequate light and air at all floor levels. Moreover, if the TDR was allowed, the location of these areas was such that there would have been no room for increasing the infrastructure to cope up with the increase in residence/structures.
The court after analyzing the facts of the case, appointed a Committee of experts comprising architects, social activists, lawyers, bureaucrats and retired State and BMC Officers to review the TDR policy in the larger interest taking into consideration the submissions made by the petitioner as well as to frame norms and guidelines for future implementation.
The court held that the existing infrastructure in terms of Parks, Play grounds, open spaces, water supply, sanitation and sewerage disposal, ambient quality of air and public transport were inadequate. There is serious congestion on roads and railways. Yet considering object and purpose behind the Slum Rehabilitation Scheme for those residing in slums and shelters, the court rejected the challenge under Articles 14, and it cleared the decks for corridors along the Western and Central railway lines.
The notification dated 16th January, 2016 had linked the utilization of TDR to the width of the roads and plot size, allowing higher vertical development for wider roads and curbing construction of skyscrapers on narrow roads. The notification has also jotted down cases where compensation in terms of Transferable Development Rights (TDR ) is permissible and cases where it is not permissible[21]:
CASES ELIGIBLE FOR TRANSFERABLE DEVELOPMENT RIGHTS (TDR ):–
Lands under various reservations for public purposes, new roads, road widening, etc. which are subjected to acquisition, proposed in Draft or Final Development Plan, prepared under the provisions of the Maharashtra Regional and Town Planning Act,1966;
Lands under any deemed reservations according to any regulations prepared as per the provisions of Maharashtra Regional & Town Planning Act, 1966;
Lands under any new road or road widening proposed under the provisions of Maharashtra Municipal Corporation Act;
Development or construction of the amenity on the reserved land;
Unutilized FSI of any structure or precinct which is declared as Heritage structure or Precinct under the provisions of Development Control Regulations, due to restrictions imposed by that regulation;
In lieu of constructing housing for slum-dwellers according to regulations prepared under the Maharashtra Regional & Town Planning Act, 1966;
The purposes as may be notified by the Government from time to time, by way of, modification to, a new addition of, any of the provisions of sanctioned Development Control Regulations.
CASES NOT ELIGIBLE FOR TRANSFERABLE DEVELOPMENT RIGHTS (TDR):–
It shall not be permissible to grant Transferable Development Rights (TDR) in the following circumstances:—
For earlier land acquisition or development for which compensation has been already paid partly or fully by any means;
Where an award of land has already been declared and which is valid under the Land Acquisition Act, 1894 or the Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 unless lands are withdrawn from the award by the Appropriate Authority according to the provisions of the relevant Acts.
In cases where the layout has already been sanctioned, and layout roads are incorporated as Development Plan roads prior to these regulations.
for the width of road that would be necessary according to the length as per Development Control Regulations;
If the compensation in the form of FSI / or by any means has already been granted to the owner.
Where lawful possession including by mutual agreement /or contract has been taken.
For an existing user or retention user or any required compulsory open space or recreational open space or recreational ground, in any layout.
For any designation, allocation of the use or zone which is not subjected to the acquisition.
Scheme of Redevelopment
The Development control Rules (DCR) act as a guide to every person who wishes to develop and redevelop any building or alter the building. Under the DCR rules, a person who intends to carry out the construction needs to give a notice to the commissioner along with the plans as well as statements of the construction that is to be done. Any construction thereof has to be done in conformity of the regulations provided. Under the regulations, the Metropolitan Commissioner has the final authority to interpret, construe the provisions of the regulations.
Issues Regarding FSI (Floor Space Index)
Under the new DCR Rules, the areas for balcony, flower-beds, terraces, voids, niches have been included in Floor Space Index. FSI means the quotient of the ratio of the combined gross floor area of all floors, excepting areas specifically exempted under these Regulations, to the total area of the plot.
Floor Space Index (FSI) = Total covered area on all floors/Plot area[22].
Thereby, FSI implies the ratio between the built-up area allowed and plot area available. Floor Space Index is directly proportional to the Built up area. The Higher the FSI, the higher is the Built up area.
There are a lot of disputes wherein the Floor Space Index is excessively used by the Builders or wherein the height of the building is done, or the construction of the building is carried out in excess to carrying of construction beyond the permissible limits or if the revised plan has not been approved by the planning authority.
The Supreme Court in one such case has held that the revised plans submitted by the architect had not been approved by the Planning Authority and the flat buyers were aware of the same. In such a scenario, it is the buyers of the flats who have purchased the flat to sue the builder/developer for costs or return of their money. Therefore, the flat buyers cannot seek a direction for regularization of the illegal and unauthorized construction made by the developers/builders. The court further held that regularization of any such illegal construction would lead to the destruction of the purpose of Development Control Rules itself[23].
Any person who carries of such development/construction illegally and in violation of the Rules as well as without permission of the Planning Authority is liable to get punished as there is a requirement that the land must be restored to its original position.
There is no provision under the Act for condonation of illegal construction by the developers/builders and promoters or regularization. It is the obligation of the promoters as well as developers to obtain sanctions under MOFA, 1963 and inform about the same to the buyers of the flat.
In a case involving unlawful constructions as well as unauthorised encroachments up to the extent of 24000 sq foot, the Supreme Court while coming hard on the builders held that making of unauthorized constructions is against the interest of the society at large and ordered that the demolition of the excessive constructed property must be demolished[24].
In the case of Promoters & Builders Association v. Pune Municipal Corporation & Ors[25], a writ petition was filed by the promoters and builders Association of Pune, which was a society registered under the provisions of Societies Registration Act against Pune Municipal Corporation as well as State of Maharashtra challenging the Development Control Rules that were modified. The main relief that was sought was that the writ of mandamus be issued to implement DCR Rule N-2.4.11(b) so that the road area in respect of the plot, which is reserved for the road can be utilized being 0.4 FSI on the same plot and the balance unutilized FSI, if any, can be converted into TDR and can be used anywhere on a receiving plot to the extent of 0.4 FSI, in addition to the 0.4 FSI permissible on the receiving plot for amenities under Rule N-2.4.11(a) and direct the Municipal Corporation to forthwith dispose of the applications which had been submitted by the members of the petitioner Association. The question that arose before the Supreme Court was whether the State Government can make any change by its own in the modifications submitted by Planning Authority or not. The apex court observed that the DCR was framed under Section 158 of the Act. Rules framed under the provisions of a statute form part of the statute and thereby DCR have a statutory force. After having seen the sanctioned plans, as well as having a look at the construction work, the Supreme Court dismissed the petition recording the fact on behalf of Pune Municipal Corporation that the Constructions were not in violation of clause (b) of D.C.R – 2.4.11.
Issues Pertaining to Cooperative Societies
As per Section 10[26] of Maharashtra Ownership of Flats Act, 1963 the promoter has to register the organization in the form of a cooperative society or in the form of a company.
The Cooperative societies Act is governed by the Maharashtra Co-operative Societies Act, 1960. The Cooperative society is by a legal fiction owner of the property and has a possessory right in the premises. If the builder has not completed the project as per the agreement, the flat buyers as individuals or cooperative society as a whole may sue for specific performance of the contract with the builders.
One of the biggest reasons for disputes under the Cooperative Housing Societies is the Redevelopment by the builders/developers. The managing committees, in collusion with the Builders and the Developers, on various issues including relocating while redevelopment of the society is being carried on, deny them of their fundamental rights, basic amenities as well as issues pertaining to parking facilities. The other kinds of issues that prevail in the Cooperative Housing Societies include day to day functioning of the societies, including disputes arising between various members of the society, between the Managing Committees and members of society as well as use of parks, swimming pools or other amenities.
If the general body of the Co-operative society has taken a decision with regards to redevelopment and the same has been sanctioned by majority of the members of society, the decision of the body of the Cooperative society is valid till the time it is in force. In the Jasmina Constructions Pvt. Vs Mandapeshwar Kripa Co-Operative[27], out of 84 members of the society, 77 had vacated their respective premise for the purpose of redevelopment and there was a unanimous resolution to that extent. The members contended that there was permanent dispossession by the builder. The plaintiffs had already invested huge amounts for the redevelopment of the society, and had provided necessary alternate accommodation to all the members as well as the dispossession was only for the temporary period till the construction and/or completion of the project. The Court granted eight weeks’ time to the five contesting defendants.
Procedure for Registration of Cooperative Housing Society
It would be appropriate to discuss the procedure of Registration of the Cooperative Housing Society. The above mentioned documents are submitted to the Registrar. After the scrutiny of the documents is done by the concerned Registrar, he would make an arrangement of issuing certificate of registration of the society under Section 9(1) of the Maharashtra Co-operative Housing Society Act, 1960. A copy of the registered bye laws, memorandum regarding registration of the society is sent to the chief promoter. The order for registration of the society must be sent for publishing in the government gazette. The First general body meeting of the Promoter members would be organized by the Chief Promoter within a span of 3 months from the date of registration of society[28]. If the meeting was not taken by the chief promoter then the complaint can be made to the Registrar and after appointing the authorized officer, such a meeting can be conducted. If the registration of the society is denied, then an Appeal can be made under section 152 to the immediate senior officer. If the Registrar does not take any action on the proposal received for registration, then it is deemed that the society has been registered. The information regarding the procedure of working of the society as well as the bye laws can be given to the members in the first meeting by the office bearer representatives of the District Federation and officers from the co-operation department[29].
Builder-Non-Cooperation Co-operative Housing Society
If builder/promoter delays to register the Co-operative Housing Society, then in that case, the application for registration of society be submitted in Form 6 (Rule 12) before the authorized officer (District Dy. Registrar) in the respective district, who have given power under section 10(1) of the Maharashtra Ownership Flats Act 1963
While submitting the said proposal, following documents are Necessary –
7/12 extract of the land or property card.
Competent Authority Certificate regarding non-Agricultural land.
Order regarding applicable/non-applicable Land ceiling Act Map of the construction approved by the competent authority.
Letter of given permission for construction.
Completion certificate of Construction.
Development Agreement if the land is taken for development.
Power of Authority letter of the Land.
Copy of the Title search Report.
Agreement copy of the flat purchased.
Architect certificate regarding construction.
List of the Members.
Scheme of the Society.
Application regarding reservation of Name.
Minimum 10 Members shall necessary for the registration of the Society.
Application for registration of Society (A Form)
Table containing information of the society (B Form)
Table containing information of the members (C Form)
Statement of Accounts of the members (D Form)
Notarised guarantee letter of the chief promoter of society on the stamp paper of Rs. 100/-
Notarised Indemnity Bond of the members who applied for the registration of society on the stamp paper of Rs. 200/-
Affidavit of the Members (Minimum 10 promoters’ Affidavit)
Two copies of bye laws approved by the Commissioner, Co-operation and Registrar, Maharashtra State, Pune.
Bank balance statement of the promoter members who have deposited Rs.500/- each as a share and admission fee Rs.100/- in District Central Co-operative Bank after getting sanction for the reservation of name in district of Rs.2500/- paid as society Registration fee in the Government Treasure[30].
Redressal before the Consumer Court
The Buyer of the real Estate can file a case before the consumer court if he falls within the definition of a “Consumer[31]” under the Consumer Protection Act, 1986
Failure to deliver possession
Let us understand the repercussions when the builder fails to deliver the possession within a stipulated time as given in the agreement.
Satish Kumar Gajanand Gupta vs. M/s SrushtiSangam Enterprises (India) Ltd &Ors[32]
In the present facts of the case, even after paying the earnest money, the builder failed to deliver the possession within a stipulated time. However, the buyer of the said property was not classified as a consumer by the court as the complainant was a resident of Delhi and he intended to purchase some permanent accommodation at Mumbai for his stay during his business visits to save on the expenditure incurred in hotels. The National Consumer Disputes Redressal forum held that the transaction was related to the business activity and, thereby, it will fall in the category of commercial purpose, and the complainant will not fall within the definition of a consumer under the Consumer Protection Act, 1986. The same view has been taken in the case of Jag Mohan Chhabra & Anr. vs. DLF Universal Ltd[33] which was somewhat a similar case. Therefore, it was held that the complaint was not maintainable under the Consumer Protection Act, 1986. In the present case, the same view was reiterated while dismissing the complaint. However, the court granted liberty to the complainant to approach the Civil Court to seek remedy.
Swaran Talwar & 2 others v. M/s Unitech Limited[34]
The grievance of the complainants is that though they booked flats more than eight years ago, the opposite party had failed to offer possession to them and the project was nowhere near completion even though 95% of the cost was already paid. As per the agreement, the apartment was proposed to be delivered to the Allottees within 36 months. The complainants alleged that the money was used elsewhere and the court held that such a practice constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trade practices which have been given in Section 2(r) (1) of the Act are inclusive and not exhaustive. After waiting for a span of nine years of having booked their flats with the opposite party, the court ordered that the complainants were