GST applicable on Society Donation by out going member: AAR

By Maharashtra Bureau

Housing Societies seek transfer fee from outgoing member and also incoming member. Although Transfer fee is 2% of agreement or 25000/- which ever is lower, but housing societies and commercial societies ask huge donations from the out going member on pre-text of giving NOC. Although such NOCs are also not mandatory but when incoming member wants to avail loans, such NOCs are required.

GST is applicable on Transfer fee as well as on any donation or additional funds given for transfer. GST applies on Transfer fee @18% if the Society not otherwise exempt  from GST registration.

Recently, Authority for Advance Ruling (AAR), Maharashtra, in the matter of a south Mumbai housing Society had to determine gratuitous payment from an outgoing member, would be subject to GST. Based on the facts of the case, AAR held that the gratuitous payment, which ran into several lakhs, would be subject to GST.

 

No Confidence motion against housing society office bearers

By Legal Cell

Motion of No-confidence can be passed by simple majority of

Committee Members Bombay High Court Clarifies the Position

The unamended section 73-ID indicated that the requisition for special meeting in response to a motion of no-confidence was required to be signed by not less than 1/3rd of the total number of members of the committee who are entitled to vote, the quorum for such a meeting was required to be 2/3rd is a fraction it was to be rounded off to the next higher number and finally the amendment, as made by the Maharashtra Act 7 of 1997, the situation has changed so far as it relates to the motion to be passed by majority and the “word 2/3rd majority” has been replaced by the word “simple majority”.

This was stated by Justice B.M. Marlapalle and Justice D.S. Zoting of the Bombay High Court, allowing the writ petition filed by Jayprakash Raosaheb Salunkhe and other vs. states of Maharashtra and others.

The facts of the case were as follows : The petitioners claimed to be the member of the Managing Committee of the Trimurti Stalkply Sahakari Sanstha, Ltd., Basmant, Taluka – Basmat District Hingoli, which is a registered Co-operative Society under the provisions of the Maharashtra Co-operative Societies Act, 1960. The respondent no.4 was the Chairman of the said Managing Committee and other respondents were members of the Managing Committee. It was contended that total members of the Managing Committee were 15.

On 10th April, 2000, the Petitioners submitted a motion of no-confidence before the District Deputy Registrar against the respondent no.4, the Chairman in the prescribed form and ac- cordingly the District Deputy Registrar (Respondent No.2) issued notice on 16th April, 2000 to all the members of the Managing Committee informing them that a special meeting of the Managing Committee to discuss the motion of no-confidence and to vote on the said motion was called and fixed on 24th April, 2000. Along with the requisition of no-confidence the list of the Managing Committee members was also submitted by the petitioners-requisitionist.

On 20th April 2000, the Petitioner no.1 submitted a representation to the Respondent no.2 (DDR) inviting his attention to the amended provisions of section 73-ID of the Act, to the effect that the motion of no-confidence was are required of the total number of the Managing Committee members who were entitled to vote at the election of such Managing Committee and the Provisions of Rule 57-A(7)(a)(III) of the Maharashtra Co-operative Societies Rules 1961would not operate. In the meanwhile, the meeting as fixed y the respondent no.2 was proceeded on 24th April 2000 and the respondent no.3 as directed by respondent no.2 by a specific order, presided over the said meeting. Respondent no.3 passed an order on 24th April 2000, stating that as required under rule 57-A (7)(G)(III) of the rules, the 2/3rd members of the total members entitled to vote were not present and the motion of no-confidence was rejected. The petition was therefore amended and the order passed on 24th April 2000 by respondent no.3 was also challenged.

The counsel appearing for the respondent no.4 took objections to the maintainability of the petition on the grounds that (1) the petition involved disputed questions of fact (b) petitioners had an alternative and efficacious remedy under section 91 of the Act to approach the co- operative court byway of a dispute etc.

The counsel for added respondent urged that there was no anomaly or inconsistency be- tween the amended provisions of section 73-ID of the Act Rule – 57 – A (7)(G)(III) of the rulesand in any case it was not the function of this (High) Court to declare the provisions as incon- sistent or to make laws.

Both the counsel endeavoured to impress upon the High Court that the provisions of section 73-ID(1) of the Act and Rule –57-A(7)(G)(III) of the Rules operated in different areas viz. for passing the resolution by simple majority ; Provisions of section 73-ID of the act are required to be considered and for deciding the quorum for the special meeting called by the Registrar by following the provisions of Rule 57-A of the Rules, the provisions of sub rule (7)(9)(iii) were required to be followed and in short there was no conflict between there two provisions.

The counsel for the petitioners submitted that the action of Respondent no.3 in insisting on 2/ 3 majority as a quorum for the meeting was illegal and the quorum for the meeting was to be decided in keeping with provisions of bye-law no.G.3.2. of the said societies bye-laws, which had been duly approved by the competent Authority. On this point the High Court observed that it was well settled by a cater of decisions that provisions of bye-laws were not statutory in nature and they did not have an overriding effect on the provisions of the Rules, though no doubt, they were referred to an relied upon for the matters for which there was no provision in the statutory Rules and therefore, the High Court was not impressed by the submissions of the counsel of the petitioners, that the quorum for the special meeting scheduled on 24th April 2000 ought to have been followed in keeping with the provisions of Bye-law No.G.3.2. of the Bye-Law of the said society.

The High Court in its judgement quoted fully section 73-ID of the Act (motion of no confidence against officers of Societies) and observed that Rule 73-ID(I) in the original scheme Pro- vided for 2/3rd majority and the said words simple majority by an amended by the Housing Act 7 of 1997.

The High Court observed that if bye laws be mad to the provisions of section 73-ID of the act, it must be held that for the meeting which are called by the Registrar for discussing or for holding vote on the motion of no-confidence, the provisions of Rule 57-A of the Rules must be construed to be mandatory and such meeting would be covered only by the procedure set out therein and not the bye-laws.

The unamended Section 73-ID indicated that the requisitions for special meeting in response to a motion of no-confidence was required to be signed by not less than 1/3rd of the total number of members of the committee who are entitled to vote, the quorum for such a meeting was required to be 2/3rd of the members of the Managing Committee and if the 2/ 3rd is a fraction it was to be rounded off to the next higher number and finally motion of no confidence was required to be passed by 2/3 majority. With the amendment, as made by Maharashtra Act 7 of 1997, the situation has changed so far as it relates to the motion to be passed by majority. With the amendment it is contended that (a) fraction it was to be rounded off to the next higher number and finally the motion of no confidence was required to be passed by 2/3rd majority. With the amended it is contended that (a) the requisition for no- confidence shall be signed by 1/3rd of the members (b) the quorum shall be complete with 2/ 3rd of the members and (C) the vote of no-confidence shall be simple majority. Referring to the arguments of the counsels for the Petitioners as well as for the Respondents, the High Court allowed the Petition holding that the special meeting for discussing the no-confidence motion and casting vote thereon was required to be proceeded on the basis of simple major- ity.

The High Court therefore directed Respondent No.3 to hold a fresh meeting by giving due notice to that effect of the Petitioners as well as the respondent members.

There was no order as to costs.

(In the High Court of Judicature, Bombay Aurangabad Bench, writ petition No.1559 of 2000 decided on 3-5-2000).

 

Can residential flat in housing society be used as office?

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By Legal Cell

USER of Residential premises for professionals purposes : Relevant Bye-Laws :

Under Bye-Law No.78(d) of the model bye-laws of 1984 and Bye-law no.76(a) of the new model bye-laws of 1984 and Bye-law No. 76(a) of the new model bye-laws of 2001 no mem- ber of the Society should use the flat deemed to have been allotted to him for a purpose other than for the one for which it has been allotted.

Entire flat can be used for professionals and part of the flat can be used for business offices :

In general a misconception is prevailing in the housing societies in Mumbai that a residential flat can be used only partly for professional office or is also misconceived that a residential flat cannot be used for business office at all. CRUZ of the judgements on user of residential flats is that even if the entire flat is used by a professional person for the practice of his profession, there is no change of user to a commercial one and there cannot be a prohibition for the same. If the flat is partly used for business office, then also if the dominant user is residential, there is no violation of the provisions relating to the change of user.

Distinction between business and profession :

The constitution of India while ensuring under Article 19(1)(g) to all citizens the right to prac- tice any trade, business or profession has maintained a clear distinction between carrying on a trade or business as against practicing a profession. The reason underlying the distinction is that unlike in a trade or business, a profession is practiced without any underlying profit motive. What a practicing professional renders to his client is his services essentially based on his qualification, personal skill and intellectual capacity.

All the learned professions have certain common characteristic like statutory recognition of the profession and adoption by the members a self contained code of conduct with statutory checks and boundaries to ensure professional integrity and character alongwith competence of the members of the profession so as to inspire confidence of the people in the profession.

The Supreme Court also has in several judgements maintained the above cited distinction between a trade and business on one hand and the practice of profession on the other hand.

The legality of user of premises is governed by the local laws applicable in various states in respect of Shops and Establishments Act, 1948.

Case law on firm of lawyers :

In V.Sasidharan V/s Peter and Karunakar (1984) 65 FJR 374 (SC), the question for decision before the Supreme Court was whether the office of a lawyer or of a firm of lawyers is or is not a commercial establishment within the meaning of the Kerala Shops and Commercial Es- tablishments Act (34 of 1960). The SC held that it does not require any strong argument to justify the conclusion that the office of a lawyer or a firm of lawyers is not a “shop” within the meaning of section 2(15).”

The Supreme Court has also, in several judgements reiterated this fundamental distinction.

In National union of Commercial Employees V/s Industrial Tribunal (1962) 22 FJR 25, the Court held that a firm of solicitors was not an “industry” within the meaning of section 2(j) of the Industrial Disputes Act and that the services rendered by the firm were only in the indi- vidual capacity of the partners and very much dependent on their professional equipment knowledge and efficiency.

Case law on private dispensary :

In yet another case of Dr. Devendra M. Surbi V/s. State of Gujarat (AIR 1969 SC 63 6T), the Supreme Court had occassion to examine the definition of “Commercial Establishment” in section 2(4) of the Bombay Shops and Establishments Act, 1948 and construing the word “Profession” appearing in association with the words “Business and Trade” in the said sub section, held that a private dispensary of a medical practitioner did not come within the defi- nition of “Commercial Establishment”.In Dev Brat Sharma V/s. Dr. Jagjit Mehta C.A. No. 4216 of 1988, the Supreme Court held that the user of residential premises under tenancy for the purpose of the doctor’s clinic did not tantamount to change of user.

West Bengal Govt. tried amendment of Shop and Establishments Act :

The same conclusion was reached by the Calcutta High Court in Dilip Kumar V/s. Chief Inspector (Shops and Establishments) (1986) 69 FJR 100 (Cal). In this case, the question for consideration was whether the inclusion amounted to an unreasonable restriction violative of article 19(1)(g) of the Constitution.

Yoga Classes :

In the case of Pant Nagar Anandlok CHS LTD. it was decided that carrying out activities like conducting yoga classes in a residential flat does not constitute breach of bye-laws of a Co- op. Housing Society.

The dispute in question had been field by the Pant Nagar Anandlok Co-op. Hsg. Soc. Ltd. against one of its members and his wife, seeking a declaration that the yoga activities of the member were violative of the bye-laws and were illegal. Further the society claimed in the dispute that this member herself or through her agents or servants be permanently restrained by an order or injunction from, in any manner conducting the yoga classes.It was stated in the complaint that the society received complaints from its members that because of the yoga classes, there was a lot of harrassment to the neighbours, the members of the society and to the public at large. The society particularly referred to the fact that fashionable ladies and girls and hippy type persons visited the society’s premises, who spoke loudly that caused a lot of annoyance. The sandals, chappals and shoes in the passage cause obstruction for use thereof by the members of the society.The ailing persons, who could benefit from yoga were sometimes referred to her by doctors. On an average in a day, 30 to 40 persons used to attend the yoga classes which she taught between 7.30 am to 7.30 pm.

The Judge referred to some rulings which were as follows:

Lakshman Sintre V/s. Balkrishna K. Shetye, B.L.R. page 937; B.R. Oswas V/s. Lakshmibai

B.L.R. page 214; University of Delhi and others (AIR 1963 S.C. page 1873); K. K. Karunanidhi and others (AIR 1073 Madras page 443) Appellate Court; Sant Ram V/s Rajinderlal and others, Supreme Court (1979); V Sasidharam V/s. Peter (AIR 1984 SC page 1700).

Drawing analogy from these verdicts, the Judge, in the case in question, decided that there was no breach of bye-laws or regulations of the society. The Court also directed the Respon- dent Society to pay Rs. 100/- as costs of the appeal to the appellant.

Office of Chartered Accountant :


Phillipos & Co. Vs. The State of Karnataka C.C. No. 21496 of 1987 :

Case under Karnataka Shops and Commercial Establishment Act, 1961 – office of the part- nership firm of chartered accountants not a commercial establishment as C.As. carry on profession like lawyers or a doctor and do not carry on trade business.

Observations :“A reading of the provisions of the Chartered Accountants Act 1949 and the Regulations would make it amply clear that a chartered accountant in practice has manifold functions and duties to be observed by him and that apart for possessing required qualifica- tions he requires special skill, learning and experience in the discharge of his duties.A pro- fession is a vocation or occupation requiring special usually advanced education and skill. The work and skill involved in a profession is predominantly mental or intellectual rather than physical or manual.”

Society Landmark Judgement Book Launched for Maharashtra

By Legal Cell

The Book : “Landmark Judgments on Housing Society Matters in Maharashtra”  is launched today on Saptakala.com/books. The e-book is available on the website and hard copy shall be available after Lockdown is lifted.

The book has more than 35 Landmark Judgments reported and analysed with citation and verbatim orders of various courts including Supreme Court, Bombay High Court, Maharashtra Society Appellate Tribunal and government notifications in housing society matters.

The book is Authored and compiled by Advocate Dr Sanjay Chaturvedi along with co-authors Adv Akhand Pratap Singh and Adv Chandni Janyani.

Topics covered are car parking, non occupancy charges, society redevelopment, income tax, GST, charges, membership rights and other main topics.

 

The first edition is available on Saptakala.com along with other books. It can be read on any PC, mobile etc. you can reserve your hard copy also by paying advance.

 

Happy reading.

Society cannot Terminate Development Agreement without MAHA RERA’s permission

By Legal Bureau Maharashtra Real Estate Regulatory Authority (Maha RERA) in a landmark order, protected home buyer’s money invested in redevelopment project and directed the builder & society to pay a penalty of Rs 15 lakhs for violating norms of RERA Act, 2016. Maha RERA was hearing the complaint of Kaushal Haria, Girish Chheda & Meghna Visaria and Velbai Haria who had booked flats in New Sangeeta CHS Ltd, Vidyavihar (E) in May 2016. The said project was a redevelopment project between society and builder Valdariya Constructions. The society in December 2011 appointed a builder as a promoter with registered development agreement for sale. In the meantime, a dispute arose between builder and society and matter went to Arbitration and the society terminated the development agreement executed with the builder. Authority in order said, “The termination of the development agreement executed between builder and society is after the commencement of RERA Act and this should have done with the permission of Maha RERA. Therefore, transferring the development rights is not valid as this project is registered with MahaRERA.” The Arbitrator allowed society for self redevelopment. The complainants were seeking interest for delayed project and handover the possession with a parking lot and all amenities. Society submitted the response before the court said, “The flat sold by the builder was illegal and it was sold below the market price. The complainants can seek a refund from the builder however they cannot seek an injunction against them.” Authority said under the provisions of section 2(zk) of the RERA Act, society is all the promoter of the project. Therefore, society is equally liable to the allottees who have booked their flats. Dr Vijay Satbir Singh, Member – 1/ Maha RERA ordered, “Considering the facts the complainants are the allottees of the project registered with Maha RERA and further directs society to join the complainants as its member within a period of 30 days from the date order.” Society is directed to give possession of their flats to the complainants by obtaining occupancy certificate, as the society has taken over the entire project for self-development as per the order of the arbitrator. In addition to this for violation of Section-15, the Maha RERA directs the builder and society to pay a penalty of Rs 15,00,000 to Maha RERA, the order said.

BMC Premiums on Housing Society Redevelopment

By Nayan Dedhia, MD – Toughcons Nirman Pvt. Ltd. As Redevelopment Consultants, today we come across several proposals for redevelopment and Only 1 Proposal out of 50 Proposals seems Feasible for Redevelopment. When we studied the reason behind it, it was observed that there were several reason why these proposals were not feasible. The major reason was Government / MCGM Share in Revenue: -30%-40% charged by way of various premiums charged by MCGM/MHADA. -2%-3% by way of stamp duty on DA & PAAA -7-8% by way of GST due to GST charged on construction, professional fees & sales brokerage whose ITC benefits also not available. -12% by way of Stamp Duty/ Registration & GST (without the benefit of ITC.) on sales 1% by way of LUC Tax and Miscellaneous Taxes. As per above, government alone charging 50%-60% by way of Taxes & Premiums. Thus by charging such huge premiums / Taxes, the question comes to mind whether the Government really has an agenda to provide affordable housing and house for all by 2022. Thus out of 100% revenue, only 40-50% is left for society members, construction costs, professionals fees, sales & marketing costs, finance cost, etc. Following are the revenues generated by the Government in the redevelopment project. Govt is charging approx 50%-60% and even after bearing the costs and completing the project if any profit remains, then it is also subject to further Income Tax. And without understanding this fact, the Society, Media, Housing Activists, Court etc. all blame only the Developers. Why such premiums/taxes/ charges are higher? Because BMC/Government wants revenue from Real Estate. BMC doesn’t want to compromise on revenue from Building Proposal. But who will explain to them, that due to the exorbitant pricing, if no proposals or fewer proposals come to them then how they will generate the required revenue in the first place? Is it possible that just by increasing premiums without any proposals, they will generate revenue? Hence, there are few things that we would like to know is that; a. Who is deciding the premiums at MCGM? b. Do they take a case study of any project to analyse the various impacts these premiums make on various sizes and types of projects? c. Do they check the feasibility of such various projects to understand what premiums should be charged? If they do it, they will realise that majority of residential projects, despite allowing TDR Loading, plots falling on 9 meters or 12 meters road will be 20% to 40% costlier than their current market price. (For eg. If the market price is Rs.20,000/- per sq.ft. then the landing cost is approx. Rs. 24000/- to Rs. 28000/- per sq.ft.) Since 2011, Fungible area was introduced in lieu of Balcony, Flower bed and elevation features. So this 35% fungible area of tenants’ area has to be added in their proposed carpet area and cannot be transferred or used in Sale Area thus making projects more unviable because of following issues of the plots described as follows: Why these projects are not feasible? There are various projects with different problems, few of them are as follows: Prior to 2010, BMC used to allow 10% Balcony and free Otla, which later on society members included it in their carpet area. Due to this today, in any project already 13-15% more BUA is used in any residential project. For the purpose of infrastructure development, MCGM has taken plot from the society and allowed them to construct it over and above the base FSI of 1 at that time. Due to such road setback FSI, today such plots’ FSI seems over consumed. As per existing policy, BMC does not allow additional FSI over and above existing FSI. MCGM says once benefit taken cannot be claimed again. But originally plot belonged to the society. So why can’t they take benefit again over and above the cap of new FSI, if they opt for redevelopment. iii. Many projects fall near railway boundary, metro rail, highway, Nalla, funnel zone and such projects full FSI cannot be consumed and thus making it unviable. iv. Several projects are smaller plots or odd in their shapes. Such project has various planning constraints and hence due to it, parking costs and BMC premiums increases compare to other plots. Thus making such projects un viable. v. Various plots were developed earlier as per layout and hence BUA of such buildings is 30%-40% more than their existing plot area. In such layouts, common RG & internal roads were developed differently and the plot owner did not transfer its rights to the respective societies. Hence these projects also are not feasible today. vi. As per new DCPR, Society plots falling on Road-width less than 6 meters are not allowed TDR, hence redevelopment is not possible for such type of buildings. vii. In MHADA, plots which are more than 4000 sq.mtrs and falls on 18 meters road, they are compelled to share the area with MHADA, thus making it unviable. viii. Also there are various societies on Collector Lands. If such societies opt to go for redevelopment they have to pay 10%-25% of land RRR for converting to freehold. Apart from above if there have been transfers by way of sale, then collector permission has to be taken and several costs are involved for the same. ix. As per figures declared in assembly, 5800 PROJECTS ARE STALLED IN Mumbai. That means 7%-8% population of Mumbai are homeless. In such projects, Developers have invested a lot of funds in these projects. Costs increased in due course due to the delay of work because of various reasons such as Stay by High Court for Dumping Ground, Introduction of GST, RERA, delay in Implementation of New DCPR, etc. Due to increased costs, if project has to be taken over from current scenario, then it is not feasible for any developer. Govt has to come out with some special policy and bail out such projects. x. For Paghadi Buildings, new DCPR has come with 33(7a), where tenants are to be offered minimum 300 sq.ft. area but that is within the FSI cap, hence such projects are also not feasible for Landowner due to less FSI for sale. xi. There are many society buildings, where the old developer was supposed to hand over the flats to the ULC, but developer sold such flats in the open market. Today such society has to pay the compensation for it before opting conveyance and such costs add additional burden and thus these projects are unviable. There are various such redevelopment projects which are not feasible due to additional costs as these plots falls on Lease Hold Land, MMRDA, Estate Properties, etc. There are many such type of projects where we have also not come across and they are not feasible. Thus as per above, there are several projects which contribute approximately 50% of the society buildings. This is the scenario and still, the BMC says that it wants revenue. Revenue that will be generated at the cost of its citizens, whose buildings are vacated or getting dilapidated and project is not feasible as per the current market scenario. GOVT / RERA/ COURT cannot hold only the developers responsible for this. They have to accept the fact that it is the Govt./MCGM costs that have increased drastically and have disturbed this industry rather than the over- trading or over-commitment by the developer. Demonetisation & RERA are the only excuses for the slow-down of the industry but what has affected the industry more is the increased Govt/MCGM Costs and since 2010, sudden change of several policies overnight. Adding to above woe, the media is also spreading the false scenario of huge inventory available unsold and hence prices will fall up to 50%. Due to such news, market sentiment is getting worse and Govt. is not taking any steps to correct it. APPEAL TO THE GOVT / MCGM Mumbai Redevelopment Real Estate Industry Does Not Require Any Package Or Tax Sops. Only Required Is That Govt/MCGM Should Reduce Their Premiums / Taxes Drastically. Govt has to rethink on its premium / taxes and intervene immediately to take bold steps. If Premiums/Taxes Not Reduced Immediately, That Day Is Not Far When 50% Of The Population Living In Dilapidated Buildings Will Die Under Them Even Without Earthquake.

Difference between Development Agreement and Service Agreements in Redevelopment of Housing Societies

By K.K. Ramani, Advocate (from his book…)
Development agreements, broadly speaking, are agreements between the owners of land/building and the developers to construct/reconstruct large building complexes. The agreements are of the nature of joint venture between the two in which the owner contributes his share by way of the development rights existing on the land and allows the developers to load TDR FSI by procuring DRCs and use the same as per D.C. Regulations. Apart from procuring DRCs the developers also contribute by way of cost o be incurred in construction and construction related activities, manage the construction work and carry out all activities necessary and incidental to such work. The two collaborators to the agreement are generally compensated by a sharing arrangement in which the product, i.e. the constructed space is distributed between the two.
The arrangement is a variant of the contract agreement in as much as the person undertaking the actual construction work is compensated not in terms of fixed agreed monetary consideration but in terms of allotment of some FSI which he is entitled to construct on his own, hold it as is own and dispose it in the manner suited to him subject to the terms and conditions stipulated in the development agreement. It is similar to the contract arrangement in so far as it relates to constructed area to be handed over to the owner except for the difference that the consideration is received by the developer not in money but in term of constructed area and/or use of some percentage of TDR entitlement which can be loaded on the property of the owner.
The arrangement can also be distinguished from a joint venture arrangement in so far as the two parties join together not to earn profit arising therefrom but to share the fruits in terms of the space constructed as a result of such activities. There is no profit worked out from the venture as such. The two parties arrive at their respective profit on the basis of their contribution and the benefit derived as a result of the agreement.
Another distinguishing feature of development agreement is the fact that the property viz. The land/ building continues to remain the property of the owner in the property card. What is given to the developer is the right of development to exploit the percentage of development potential of the area to be kept by him as free sale area which he is entitled to dispose of and make profit therefrom. This was clearly stated by the Bombay High Court in Chaturbhuj Dwarkanath Kapadia Vs. CIT 260 ITR 491 when it observed that “the object of entering into a development agreement is to enable a professional builder/contractor to make profits by completing the building and selling the flats at a profit. The aim of these professional contractors is only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements”. Such agreements are only a mode of remunerating the builder for his services of constructing the building as stated in Gurinder Developers Vs. Kurla Konkan Niwas Co-operative Housing Society (2000) 3 Mah Lj 131

Extra FSI under DCR 33(7) for Redevelopment of Societies in Mumbai

By V. S. Khemka, Advocate

Accommodation Times News Services
Grant of extra F. S. I. Under regulation 33(7) of Development Control Regulations would not solve the problems of dilapidated buildings unless fast track procedures are implemented at the offices of Collector, Municipal Corporation and MHADA. The office of Collector takes months even to issue certified copies of property cards and plans which are basic requirements to initiate process of redevelopment. Similar is the position at the offices of Municipal Corporation and MHADA and other departments of the State Government. At present clearances from about 50 agencies are needed to undertake redevelopment. At the present speed the sanctioning of the building plans in respect of about 15000 cessed buildings would take many years and till then dilapidated buildings would continue to collapse.
In Haryana home builders can start construction work of buildings or houses without having first approval from the Town and Country Planning Department. Similarly self redevelopment by tenants and residents of the property under DCR 33(7) should be permitted by submitting plans from a certified architect where the building has been declared dangerous by MHADA and where incentive FSI sought is minimum or merely 50% of the built-up area of concerned building. Even in other cases higher FSI may be sanctioned subsequently after perusing relevant records. The State Government may prescribe triple fees and charges for grant of time bound permissions and clearances from a single window. People would willingly pay the same. The task of receiving requisite applications and forwarding the same to appropriate departments and of handing over permissions and clearances from such Departments to Applications may be entrusted to Postal Authority as is being done in case of Passport Applications. This would augment the revenue of State and Postal Department and would solve the problems of tenants and residents of the buildings. They would be able to avoid red tape and corruption and would be able to undertake self redevelopment. This would ensure quality construction as well as safety of their valuable property rights. Normally the tenants and occupants of the buildings are able to collect sufficient funds that may be spent by cheques. The Tenants and residents of cessed buildings have been undertaking structural repairs to their buildings by obtaining N.O.C. From MHADA. If any building violation is noticed, the tenants and residents may be directed to rectify the same or double the fine may be imposed.
Newspaper reports about numerous FSI violations committed by developers and builders make it clear that requisite prior clearances are no guarantee of orderly development. The high pollution level at ‘C’ Ward clearly indicates that the law enforcing agencies are deterrent only to law abiding citizens. If timely action is not taken, the buildings will continue to collapse inspire of such beneficial legislation being there.

Redevelopment of MHADA Societies to get 2.5 FSI

 

By Maharashtra Bureau

1) The FSI for a new scheme on vacant lands of low Cost Housing Scheme for Economically Weaker Section, Low Income Groups and Middle Income Groups of MHADA having at least 60 percent built-up area of the tenements under EWS, LIG and MIG categories, shall be 2.50

2) For redevelopment of any existing housing scheme of MHADA, undertaken by the MHADA departmentally or jointly with societies /occupiers of buildings or housing societies/ occupiers of building or by lessees of MHADA or by developer, the FSI shall be as under.-

a) Total permissible FSI shall be maximum 2.5 on gross plot area.

b) The incentive FSI admissible against the FSI required for rehab shall be as under:-

i) In congested area, for the area upto4000 sq. m., the incentive FSI admissible will be 50 percent.

ii) In congested area, for the area above 4000 sq.m. the incentive FSI admissible will be 60 percent.

iii) In outside congested area, for the area upto 4000 sq.m, the incentive FSI admissible will be 60 percent.

iv) In outside congested area, for the area above 4000 sq.m., the incentive FSI will be 75 percent.

c) Difference between 2.5 FSI and the FSI required for “rehab + incentive” shall be shared between MHADA and Occupiers Society/ developer in the ratio of 2:1

d) In the scheme, for the land allotted for societies of MIG and HIG and developed plot allotted individually to MIG and HIG group, the permissible FSI shall be as per prevailing Development Control Regulations

3) In case of grant of NOC with additional permissible built-up area outside congested area over and above the permissible FSI as per sanctioned DCR prevailing at the time of allotment by MHADA for the purpose of undertaking Redevelopment / Utilization, MHADA shall charge premium at the rate decided by Government in Housing Department from time to time.

4) For the purpose of calculating the FSI, the entire area of the layout including development plan roads and internal roads but excluding the land under the reservation of public amenities shall be considered. Sub-division of plots will be permissible on the basis of compulsory recreational open space as in these Regulations. For low cost Housing Schemes of MHADA for EWS, LIG categories, the Regulations in the Schedule below shall apply.

5) For the purpose of this Regulation, the carpet areas for EWS, LIG or MIG tenements shall be as determined by the Government from time to time.

6) For the offsite infrastructure, MHADA shall pay to the municipal council 12.5 percent of the charges collected by MHADA for the grant of additional FSI (FSI over and above the normally permissible FSI) for the Redevelopment Schemes

7) In any Redevelopment Scheme where the Co-operative Housing Society / Developer appointed by the Co-operative Housing Society has obtained No Objection Certificate from the MHADA thereby sanctioning additional balance FSI with a consent of 70 percent of its members and where such NOC holder has made provision for alternative accommodation in the proposed building (including transit accommodation) then it shall be obligatory for all the occupiers/ members to participate in the Redevelopment Scheme and vacate the existing tenements, for the purpose of redevelopment. In case of failure to vacate the existing tenements the provisions of Section 95-A of the MHADA Act mutatis mutandis shall apply for the purpose of getting the tenements vacated from the non co-operative members

8) A corpus fund, as may be decided by MHADA, shall be created by the Developer which will remain with societies for its maintenance.

SCHEDULE

The following provisions shall be applicable only for Low Cost Housing Schemes i.e. Economically Weaker Sections and Low Income Group Housing Schemes only undertaken by Maharashtra Housing & Area Development Authority (MHADA)

1. Minimum Plot Size:-

(a)In the case of a growing house for EWS and LIG category a plot of 25 sq. m., a room of minimum size of 5.57 sq. m. (60 sq. ft) with toilet arrangement in the first phase shall be permitted. In the second phase, one room of 9.30 sq. m. (100 sq. ft.) May be allowed to be added. However, commencement and occupation certificates shall be granted initially to the first phase only and subsequent certificates for second phase issued as required.

(b)Multi-purpose rooms: – A multi-purpose room shall be allowed with size upto 12.5 sq.m. with a minimum width of 2.4 m.

(c) Cooking space (alcove) :- Provision of separate kitchen shall not be necessary. However, cooking space shall be allowed with a minimum size of 2.4 sq.m. with minimum width of 1.2m.

(d) Combined toilet: – A combined toilet shall be permitted for more than one tenement with a minimum area of 1.85 sq.m. with minimum width of one meter.

(e) Height: – The average height for a habitable room with sloping roof shall be minimum 2.5 m. with minimum height of 2 m. at the eaves. In the case of a flat roof, minimum clear height shall be 2.6 m. for a habitable room. Kitchen areas shall have minimum clear height/average height of 2.4 m. and bath and water closet (without loft) shall have a clear minimum height of 2.2 m.

(f) Plinth: – The minimum plinth height shall be 30 cm. and in areas subject to flooding the plinth shall be higher than the high flood level.

2. External walls: – 115 mm, thick external brick wall without plaster shall be permitted

3. Staircases: – Single flight staircases without landing between the two floors shall be permitted.

4. Front open space: – The front open space from roads having width of 9.14 m. and below shall be a minimum of 1.5 m for buildings with height of upto 10 m.

5. Open space (side and rear):- The distance between two ground floor structures shall be of a minimum of 4.5 m for purpose of light and ventilation of habitable rooms. In case of toilets deriving light and ventilation from open space, the distance between the two ground floor structures shall be a minimum of 1.5 m.

6. Pathways:-

The widths of pathways shall be as follows:-

(i) 1.5 m. width of pathways upto 20 m. in length;

(ii) 2.0 m. width for pathways upto 30 m. in length;

(iii) 2.5 m. width for pathways upto 40 m. in length;

(iv) 3.0 m. width for pathways upto 50 m. in length

7. Flushing cistern: – In water closets, flushing cistern shall not be essential and toilets without this provision may be permitted

8. Water closet pan size: – The water closet seat shall be of a minimum of 0.46 m. (18 inches) in length.

9. Septic tank and leaching pits (soak pits).-A septic tank shall be provided with capacity of 141.6litres (five cubic feet) per capita. Where the municipal services are likely to be available within four to five years or so, pour flush water seal latrines (NEERI type) shall be permitted where the municipal sewerage system is not available and the water table in the area is not high.

10 Convenience shopping: – Convenience Shopping as defined in these Regulations shall be permitted along layout roads with width of 12.2 m. to 18.49 m. provided that a minimum set-back of 1.5m and a minimum plot area of 25.2 sq.m is available and is provided.

11. Recreation Ground: – In the layouts, provision for recreation ground shall be on the lines prescribed in these Regulations

12. Ancillary structures: – Ancillary structures such as underground tank, overhead tank, substations etc. shall be permissible in the compulsory recreation open space subject to the condition that not more than 10 percent of such space shall be utilized for such purposes.

13. Other provisions of these regulations shall continue to be applicable for such schemes.

Clearly Define the Rental Escalation Clause in Society Redevelopment Process

By Anuj Puri, Chairman Anarock

In most metros such as Mumbai, redevelopment of old residential buildings is a normal and desirable occurrence. Without redevelopment, there would be no new supply in the fully developed city centres. Also, redevelopment is necessary because every building has an inbuilt shelf-life, after which it becomes unsafe, unattractive to the market and difficult to maintain.

Even now, a number of housing societies in Mumbai are contemplating the redevelopment option. However, the stakeholders of these societies often lack the information they need to make an informed call on which developer to enlist, and what guidelines they should follow before making a commitment. Here is a brief reference guide on what to look and ask for:

 

Check the Handover Timelines

A developer undertaking the redevelopment of a residential building can legally start the construction process only after he obtains the Commencement Certificate (CC). However, there are a host of other permissions and approvals to be obtained prior to that, together referred to as Intimation of Disapproval (IOD) approvals.

While the society members and developers mutually decide on when to vacate for facilitating the construction, it should ideally be done after the IOD has been obtained. In fact, the developer would also be more comfortable with vacating members only after the IOD has been obtained, since this would minimize his outgoings on the rentals which he would have to pay to members towards meeting their alternative accommodation costs.

Check the Reimbursement Parameters

The housing society members of a project that is to be redeveloped are entitled to monthly rental payments from the developer undertaking the project. The extent and limit for these payments must be clearly outlined in the agreement drawn up between the members and developer. Usually, it will be equivalent to the applicable rental for a similar-sized apartment in or around the same locality. The developer must also reimburse members for the cost of packers and movers and minor interior alterations in the rented accommodation they occupy during the redevelopment process, as these are also counted as expenses incurred while relocating to a new accommodation.

Clearly Define the Rental Escalation Clause

In a city like Mumbai, there have been several cases where members’ backs have been put to the wall because of poorly-framed rental clauses. It is important for the rental escalation cost to be included in the agreement between a developer and the housing society members. Typically, rentals tend to rise by 10% every year, though this can vary depending on locations, category/type of buildings and some other aspects. Society members should do their due diligence on this subject and negotiate for rental escalation terms that best fit their location and building type.

Consider Increased Maintenance Costs Post Redevelopment

The maintenance costs for a project are bound to rise after it has been redeveloped, proportionate to the additional amenities that the developer has provided. These amenities would include but are not limited to recreational facilities, garden, swimming pool, gymnasium, covered parking, air-conditioned lobby, open areas, etc. The housing society members need to calculate and assess the financial implications, keeping in mind the interests of all members. Depending upon the average financial capacity and everyone’s common interests, members should ask the developer to only provide amenities that everyone has agreed on. Often, developers offer maintenance-free periods to members, wherein the developer is willing to bear the maintenance charges which would otherwise have been borne by the society members. In the case of such an arrangement, the society should ask the developer to deposit this amount in a separate account prior to giving him permission to sell the surplus flats in the newly redeveloped building.

Ensure .g/;a Strong Delay Clause In The Agreement

The terms and conditions in the agreement between a developer and the housing society must clearly capture all the details regarding the construction time-frame. The developer should be asked to specifically mention the date by which he would be handing over the completed structure to the society members. The applicable penalties that the developer incurs if a delay occurs should also be mentioned. The penalties could be in the form of termination of contract, wherein the society members pay a pre-decided amount on a pro-rata basis according to the status of construction progress. Else, the developer may be liable to compensate the society members in cash or otherwise as a fine for delay.

To summarize, the redevelopment agreement between a housing society and a developer must incorporate maximum clarity over the roles and responsibilities of each involved party.

 

 

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