REDEVELOPMENT: ILLS, EVILS & EPIDEMICS

It has been observed in recent past that numerous redevelopment projects either have been stalled or delayed beyond the documented period of its completion. Developers play vital role in redevelopment of housing societies. Currently, the redevelopment mania of residential properties is booming in full swing and one finds in Mumbai that compound wall of every third property of a housing society is covered with tins as number of small time Developers and Real Estate Companies have joined the battle in an effort to grab a share of this fast rewarding pastry.

Redevelopment of dilapidated buildings in overcrowded Mumbai is a ‘need’ for occupants than a mere dream of better lifestyle. Although the State Government has come up with various regulations to facilitate the redevelopment process, there are still large numbers of stalled or delayed projects due to various causes responsible for delaying and stalling of redevelopment projects.

A journey from congested and dilapidated chawls and old buildings to high rise towers in the heart of the city is enthralling for many middle class city families in Mumbai. Staying in these decaying buildings is not only unpleasant but also hazardous. The old localities in Mumbai have thousands of buildings and lakhs of people staying in worst living conditions in such buildings.

With a view to facilitate redevelopment of these buildings, the Maharashtra Government provided Floor Space Index (FSI) of 2 for redevelopment of cessed buildings in the year 1984. However, to encourage more redevelopment projects, the Government announced increase in the FSI for redevelopment projects in February 2009.

In recent past, the Maharashtra Regional and Town Planning Act, 1966 has accorded its sanction towards the modification in the Regulation No. 33 (7) of Development Control Regulation (DCR), 1991 for Greater Mumbai followed by Notification No: TPB 4312/CR-512012/UD-11 Dated 14th August 2013 issued by Government of Maharashtra, Urban Development Department, Mantralaya, Mumbai 400 032 which specifies that for reconstruction/redevelopment to be undertaken by cooperative housing societies of existing tenants or by co-op. housing societies of landlords and/or occupiers of cessed buildings existing prior to 30/9/1969 in Island City for reconstruction/redevelopment of the buildings of Corporation, the Floor Space Index (FSI) shall be 3.00 an the Gross Plot Area or the FSI required for rehabilitation of existing tenants plus incentive FSI as specified herein under whichever is more.

Cessed buildings, which are those built before 1960, are given an FSI of 4 under Cluster Development i.e. of more than one acre plot. Presently, around 1,365 redevelopment projects have received NOC from MHADA in Mumbai. Some of the projects have been completed successfully; some others are under construction, while some projects have remained stalled since years!

When a layman reads or hears about delayed or stalled projects, he assumes that the Developer is fraudulent and starts grumbling about how the Developer keeps the tenants wandering for their own houses. But there are reasons aplenty which are responsible for stalling or delays in the redevelopment project.

Some of the major reasons are the amendments to Development Control Regulations (DCR), delayed approvals of permissions or plans from Government or BMC, erroneous selection of Developer by Society, escalation in cost of material or labour, force majeure, frequent changes in government policies, imperfect planning and execution, lack of transparency in Society and Developer’s relations, liquidity crunch, litigation, unauthorized construction, violation of terms and conditions of Redevelopment Agreement or simply the Developer venturing into redevelopment projects beyond his capacity.

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

According to industry watchers, most of the Developers are facing project delays. About 85-90% projects are delayed in some way or the other and the reasons for such delays are not in the Developer’s control. The delays on account of various reasons do affect the overall budget of a Developer, increases the construction and storage cost and hit the brand image and future of the company. Also, it has a direct impact on end-users as well.

There are major projects like D. N. Nagar Residential Enclave (MHADA) in Andheri (west), Chirag Co-operative housing society in Khira Nagar, Santa Cruz (West) and many unlisted projects which are stalled due to many reasons. The largest slum of Asia i.e. Dharavi Redevelopment Project, is in an indeterminate state even today.

It is learnt that the Maharashtra Government has lost more than Rs 15,000 crore of revenue over the past two years due to stalled redevelopment projects of old MHADA buildings in Mumbai. There are nearly 17,000 Cessed Buildings in South Mumbai under progress and nearly 20,000 Housing Societies, 3,000 MHADA Buildings, 2,000 Collector Land Buildings waiting for redevelopment in Western and Eastern Suburbs.

In Mumbai, about 60% of the people stay in slums. Government is serious about the redevelopment of slums but hardly have any solution to initiate speedy process. Thus, at least 70% to 75% of the properties in Mumbai are potentially available for redevelopment. Out of these, nearly 25% have signed the Redevelopment Agreements with the Developers but the redevelopment has not started for various reasons.

Nearly 18 months were lost by the Government Authorities between a period of July 2010 to January 2012 regarding the policy decision on Fungible FSI and changes in the Development Control Rules and CRZ notification though issued by the Central Government, the State Government is yet to carry out the marking of CRZ and come out with the detailed regulations.

The environment and High Rise Committee Clearances are also now mandatorily required in case of high rise projects. The gap between executing the Development Agreement and the actual execution of the project leads to change in the market situation. This creates greed in the minds of the members of the society or the tenants in the building and they start renegotiation to extract enhanced benefits.

The Developers’ plea is that while 35% as Fungible FSI is granted to the tenants in Island City but it is not possible to give entire 35% as Fungible FSI since many common amenities like fire fighting ducts, electrical ducts, common passages to the tenants’ new flats, meter room are included in FSI. We need to deduct all these areas proportionately from the tenants on that floor. So the maximum that a Developer can propose from Fungible FSI is 25% which in turn becomes difficult to convince the housing society members when they ask for additional area over and above full 35% of Fungible FSI.

The common problem faced by Developers during redevelopment projects is non-cooperation by the original tenants. Many times, the adamant attitude of tenants does not benefit either of the parties. Obtaining majority for any decision is always a serious concern, getting plans approved by the whole Society and getting rebellious members to vacate the premises as per the agreed terms has been troublesome.

There are certain projects in which the housing societies do not have the plot conveyed in their name and getting the whole procedure in place takes six months to a year which eventually does eat up into the profits causing prices to go higher.

A Society in Juhu had signed the redevelopment project seven years back. The project is yet to start as the members are hiking their demands every now and then. Also, another reason a project may get delayed is when the property to be redeveloped goes under the jurisdiction of the court. This can happen when some members refuse to give their consent for redevelopment and opt for a legal recourse.

There are numerous judgments of Mumbai High Court where it is upheld that members of a co-operative housing society who are in minority cannot obstruct a redevelopment project and must abide by the majority decision of the society unless they illustrate and prove that there is some prejudice caused to them or there are elements of fraud in the entire process of redevelopment.

Industrial enmity in Developers is another important reason which causes delay in project completion. Some of the Developers try to disturb their rival bidders by giving different offers or by instigating few members of the society by offering something extra. This type of snatching away of redevelopment assignment is not a healthy practice redevelopment projects.

To avert the delay in projects delay and lawsuits thereof, the Developers must follow the laid down norms as formulated in Acts, Laws, Rules and Regulations by the State Government and Local Authorities in respect of redevelopment. On the other hand, if the Civic Bodies grant all the necessary permissions/approvals within a specified schedule, ease the norms of redevelopment and facilitate faster clearances, the Developers would cut down around 20% to 25% of the project cost ascribed to such delay.

The members, on the other hand, should support and co-operate with the Developers in corporate interest of the society. Developers too should emphasize the efforts to turn the dream of redevelopment into reality with due diligence.

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WHAT IS NICHE AREA IN A FLAT

Often there is a confusion to understand what called NICHE AREA is in a flat. The niche area is a recessed area in the wall but at times, certainly a centrepiece of the whole flat. There are many different ways to use the niche area.

You can use it to show off your artwork, use as fire place, set up a small temple, display antique objects, store items that you need to use frequently or you can use it as a combination of both decor and function. Just be sure not to neglect this space in the flat since it has so much potential to be a part of the overall image to create.

Bathroom niche is the perfect combined showcase for fresh towels and decorative objects. The sparseness keeps the overall look neat, while the monochromatic treatment makes it all feel clean and modern

The most common way to use a niche in the home is to use it as a bookcase to store your books without having to buy a separate shelving unit. It is an untraditional spot in the wall (up high) that hints of an artistic sensitivity as also aesthetically appealing.

The location of the space on the wall where the niche is engraved, might contribute a lot to be very functional. A niche in the staircase area is terrific. Even a bathroom niche when it is decoratively appealing to have a small collection of perfume bottles or soap dispensers in there. Like flower bed, balcony, dry balcony, sundeck etc., the niche area was considered as Free of FSI prior to the introduction of Fungible FSI under modified DCR. However, this area is now considered as part of Usable Carpet Area.

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FUNGIBLE FSI: A NEW GOLDEN GOOSE OF BMC

The amended DCR introducing a compensatory FSI in form of Fungible FSI in early 2012, has been proved a golden goose for BMC and has laid dear eggs worth Rs 1,500 crore in little over a year by charging builders a premium for utilizing Compensatory Floor Space Index (FSI). FSI defines how much can be built on a plot.

The premium paid by the Developers Fungible FSI in redevelopment projects, has become a major source of additional income for BMC. Within a year, it has become the third highest revenue earner after Octroi and Property Tax. It is learnt that BMC will utilize this amount to supplement Mumbai’s overall infrastructure.

It is now widely known that the amended DCRs permits Developers to build 35% additional area for residential buildings and 20% additional area for commercial projects by paying premium to be paid to the BMC. These extra areas were earlier manipulated and misused by majority of unscrupulous Developers who clandestinely and shrewdly sold them to the innocent flat buyers as part of the flat. In 2011, with an intention to arrest such deceiving and misleading attitude of Developers while selling of flats, a new policy was framed to ensure that Developers pay a premium for utilizing these spaces in a flat.

In western belt of suburbs, the Developers collectively paid app. Rs 750 Crore as premium on Fungible FSI till last month. Developers in the eastern belt of suburbs paid an equal premium of app. Rs 750 Crore including the premium revenue from island city and redeveloping the slums.

However, though the premium collection is unique, it may not last in case of slump in the property market as the premium earned so far, is from major projects of redevelopment which are on-going. Shortly, the realty market may face a down-turn and many Developers may not opt for the extra FSI immediately to offer.

With an objective to streamline the non-transparent and highly corrupt building approvals system, the new amendments were recommended in 2011 and were made effective from 6th Jan. 2012. These modifications now curtail the discretionary powers of Municipal Commissioner to grant building concessions to the Developers as against the earlier system, the Municipal Commissioner used to generously clear the projects with unusually large flower beds which is evident today in thousands of buildings, voids, lily ponds and car decks mainly in suburbs. These areas were not included in the building’s FSI.

These concessions were allowed to the Developers to build an additional 50% to 80% area above the permitted built-up area i.e. free of FSI. These tricksters then would sell these spaces to flat buyers at market rate and then encourage them to illegally integrate these free of FSI areas to make the flat spacious.

Builders operating in the Bandra-Khar-Juhu belt had been making huge profits by manipulating building concessions granted to them by successive Municipal Commissioners.

The corrupt plans approval system is still prevalent. Earlier, the sanctioning authorities at Building Proposal Depts. used to demand a fixed rate per sq. ft as passing charges. Now, they ask for a lump sum amount as said by a Developer.

We append below, a comprehensive list of items counted in FSI Calculations in New DCR in Mumbai:
Under DCR Regulation No. 35(3), the following shall be counted in FSI.

i) Covered parking spaces as provided under DC Regulation No. 36 (5) (e).
ii) Area of fire escape balcony as provided in DC Regulation 44 (5).
iii) Area of sanitary block for the use of domestic servants engaged in the premises, other than at staircase mid-landing level, stilt level, parking level.
iv) Part/Pocket/Covered Terraces, for whatever purpose, except open terrace above the top most storey and the part terrace at top most storey due to planning constraints but accessible from common staircase.
v) Area below open to sky swimming pool, clearance exceeding 1.5 meters from floor level.
vi) Air condition plant room/Air handling unit room, meter room, DG set room except provided in basement.
vii) Fire checks floor/service floor of height exceeding 1.8 meters.
viii) Area of balconies a provided in sub regulation 22 of DC Regulation 38.
ix) Niches below window sill.
x) Area of one public telephone booth and one telephone exchange (PABX) room per building.
xi) The ornamental projection including the voids, flower beds, etc. projecting from the face of the building except at the terrace level.
xii) Ornamental projection, flower bed etc. over a balcony or gallery.
xiii) Area of one room for installation of telephone concentrators as per requirements of Mahanagar Telephone Nigam Limited.
xiv) Area of a separate letter box room on the ground floor of residential and commercial buildings.
xv) Covered areas required on top terrace for antenna/dish antenna/communication tower used for Telecom (Basic Cellular Or Satellite Telephone) or ITE purposes, V-Sat, Routes, Transponders or similar IT related structure or equipment in excess of 20.00 sq. meters.
xvi) The parking floor in excess of required parking under these DC Regulations [35 (2) (VI)]. Deck parking inclusive of car lifts and passages thereto on habitable floors.
xvii) Driver’s room/sanitary block on podium and or parking floor.
xviii) Covered swimming pool.

The following new DC Regulation 35(4) added.

DC Regulation 35(4):Compensatory Floor Space Index (Fungible FSI):-
Notwithstanding anything contained in the DC Regulations 32, 33 & 34, the Commissioner may, by special permission, permit Fungible Compensatory Floor Space Index, not exceeding 35% for Residential Development and 20% for Industrial or Commercial Development, over and above admissible Floor Space Index by charging a premium at the rate of 60%, 80% and 100% of the Stamp Duty Ready Reckoner Rate for Residential, Industrial and Commercial Development.

Provided in case of redevelopment under DC Regulation 33 (7), 33 (9) & 33 (10) excluding clause no. 3.11 of Appendix-IV of Development Control Regulation 1991, the Fungible Compensatory FSI admissible on rehabilitation component shall be granted without charging premium.

Provided further that redevelopment under DC Regulation 33 (5) and redevelopment proposal of existing buildings in suburbs and extended suburbs by availing TDR, the Fungible Compensatory FSI advisable on FSI consumed in existing structure shall be granted without charging premium.

However, such Fungible Compensatory FSI for rehabilitation component shall not be used as free sale component and shall be used to give additional area over and above the eligible area to the existing tenants/occupants. Provided, that this regulation shall be applicable in respect of the buildings to be constructed or reconstructed only.

Explanatory Note:-

i) Where IOD/IOA has been granted but building is not completed, this Regulation shall apply only at the option of Owner/Developer,
ii) For plots/layouts where IOD is granted for partial development, this Regulation will apply for the balance potential of the plot,
iii) The Fungible FSI is usable as Regular FSI,

Provided, further, the development in Coastal Regulation Zone (CRZ) areas shall be governed by the Ministry of Environment & Forests Notification issued from time to time.

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DEEMED CONVEYANCE BEFORE REDEVELOPMENT OF HOUSING SOCIETY

The non-availability of Conveyance of Land to thousands of Co- Operative Housing Societies in Maharashtra is a burning issue which has led to many problems for them. The major problem is with respect to the Re-Development of such Societies which are about 30-40 years old and are having their buildings in irreparable and dilapidated conditions.

On February 28th, 2008 the President of India had approved amendments in Maharashtra Ownership Flats Act (MOFA) giving the right of Deemed Conveyance to the Co- Operative Housing Societies. The highlights of these amendments are that the State Government has empowered the District Deputy Registrars of Co-operative Housing Societies to act as Competent Authority for the area under their jurisdiction for granting the Deemed Conveyance to the Co- Operative Housing Societies.

When the Property Developers/Promoters and Land Owners do not co-operate with the Co-operative Housing Society to execute & register the conveyance of land and building, the aggrieved Co-operative Housing Society can under latest Amendments of Sec. 11 of MOFA can apply for the Deemed Conveyance, in prescribed form before the Competent Authority. The Competent Authority upon scrutinizing the Application, Verifying the Authenticity of the attached documents and after Hearing the concerned parties, if satisfied will pass the necessary Order in accordance with the amended rules of MOFA.

The Competent Authority shall issue the Order certifying that it is a fit case for enforcing the execution of Deemed Conveyance. The Order shall enable Conveying the Right, Title and Interest in the Land and Building and ownership in favour of the applicant Co-operative Housing Society under latest Amendments of Sect. 11 of MOFA.

When the Property Developers/Promoters and Land Owners do not execute the Conveyance in favour of the Co-operative Housing Society then the Co-operative Housing Society can approach the Competent Authority (the District Deputy Registrars of Co-operative Housing Societies) for the Deemed Conveyance.

The Co-operative Housing Society can make the application to the Competent Authority in prescribed Form VII along with Copies relevant Revenue Records, Municipal Corporation Records, Society Registration Certificate, Registered Agreements of all Members etc.

The Competent Authority scrutinizes the application & verifies the authenticity of the documents produced. The Competent Authority gives a reasonable opportunity to the Property Developers/ Promoters and Land Owners to file their say during the hearings. After the scrutiny, verification and hearings, if the Competent Authority is satisfied, issues the order as per the amended rules of MOFA.

The Competent Authority issues the order to the Sub- Registrar (the registration officer under the Registration Act, 1908) that it is a fit case for enforcing the Execution of Conveyance Deed. Under Section 11(4) of MOFA the rights, titles and interests of the Property Developers/Promoters and Land Owners can be conveyed to the applicant Co-operative Housing Society.

The Co-operative Housing Society shall then approach the Sub- Registrar (the Registration Officer under the Registration Act, 1908) with the Conveyance deed and the Deemed Conveyance Order for Registration of the Conveyance. The Sub- Registrar if satisfied shall register the Conveyance Deed.

After the registration of the Conveyance Deed the Co-operative Housing Society shall approach various Government Agencies to change the Land Revenue Records in favour of the Co-operative Housing Society.

The following sets of Documents are required from the Society for obtaining order of "Deemed Conveyance".

FROM SOCIETY:

1. Society Registration Certificate

2. List of Members

3. Copies of Registered Agreements (Chain of Registered Agreements in case of Re- Sale) for all Flats/ Shops with Stamp Duty, Registration Receipts & Index II details

FROM MEMBERS:

1. Stamp Duty & Registration receipt of all the members

2. Stamp Duty & Registration receipt of all the Re-sale flats

3. Index II of all the agreements

FROM DEVELOPER/LAND OWNERS:

1. Development Agreement

2. Death Certificate of owners of the land who have expired

3. Partnership deed of the partners

4. Partnership Deed Registration Proof

5. Conveyance Agreement with the Builder

6. Will, Probate Copy, in case the development agreement is    signed by legal heirs

7. Land Agreement (with the earlier and Builder)

FROM CITY SURVEY OFFICE/TALATI/TAHSILDAR OFFICE:

1. 7/12 Extract

2. Village Form No.6

3. Property Card

4. City Survey Map

FROM COLLECTOR’S OFFICE:

1. N.A Order

2. U.L.C Order

3. N.A Tax paid Receipt

FROM LOCAL AUTHORITY/BMC:

1. BMC approved Plan

2. BMC (IOD)

3. BMC (Commencement Certificate)

4. BMC (Occupation Certificate)

5. BMC (Building Completion Certificate)

6. BMC (Latest Property Tax Paid)

7. Location Map

FROM PROFESSIONALS:

1. Survey Report – From Architect/Survey Engineer

2. 30 Years Search Report & Title Certificate – From an Advocate

"Court Fee Stamp of Rupees 2000/-"

FORM OF APPLICATION FOR DEEMED CONVEYANCE
FORM VII
(See rule 12)

Form of Application under sub-section (3) of section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 to issue a Certificate for  Deemed Conveyance or Registration of Declaration in favour of the Applicant.

Before the Competent Authority at: ...........................................

Application under Sub-Section (3) of Section 11 of the Maharashtra Ownership Flats (Regulation of the promotion of construction, Sale, management and transfer) Act, 1963

Application No............................of..............20.......................
............................................................................Applicant/s;
Versus
.............................................................................Promoter/s Opponent/s.

The Application/s above named state as follows:

1. The Applicants are the members of a Co-operative Housing Society formed under Section 10 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer ) Act, 1963 duly registered under the
   Maharashtra Co-operative Societies Act/the Company/ Association of Apartment takers having its registered office at (address)............................................................................................
   ..........................................................................................(hereinafter referred to as "the said Society"/"said Company"/ "said Association of Apartment-takers").

1. The said Society/the said Company/the said Association of Apartment takers is in possession of a Plot of land bearing Survey No............................,Hissa No............................, City Survey No............................ admeasuring ...........................sq. metres, (hereinafter referred to as "the Suit Premises") – Hereto Annexed and marked as exhibit No............................is the copy of Registration Certificate of the said Society/the said Company/the said Association of Apartment takers.

2. The Applicant states that the building of the said Society/the said Company/the said Association of Apartment-takers consist of.............wings/.........................building known as............................ (Give the description here)

3. The Applicant states that the Opponent has entered into an Agreement for sale of flats/shops with the individual purchasers of the flat/shop as required by Section 4 of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 and all Agreements are duly stamped as required under the Bombay Stamp Act, 1958 and also duly registered as required under the Registration Act, 1908. The Opponent has agreed to convey the suit premises with the entire building constructed thereon (hereinafter referred to as "the said Property") to the said Society/the said Company/the said Association of Apartment-takers within the period agreed upon in the Agreement or within a period of four months from the formation of the said Society/the said Company/the said Association of Apartment-takers, as provided in Rule 9 of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Rules, 1964. The copy of the said Agreement for Sale executed with one of the flat/shop purchaser Mr./Mrs..................................with the Opponent No................. is enclosed herewith and marked as Exhibit No............., and a list of present members with the details of Flat Number, Area, Stamp Duty Paid, Registration Number, Registration Fees paid, etc., is given in Exhibit No.............................

4. The Opponents have failed to execute a conveyance for conveying the right, title and interest of the promoter in the land and building in favour of the Applicants, which they are legally entitled to have and enjoy as provided under the said Act and the Rules made there under. (In case of Association/Condominium to be submitted under Apartment Ownership Act, as per the desire of flat purchasers, the fact should be mentioned and the failure of the promoter in complying with the provisions of the law should be brought out here)

5. The Applicant is, therefore, entitled to have a certificate issued by this Competent Authority that the Applicant is entitled to have a Deemed Conveyance in respect of the suit premises under section 11 of the said Act.

6. Accordingly, this Competent Authority be pleased to issue a certificate of entitlement of  conveyance of land admeasuring ............sq. metres as specifically set out in (the Property Registration Card) the copy of the Agreement dated................................along with building situated at Plot No......................bearing Survey No...................................Hissa No......................at..................(Name of the place) in favour of the Applicant as the same falls within jurisdiction of this Hon'ble Competent Authority.

7. The Applicant will rely upon a list of documents, which is annexed hereto.

8. The Applicant therefore prays that:

   1. This Hon'ble Competent Authority be pleased to grant a Certificate that the Applicant is entitled to have an  deemed conveyance of Suit Premises under Section 11 of the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 and to have it registered.

   2. For costs of the application to be provided.

   3. For such other reliefs as this Hon'ble Competent Authority may deem fit.

Sd/- Sd/-
Advocate/Authorised Applicant.

Representative for Applicant:

VERIFICATION
I, Shri ..................................................Member of the Applicant and Authorised Representative above named, residing at ......................... floor ....................................................Co-operative Housing Society Ltd.......................................do hereby state on solemnly affirmation that what is stated in the foregoing Application is true to my own knowledge and 1 believe the same to be true.

Solemnly declared at.............................

This.........day of................20..........................

(Sd/-)

Before me

Sd/-                               Sd/-

Advocate/Authorised
Representative for Applicants                       Notary Public

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