By Anup P. Shah, Chartered Accountant
Law and Business
1. Introduction :
The last few months have witnessed a hectic activity on the
real estate front. Several important laws have been amended or enacted and
several crucial decisions have been rendered by the Supreme Court and the Bombay
High Court. Some of these amendments are good and some of these are not so good.
These amendments would have a major bearing on the way immovable property
transactions are carried out in the State of Maharashtra. This Article presents
an overview of these important enactments and cases.
2. MOFA : Deemed conveyance :
2.1 The Maharashtra Ownership Flat Act, 1963 (‘MOFA’) was
recently amended to provide that builders/developers must compulsorily make a
conveyance of the property to the co-operative housing society within a
stipulated period. If they fail to do so within the stipulated time, then the
designated competent authority, i.e., the District Deputy Registrar can
take action against the builder.
2.2 One of the important provisions of the amendment is that
the designated competent authority i.e., the District Deputy Registrar,
can take action against the builder for non-compliance. He can issue an
automatic conveyance (Unilateral Deemed Conveyance), whereby the rights will be
transferred to the society. As per the amendment, the punishment for a builder,
who fails to transfer the plot to the housing society, would be imprisonment for
a term from 6-12 months or a fine of Rs.10,000 to Rs.50,000 or both. He could
also be debarred from any construction project for five years.
2.3 However, certain grey areas remain in the amendment. The
law allows both the competent authority as well as the sub-registrar to issue
show-cause notices to the builder for not having executed conveyance. This
dichotomy of authorities may unnecessarily complicate matters and delay the
proceedings.
A sub-registrar can after giving the promoter a hearing come
to a conclusion contrary to the competent authority and thus refuse to register
the unilateral deemed conveyance. What happens next is unresolved.
2.4 The new law requires the competent authority to dispose
of all cases in six months, but strangely, it does not provide for the time
period within which the sub-registrar must issue the conveyance.
2.5 While it is a welcome step, as with all laws the proof of
the pudding lies in its successful implementation.
3. Registration process simplified :
3.1 A recent Circular of the Revenue and Forest Department
has simplified the process of registering conveyance of immoveable properties in
the State. Now, it is possible to register a property without waiting for a
no-objection certificate from the various authorities, e.g., Collector,
etc.
3.2 This Circular has its genesis in a Supreme Court decision
which has declared Section 22A of the Registration Act, 1908 as
unconstitutional. Section 22A casts an obligation to obtain ‘No Objection’
Certificates from various authorities such as the Collector, etc., to whom the
land belonged before registering a property. The Court also directed that no
registrar or sub-registrar of assurances could refuse registration under any
notifications issued under the provision.
3.3 Thus, now an NOC would not be required for transferring a
flat on collector’s land, e.g., in Nariman Point, Cuffe Parade. This
would speed up the registration process and would lead to greater voluntary
registration of property. This would automatically improve the title to the
property.
3.4 Another effect is that flat buyers requiring home loans
had to get their documents registered before availing the loan. Such buyers were
unable to obtain loans since registration was held up for want of NOCs. Now they
can avail of a loan as registration no longer requires an NOC.
In most cases the NOCs were time-consuming and sometimes led
to cancellation of the deal. This was especially true in the case of
transactions on Collector’s land, in areas like Nariman Point, etc. Other
permissions required were N.A. (Non-Agricultural) Permissions, BMC, etc.
3.5 Besides a speedier registration, one can also look
forward to less bureaucracy, fewer touts and reduced corruption in the
registration process. Such amendments are not only good for the real estate
sector, but good for administration. We often criticise the Government for old
outdated laws, this time kudos to the Government as it eliminates a
‘bottleneck’.
4. Buildings on forest land :
4.1 The Bombay High Court in a recent decision has held that
all development on more than 1,000 acres of land in the certain suburbs of
Mumbai is illegal, since the development was on forest land.
Over 125,000 flats spread over 120 acres are affected by the
Court’s decision. Both the existing developments and under-construction projects
would be affected by this Order. An SLP against the same is expected soon.
4.2 This case was moved by an NGO, Bombay Environmental
Action Group (BEAG), to protect the forest lands encroached upon by the
builders. Most of the disputed flats are in areas Kandivali, Borivali, Ghatkoper,
Bhandup, Mulund, Thane, etc. A Division Bench of Chief Justice Swatanter Kumar
and Justice S. C. Dharmadhikari dismissed about 19 petitions filed by the
builders.
4.3 The Government is now proposing to regularise all such
houses built on illegal lands by levying a one-time penalty. In the meanwhile,
the Registrar has a blacklist of survey numbers which fall within the illegally
developed areas. Registration of any transaction under these survey numbers is
being rejected. The sub-regsitrar’s offices have displayed all these blacklisted
survey numbers. Thus, a lot of flat owners and buyers are being inconvenienced
by this order. As a result, natural corollary property rates in the blacklisted
areas have crashed. The Forest Department is deciding upon its next course of
action, i.e., whether or not it should demolish these illegal
constructions.
4.4 The proposed action of the Government will bring relief to the affected persons.
5. Use of extra FSI by builders:
5.1 A recent Bombay High Court Order has held that builders will no longer need the consent of existing flat owners if they have extra FSI on a plot and are planning to have additional buildings or structures if the new construction has all the necessary approvals from the municipal authorities. The consent of the flat owners would be needed only if the new construction results in alterations to the existing building or the construction as described in the flat purchase agreement executed between the flat buyer and builder.
5.2 This order was passed by Justice A. M.’ Khanwilkar of the Bombay High Court in the case of Mehani Builders v. Jamuna Darshan Co-operative Housing Society Ltd. The society was objecting to the additional construction carried out by the builder by using extra FSI. The Court delivered its judgment under the Maharashtra Ownership of Flat Act (MOFA) 1963.
5.3 As per the judgment, the agreement should-very clearly mention the potential FSI utilisation. Further, developers must now construct their buildings in accordance to the plans and specifications and in accordance with the agreement entered into-by both parties and they should spell out how they propose to use any extra FSI.
5.4 Now construction of additional buildings is permissible so long as it is under the scheme or projects of development in the layout and subject to the relevant building rules or byelaws or development control rules. This is an order which would promote greater transparency in property transactions.
5.5 The Government should also incorporate this order also whilst regularsing development on forest land.
