Maharashtra: Seeking a way out of mess of stalled projects

According to experts, illegal projects like the ones in Vasai-Virar are not built without the complicity of government officials

Flat buyers stuck with real estate projects that refuse to move ahead despite favourable orders from the legal system are seeking a way out of the impasse. Such protracted issues, wherein flat buyers continue to pay EMIs for homes they never got, have become a concern for housing experts. mid-day speaks to legal and real estate experts to understand solutions that can be adopted.

CA Ramesh Prabhu, founder chairman of Maharashtra Societies Welfare Association (MahaSEWA), said, "An increasing number of stalled projects and lack of regulations to get them completed in time is a great concern in Maharashtra. There is an eight-point solution that the MahaRERA can implement to complete these projects. First, the stalled projects complaint filed under Section 7 and 8 of RERA should be heard on priority. Secondly, detailed regulation should be published to get projects completed. Third, the MahaRERA should get the quarterly process report from the promoter and reach out to the allottees of stalled projects. The MahaRERA may invite and inspire them to register an Association of Allottees or society to hand over the project to get it completed.

Today, there is no system for allottees to know each other nor the authority has any details of allottees. Fourth, a panel of contractors or developers ready to accept stalled projects should be set up. The fifth is for the regulations to state clearly that disputes between landowners and developers, between promoters, etc. shall not inhibit the authority's ability to get stalled projects completed. Such regulations should be approved by the state government to make them binding on all stakeholders.

"Under the sixth point, the MahaRERA should rope in professionals to provide feasibility reports and road maps to get projects completed. In case the project is not viable, the MahaRERA should have the authority to consider waiving off a certain premium of the projects or recommend increased free FSI. These may be considered on a case-to-case basis and any liability may be imposed on promoters or their partners. They should not be allowed to build a new project until their payments are made. Each partner, proprietor, director, entity or firm should also have a unique identification number given by RERA with details of assets and liabilities. According to the Supreme Court, a loan-giving financial institution becomes the promoter if it takes over a project due to default. The burden of the project is then shifted to the financial institution. The seventh point is to make this a part of regulations so that the financial institution will not bring hurdles to get the project completed. Lastly, the MahaRERA should empanel a few institutions to fund stalled projects."

Also read: Maharashtra: RERA puts brakes on new projects in MMR

Prabhu concluded, "MahaRERA's proactiveness in such cases can make a big difference."

Herculean task

"There are hundreds of stalled projects in the Mumbai Metropolitan Region (MMR) with thousands of flat buyers left in the lurch. In many cases, even though the MahaRERA has passed orders, either to give possession or grant interest on delayed possession or grant refund, the execution is a Herculean task," said Advocate Godfrey Pimenta, who practises in MahaRERA and is a trustee of Watchdog Foundation.

"In some cases, developers divert funds or siphon money. The MahaRERA should consider forensic audits, particularly of stalled projects under Section 35 of RERA," said Pimenta.

Initiate action under MPID Act, 1999

"Under the Maharashtra Protection of Interest and Depositors Act, 1999, the chief secretary of the state, can seize and confiscate properties of rogue developers and utilise the sale proceeds to complete stalled projects or regularise illegal constructions. The illegal buildings in Vasai-Virar are with tacit approval and support of officials of Vasai Virar City Municipal Corporation (VVCMC). It is necessary to punish complicit officials. But this is a very tall order as no political party has the will to punish the guilty," Pimenta concluded.

Solution for past, future

Advocate Shreeprasad Parab, expert director at State Housing Federation, suggested the way out for stalled projects into two parts - past and future projects. For past projects which are stalled, Parab suggested that MahaRERA may facilitate development works through a competent authority or the Association of Allottees. MahaRERA may also freeze the developers' account and utilise it to complete the work or protect investors/mortgagee.

For future projects, Parab said, "In Maharashtra, any construction project has to be approved by the Planning Authority as per the provisions of DCPR/UDCPR. This approval requires the developer to first secure many permissions. After approval, the project needs to be registered in RERA. There should be a policy to get a Single Window Integrated System, wherein all approvals are made at a single point with a single charge. A software should be developed wherein approvals can be made in a single click and discrepancies under DCPR/UDCPR are highlighted. This will provide transparency, fair play, and speed up the processes."

Right to property

Parab continued, "Right to Property was one of the seven Fundamental Rights under Article 19 (1) (f) of the Constitution. Article 31 guaranteed to every person right against deprivation of his property. The 44th Amendment Act of 1978 repealed Article 19 (1) (f) and Article 31 from Part III, and inserted Article 300A in Part XII under the heading ‘Right to Property'. So, the right to property remains a legal or a constitutional right. Further, Article 21 speaks about protection of life and personal liberty. Thus, right to livelihood and shelter are now protected under Article 21 as it is not merely confined to animal existence or survival."