National Conference on Co-Operative Societies, Trusts, Organized by Institute of Chartered...

7/29/2019 National Conference on Co-Operative Societies, Trusts, Organized by Institute of Chartered Accountants of India -

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National Conference on Co-operative Societies, Trusts,

Redevelopment of Properties, Legal and Taxation Aspects


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Disclaimer

1. The material contained herein is for private circulation and reference purposes only.

2. The views expressed in the articles, write-ups, surveys, etc., contained in the background material

are those of the concerned authors, individuals, organisations, agencies etc., and should not be

construed as the views of the Institute of Chartered Accountants of India or any of its Committees

or Boards.

3. The Institute of Chartered Accountants of India or any of its Boards or Committees does not

undertake the responsibility for the accuracy or otherwise of any views expressed or facts includedin the background material.

4. The Institute of Chartered Accountants of India or any of its Boards or Committees also does not

accept any responsibility for the actions taken by the reader on the basis of the material contained

in the background material.

5. The copyrights in respect of the material included in the background material rests with the

respective authors, organisations, etc.


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I am pleased that Committee for Co-operatives & NPO Sectors of the Institute of Chartered

Accountants of India (ICAI) is organising a National Conference on Co-operative Societies, Trusts,

Redevelopment of Properties, Legal and Taxation Aspects, I am glad that the same is being hostedby Western India Regional Council (WIRC) of ICAI.

It is overwhelming to see progress achieved by the co-operative sector in its century long movement

after experiencing many ups and downs. Over the years, Cooperatives have strived hard to build

a better world by advancing sustainable development, social integration and decent work. Co-

operatives empower their members and thereby strengthen communities. They promote food

security and enhance opportunities for small agricultural producers. They are better tuned to local

needs and better positioned to serve as engines of local growth. By pooling resources, they improve

access to information, finance & technology and their underlying values of self-help, equality and

solidarity. They work for overall improvement of their members & other stakeholders in challenging

economic times.

Committee for Co-operatives & NPO Sectors has been working towards strengthening Co-operatives& NPO sectors and simultaneously exploring the new professional opportunities for members. In its

endeavours, the Committee has sent various representations to authorities such as CBDT, NABARD,

and various State Governments. The Committee has also been taking initiatives to update the

knowledge of the members through various publications and conducting of conferences, seminars,

workshops, etc. This seminar is another step towards imparting knowledge in the field. CCONPO has

launched a certificate course on Management, Taxation, Laws, Accounting and Auditing concerning

Co-operative societies & NPOs for the benefit of our members.

I believe that programmes like this could be a great learning experience for Chartered Accountants.

By attending these programmes and hearing the learned subject experts, members can emerge

with greater comprehension and knowledge accompanied with invaluable tips and information from

practical wisdom and experience of expert concerned.

I wish all the delegates a fruitful, professionally enriching experience from this National Conference.

With best Regards

ca. sbdh K. aw

PresidentThe Institute of Chartered Accountants of India

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Dear Participants,

It is heartening to note that the Committee for Co-operatives and NPO Sector of the Institute isorganising a National Conference on Co-operative Societies, Trusts, Redevelopment of Properties,

Legal and Taxation Aspects on 3rd & 4th August at Mumbai. By way of organising such

programmes, the ICAI tries to be instrumental in enriching the professional base of its members.

The Government along with other regulatory bodies takes all possible steps to regulate these

sectors by enacting various laws and assuring their compliance by them. The Chartered Accountants

can play a vital role in this area by ensuring the fulfilment of various regulatory provisions by

these organisations. Definitely this leads to the need for our members to maintain and expand

their knowledge base on these regulatory provisions. In todays busy schedule, taking out time

to read and understand the new regulations or changes made in the existing ones sometimes

becomes difficult. This Conference is aimed at not only towards disseminating the developments

in the regulations in these sectors but also providing guidance to the members to explore more

professional opportunities in other sectors also. Eminent speakers from professional fields havebeen invited to share their views with the audience which will be of great help in professional

development not only to our Fellow Chartered Accountants but also for other stakeholders.

I am impressed with the topics chosen for the workshop and the experts invited to share their

wisdom amongst the delegates. I am sure that the deliberations in the workshop would be of high

standard and provide an opportunity to the delegates to interact with the experts having experience

and expertise in Co-operative and NPO Sector.

I would like to congratulate CA. Anuj Goyal, Chairman, Committee for Co-operatives & NPO Sector,

CA Tarun J. Ghia, Vice-Chairman, Committee for Co-operatives & NPO Sectors and other members

of the Committee for organizing this National Conference which would surely help our members

and other participants to be well equipped and take a lead.

On this occasion, I extend warm greetings and felicitations to the participants and wish theprogramme all success.

Date : July 24, 2013

Place: New Delhi ca. K. rh

Vice-President, ICAI

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Welcome to all the participants,

On behalf of the Committee for Co-operatives and NPO Sector of the Institute, I take the pleasureof welcoming all the participants to the two days National Conference on Co-operative Societies,

Trusts, Redevelopment of Properties, Legal and Taxation Aspects at K.C Auditorium, Churchgate,

Mumbai that is being hosted by Western India Regional Council of ICAI.

With a comparatively new Committee for Co-operatives and NPO Sectors formed in 2011, we

Chartered Accountants are now focusing on yet another sector of the Country. These two dynamic

Sector provides an opportunities to the Chartered Accountants in the field of Internal Audit, Statutory

Audit, Auditors on behalf of donors and funding agencies, reviewers of financial management

systems, advisors on financial management systems, etc. NPOs are generally registered either as

a society or a trust or a section 25 Company under the respective laws namely the Societies Act,

Trust Act or the Companies Act, 1956. Depending upon the law under which it is registered, it has

to get its accounts audited as required under the respective laws.

I am sure that this Conference would enhance the understanding of the participants towards theimportance of compliance and good governance in NPO and Co-operative Sector, professional

opportunities for CAs in NPO Sector, redevelopments, fungible FSI, stamp duty registration aspects

and many more.

I would like to express my gratitude to CA. Subodh K. Agrawal, President, ICAI and CA. K. Raghu,

Vice President, ICAI for giving this oppurtunity to the Committee for Co-operatives and NPO Sector

for organising this National Conference. I wish to place on record my thanks to Justice V. M Kanade,

Honble Justice, Bombay High Court, CA. Tarun J. Ghia, Vice-Chairman, CCONPO who has been

instrumental in successful organisation of this Conference and my colleauges in Central Council for

sparing their valuable time and making efforts for organising the Conference.

I am confident that, this would be a great learning experience for the participants.

Date : July 28, 2013 ca. anj gy

Place : New Delhi Chairman

Committee for Co-operatives and NPO Sectors, ICAI

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Dear Participants,

I am immensely happy to welcome all the delegates to the National Conference on Co-operative

Societies, Trusts, Redevelopment of Properties, Legal and Taxation Aspects being organised by the

Committee for Co-operatives & NPO Sectors of ICAI on 3rd and 4th August at Mumbai. The 2 day

Convention aims to focus and offer a clear picture on various functional areas, issues which have

grey areas and require discussion and debate.

It is an open secret that many of our CA members are frequently engaged in drafting of various

property and commercial documents. In this context, it is pertinent to mention that CAs have been

inculcated with high degree of analytical and interpretational skills. Some of the CAs are equally

proficient in usage of the language of English and have very effective communication skills. They

are drafting documents which are not only excellent in language but are second to none in terms

of consideration of relevant laws and addressing minute issues of facts and possible situations.

Such functions by the CAs will also recognise their true capability and will enhance image of

the profession at large. The events like this are in continuation of the position of the ICAI as the

partners in Nation building.For Chartered Accountants, the importance of updation of knowledge is of quintessential importance.

Continuing Professional Education is all about absorption, assimilation, comprehension and

practical application of the knowledge acquired for the benefit of clients, employers and for the

professionals themselves. It is my firm belief that by attending programme like this and hearing the

erudite faculties, one can emerge with a greater comprehension and knowledge, often loaded with

invaluable tips and insights that come out of practical wisdom and experience and which cannot be

readily found in a conventional text book or reference manual.

I thank CA. Subodh K. Agrawal, Honble President, ICAI and CA. K. Raghu, Honble Vice-President,

ICAI for encouraging and guiding in organising this Conference. I also thank CA. Anuj Goyal,

Chairman, Committee for Co-operatives & NPO Sectors for his wholehearted support and able

guidance and involvement in organising the Conference and my colleagues in Central Council of ICAI

for sparing time to join and add value to this Conference. I am extremely thankful to his highnessJustice V. M. Kanade, Judge, Bombay High Court for inaugurating this Conference and sharing his

rich experience and words of wisdom with us.

I welcome all of you to this Conference with the hope that the Conference turn out to be quite a

learning and memorable experience to all of you.

Date : July 28, 2013 ca. Tn J. gh

Place : New Delhi. Vice-Chairman

Committee for Co-operatives & NPO Sectors, ICAI.

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Programme sTrucTure

Ntn cnfn n c-ptv st, Tt, rdvpnt f Ppt, l nd

Txtn apt nd by inttt f chtd antnt f ind, ctt f

c-ptv & NPo st, n at 3 & 4, 2013 t mb

DaY-1 (3d at, 2013)

acTiViTY scHeDule

acTiViTY/ToPics guesT/sPeaKers Time

BREAKFAST 8:30 am to 9:00 am

Inaugural Session Shri Justice V.M. Kanade 9.00 am - 11.00 am

Real Estate scenario in general and its impact

on property redevelopments (to give complete

picture of market scenario and expected impact

on present as well as near future redevelopments)

Shri D. L. Desai 11.00 am - 11.30 am

Recent developments in co-operative laws

(including 97th constitutional amendments,

amendments in laws and procedural aspects, latest

model bye-laws, appointment of auditors, etc.)

Shri N. R. Nikam 11.30 am - 12.00 noon

Redevelopments, joint developments, self

developments : Legal and taxation issues

(covering MOU, DA, Joint DA, Self development,

Bank Guarantee, POA, freehold, leasehold,

tenancy, MHADA properties, Taxation, TDS,

Corpus Fund, Hardship compensation, rental

compensation, TDR, fungible, role of PMC,

tendering, invitation to offer)

CA. Tarun Jamnadas Ghia 12.00 noon - 01.00 pm

LUNCH 01.00 pm - 02.00 pm

Structural Audits in co-op societies - requirements

and compliances responding to notices u/s. 354 of

the MMC Act

Shri Satish Dhupelia 02.00 pm - 02.30 pm

Laws governing co-operative societies, trusts, real

estate transactions

Dr. Sanjay Chaturvedi 02.30 pm - 03.15 pm

TEA 03.15 pm - 03.45 pm

Concept and Working of Fungible FSI (Calculation

and measurement of Fungible FSI, Methodology of

its application, premium payable, division between

present owners and developer, changes in DCR in

view of Fungible FSI)

Shri Manoj Daisaria and

Shri Sudhir Y. Ghate

03.45 pm - 04.30 pm

Cell Towers an income avenue or a menace?

(Analytical studies and views of both sides, Cell

Towers radiation hazards, precautions, probable

solutions, rights of members dissenting to cell

towers, taxation of cell tower income, TDS

compliances)

Prof. Girish Kumar and

Ms. Neha Kumar

04.30 pm - 05.00 pm


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acTiViTY/ToPics guesT/sPeaKers Time

Service tax aspects (w.r.t. redevelopments,

ordinary maintenance of co-op. societies, repairs

to properties, renting of properties, cell towers

spaces, trusts, etc.)

Shri Sushil Solanki and

CA. A. R. Krishnan

05.00 pm - 06.00 pm

DaY-2 (4th at, 2013)

VAT issues (in re-developments, in repairing of

properties)

Adv. Kishor T. Lulla 09.30 am - 10.30 am

Property transactions by trusts (Acquisition of

properties, transfer of properties, development of

properties, permission of Charity Commissioner,

change reports, documentation, auditors

responsibility, stamp duty on registration wrt trust

properties)

Adv. Aditya Prakash Rao 10.30 am - 11.00 am

Stamp duty and registration aspects (w.r.t. society

transactions, renting of properties, release deeds,

family partition, gifts, exchange of properties, power

of attorneys, company owned flats, stamp duty in

repairs of properties, see schedule to stamp duty,

wills, etc.)

Shri Santosh Kumar 11.00 am - 11.30 am

Redevelopments and Self Developments Financing

Options Due Diligence and other critical issues

CA. Dilip Pendse 11.30 am - 12.00

noon

Right to Information w.r.t. governance of co-op.

societies and charitable trusts and in the process of

redevelopment (Legal and procedural aspects)

Shri Shailesh Gandhi 12.00 noon - 12 .30

pm

Disputes, complaints, petitions, appeals before co-

op registrars, co-op. court : laws and procedural

aspects (Covering issues of jurisdictions, over

lapping jurisdictions, co-operative disputes,

redevelopment disputes)

Imminent Faculty 12.30 pm - 01.00 pm

Labour and welfare laws : Legal and Procedural

Compliances (Concerning co-operative societies

and trusts and associations)

Shri M. B. Gajare 01.00 pm - 01.30 pm


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coNTeNTs

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N.

Thn sn

1. Redevelopments, joint developments, self developments : legal and taxation issues

(covering MOU, DA, Joint DA, Self development, Bank Guarantee, POA, freehold,

leasehold, tenancy, MHADA properties, Taxation, TDS, Corpus Fund, Hardship

compensation, rental compensation, TDR, fungible, role of PMC, tendering, invitation to

offer) CA. Tarun Jamnadas Ghia

2

2. Laws governing co-operative societies, trusts, real estate transactions

Dr. Sanjay Chaturvedi

16

3. Concept and Working of Fungible FSI (Calculation and measurement of Fungible

FSI, Methodology of its application, premium payable, division between

present owners and developer, changes in DCR in view of Fungible FSI)

Shri Manoj Daisaria and Shri Sudhir Y. Ghate

20

4. Cell Towers - an income avenue or a menace? (Analytical studies and views of

both sides, Cell Towers radiation hazards, precautions, probable solutions, rights of

members dissenting to cell towers, taxation of cell tower income, TDS compliances)

Prof. Girish Kumar and Ms. Neha Kumar

47

5. Service tax aspects (w.r.t. re-developments, ordinary maintenance of co-op. societies,

repairs to properties, renting of properties, cell towers spaces, trusts etc.)

Shri Sushil Solanki and CA. A. R. Krishnan

73

6. VAT issues (in redevelopments, in repairing of properties) Adv. Kishor T. Lulla 86

7. Property transactions by trusts (Acquisition of properties, transfer of properties,

development of properties, permission of Charity Commissioner, change reports,

documentation, auditors responsibility, stamp duty on registration w.r.t trust properties)

Adv. Aditya Prakash Rao

103

8. Stamp duty and registration aspects (w.r.t. society transactions, renting of

properties, release deeds, family partition, gifts, exchange of properties, power of

attorneys, company owned flats, stamp duty in repairs of properties, see schedule

to stamp duty, wills, etc.) Shri Santosh Kumar

123

9. Right to Information w.r.t. governance of co-op. societies and charitabletrusts and in the process of redevelopment (Legal and procedural aspects)

Shri Shailesh Gandhi

126

10. Labour and welfare laws : Legal and Procedural Compliances (Concerning co-operative

societies and trusts and associations) Shri M. B. Gajare

137


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s.

N.

sbjt P

N.

11. rdvpnt & sf Dvpnt l nd Tx i ca. Tn gh 145

12. 97th Amendment - Gujarat High Court Judgment Order (1) 153

13. Multi State Co-operatives Bill, 2010 192

14. The Maharashtra Co-operative Societies (Amendment) Ordinance, 2013 221

15. Salient Features on 97th Amendment Act 261

16. The Multi State Co-operative Societies Bill, Summary 263

17. The Constitution 97th Amendment Act, 2011 264


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Shri D.L. Desai (Shankarbhai) has been elected as the Trustee of Builders

Association of India (BAI) after having served as the Hon. Gen. Secretary,

Hon. Gen. Treasurer, and Vice President of BAI. He was earlier the Chairmanof Mumbai Centre during 1998-2000. Family circumstances compelled him

to give up his studies after matriculation and he joined the family firm M/s.

Desai Lallubhai & Co., doing business of trading in tiles, sanitaryware, cement

and construction material. Later sometime in 1979, he started real estate

business. He joined BAI in 1966 and is one of the founder members of BAI

Mumbai Centre. He has the unique distinction of actively participating in all

the All India Builders Convention held by the Centre in 1981, 1996, 2001 and

2003.

The vexed problem of Sales Tax on Works Contract from 1986 to 1988

could be resolved during his tenure 1998-2000 as Chairman of Mumbai

Centre. (Incidentally, he was heading the Centres Sub-Committee from 1988

onwards).It is due to his efforts that Indian Construction is now recognised as number

one journal of the Construction Industry in India. He gave it a new look,

refurbished it and started a series of new features in it. As a matter of fact,

he charted a new path of giving service to the members through Bombay

Construction and Indian Construction. Another area, which held his interest,

was publishing series of books on topics affecting the industry. It is also

worthwhile to mention here that, during his tenure, the financial strength of

the Centre has leaped to greater heights.

As an Editor, he has also published the following books for and on behalf of

BAI Mumbai Centre:

1. Central Excise and the Construction Industry also covering Service Tax.

2. Civil Contractors Referencer Statutory requirements.

3. Select Labour Laws for Construction Industry A Profile.

4. Employees State Insurance Act, 1948 Its applicability to the

Construction Industry An insight through judicial pronouncements.

He is the recipient of Journalist of the year 2001 Award from

Accommodation Times and Institute of Construction Management & Research,

Navi Mumbai, presented him an Award for his contribution to journalism in

construction related journals and publications.

During his tenure, as the Mumbai Centres Chairman, he started a new

experiment of the Centre taking up stalls in construction industry related

exhibitions. This resulted in a better co-operation with other likeminded

organisations. In addition, BAI could increase awareness amongst architects,consultants and contractors by taking part in such exhibitions.

He is the recipient of Honorary Membership from Practicing Engineers

Architects & Town Planners Association (India).


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Elected Central Council Member of the ICAI

At the ICAI, Member of the Direct Tax Committee, Member of BOS, Member of Committee on Industry,Member of Public Finance Committee, Member of the Disciplinary Committee, Member of Committee

on Banking, Insurance and Pension, Member of Professional Development Committee, Member ofCommittee on Economic, Commercial Laws and WTO, Member of Editorial Board, Member of InternalAudit Standards Board, Member of Committee on International Taxation.

Vice Chairman of the Committee on Co operatives and NPO Sectors of the ICAI Vice Chairman of theCommittee on Governmnet Accounting of the ICAI Member, Committee for Government Accounting,South Asian Federation of Accountants (SAFA)

Brief details of professional contributions:

Born and brought up in Saurashtra and completed schooling from Kamani Forward High School, Amreli,Saurashtra, Gujrat.

B. Com. From H R College of Commerce & Econ., Mumbai.

Practicing Chartered Accountant since 1984. Partner in M/s. TMG and Associates with core areaof practice being consultancy, appellate and drafting/documentation works. Consultant to variousredevelopment projects.

Pleaded in person Writ Petitions at Bombay High Court and

Brought directions for transparency in empanelment for and allotment of bank branch audits.

Obtained directions of transparency and objectivity in empanelment for and allotment of co-operative audits at State level as well as Divisional level.

Hasinitiatedstepsfortransparencyandobjectivityinempanelmentforandallotmentofco-operative audits at State level as well as Divisional level in Gujrat State. As also in empanelmentsin concurrent audits in banks.

As a speaker addressed

Several times Commissioners of Income Tax on Taxation of shares and securities transactions andTax issues in construction industry, redevelopments and immovable property transactions etc.

Officers of Registrar of Companies, Sales Tax Officers and Assistant Commissioners of Sales Taxon topics of professional interests.

TheInstituteofValuerscomprisingArchitects,engineersandothervaluersonlegalandtaxaspectson redevelopments.

ICAIAllIndiaconferencesonaccountingandtaxaspectsinentertainmentindustry,taxissuesinconstruction industry and immovable property transactions.

CA. Tarun Jamnadas Ghia


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VariousseminarsorganizedbyWIRC.

Publicmeetingsonunionbudgetproposals.

Addressed more than 250 meetings of Chartered Accountants and others organized by WIRC, ICAIand others.

As a writer contributed articles in

NewspaperslikeTimesofIndia(PropertySection),DNA(MoneySection),Janmabhoomi,Vyapar,Commodity World, Asian Age, and trade journals like Construction World, Bombay Construction andIndianConstruction.WasinterviewedliveonCNBCAwazNewswhenMOFAwasnotrevalidatedfor a short period after March 2005.

ProfessionaljournalsliketheCharteredAccountantJournal,IncomeTaxReview,BombayCharteredAccountantsJournal,theCharteredAccountantPracticeJournal,Taxmann,SalesTaxReview.

Association with professional organisations:

Co-opted member on the Representation Committee of the Institute of Chartered Accountants of India.

Co-optedmemberontheJournalCommitteeoftheBombayCharteredAccountantsSociety.

Co-optedintheCoreGroupoftheChamberofTaxConsultants.

WasMemberofWIRCandaChairmanofMembersinIndustryCommitteeofWIRCofICAI.

WasamemberoftheManagingCommitteeofSalesTaxPractionersAssociationofMaharashtra,ConvenerofJournalCommitteeandaMemberofCommitteeforProtectionofTaxPayers.

Advisor to:

Builders Association of India on direct tax matters and for their representations to the Government andother concerned authorities.

Right to Information Act:

Regular writer on RTI in newspapers and professional journals. Addressed meetings of professionals andsuccessfully pleaded petitions at State and Central levels.

Arbitration:

Successfully pleaded arbitration proceedings at appellate levels in respect of share market transactions.

Forensic Accounting:

Member of the India Forensic Research Foundation.

Well read on

Construction laws, property laws, BMC laws, rent control laws, co-operative laws, stamp duty andregistration laws, RTI law and is conversant with reading of building plans related approvals and theirrespective relevance and significance under the general laws and under direct and indirect tax laws.

Lecturer:Formerly, lecturer in senior colleges affiliated to Mumbai University in the subjects of accountancyand Income tax. Was a visiting faculty for the subject of Income Tax in the intensive Coaching Classesconducted by ICAI for Inter C.A. students. Am a a visiting faculty for the subject of Income Tax in theintensive Coaching Classes conducted by the Bombay Chartered Accountants Society.

Always available :

To members in respect of any issue pertaining to the fraternity at large or even individual issuespertaining to the ICAI.


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National Conference on Co-operative

Societies, Trusts, Redevelopment ofProperties, Legal and Taxation AspectsCA. Tarun Jamnadas Ghia

PART I : KEY ISSUES IN REDEVELOPMENT OF PROPERTIES

Co-operative housing and premises societies having old and dilapidated structures contemplate

redevelopment as the only viable alternative. In some cases even when the buildings are not old or

dilapidated, they contemplate redevelopment to avail advantage of incentive schemes of higher Floor

Space Index (FSI) including Transferable Developments Rights (TDR).

Upon such contemplations, the first step is generally appointment of a project management consultant(PMC). The Notification of the Department of Co-operation in the context of redevelopments issued under

the provisions of Section 79A of the Maharashtra Co-operative Societies Act, 1960 requires a co-operative

society to appoint a project management consultant in the initial stage of the process of redevelopment.

This requirement would also apply to a co-operative society undertaking self development or contract

development. The spirit of the Notification inter alia is that the process of redevelopment should be

carried out transparently, objectively and in accordance with and within the framework of applicable laws.

Therefore, the process of inviting proposals should be such that, whether the developers are invited by

tendering system or by invitation for expression of interest, all interested developers get an opportunity

to submit their offers. Many a times it is observed that a developer is selected on the basis of highest

offer. However, when it comes to drafting documents, differences arise about the details of the offer and

the legal aspects to be incorporated in the documents. To avoid such scenario and to ensure that offers

are not vague and are comparable, it is desirable that the tenders or the invitations are comprehensive

and the legal aspects from the points of views of the society and the members are incorporated therein

so that the commercial terms offered by the developers become really comparable. This will also lead to

selection of the developer on objective criteria.

It is desirable that the documents of redevelopment are drafted by the consultants of the society in an

iron clad manner. People sometimes get attracted by good designs of the plans of the new buildings.

However,theyshouldrealizethatthenewplanswillmaterializewiththehelpofgooddocumentation.In

the interest of the society and its members, the redevelopment agreement, power of attorney, individual

agreements and the bank guarantee should be as specific and elaborate as much possible leaving no

vagueness for possible defalcation or disputes.

The documentation process will not be complete in one stroke. The draft will be modified and remodified

by the society and the developer to take care of their respective interests. The consultant of the society

is required to ensure that the draft safeguards the interests of the society and its individual members andat the same time he should be able to accommodate the practical and reasonable requirements of the

developer without prejudicing the interests of the society and its members. In such a scenario to maintain

transparency in drafting, it is desirable and more convenient that the drafts get exchanged in the email

track mode so that only the changes and the modifications are attended.

Notification dated 24 10 2011 the Government of Maharashtra relaxed provisions of Development Control

Regulations by granting option of additional floor space index of 0.33 by payment of premium. In this

context, first aspect which needs clarity is that due to grant of such additional FSI aggregate of FSI


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has not increased. Thus if a co-operative housing society is presently entitled to aggregate FSI at 2

including TDR-FSI, then the same remains capped at 2 only and does not increase to 2.33. In such an

example, the original land FSI remains at 1 and in respect of TDR- FSI of additional 1, there is now an

option that either one may buy entire TDR FSI from the open market or alternately one may buy newly

introduced 0.33 FSI from municipal corporation and buy only 0.67 from the open market. One will beinclined to buy 0.33 FSI from the municipality for the reason that the premium for such additional FSI

payable to the municipal corporation is far lesser than the prevailing market price of TDR- FSI. In the

cases of redevelopments, the society/flat owners/occupants/tenants may expect that such benefit would

be passed on by the developers to them. As an offshoot of such additional FSI upto 0.33 available at

a premium from the municipality, the need and consequently the demand for TDR FSI would reduce

to that extent and correspondingly the market price of TDR-FSI has started coming down. The salient

features of the additional FSI being offered in place of TDR FSI to the extent upto 0.33 so far as relevant

to redevelopments of co-operative housing societies are summarised below:

i. Additional 0.33 FSI is optional and non-transferable. It is to be granted as on application and to be

used on the same plot.

ii. The total maximum permissible FSI, with 1.33 FSI, Road FSI and TDR shall be restricted to 2.00.

iii. As per concept of TDR, additional FSI shall be permissible on gross plot area.

iv. Additional FSI available as per Regulation 33, shall be related to basic FSI of 1.00 only.

v. In Mumbai Suburban District, construction upto 1.00 additional FSI is permissible through use of

TDR. 0.33 FSI being optional and part of overall ceiling of use of 1.00 TDR, any disclosure made for

use of TDR / FSI, while making agreements with purchasers under MOFA Act, shall be held valid

for use of 0.33 FSI.

vi. Noverticalextensionofexistingbuildingbyutilizing0.33FSIshallbepermittedwitherectionof

columns in the required marginal open space.

vii. The relaxation of premium i.e.10% of normal premium shall be charged while condoning

deficiencies in open spaces ( as applicable for use of slum TDR).Many a times, societies first enter into Memorandum of Understanding with the interested developer and

development agreement is relegated to a subsequent stage. As far as entering into MOU is concerned, the

recourse to MOU should be taken only when it is very much necessary and in general, entering into MOU

should be avoided because MOU is generally drafted on broad terms and is many times dependent on

happening or non-happening of a particular contingency. Thereafter, development agreement is drafted.

Development agreement is drafted elaborately including even the minute and procedural aspects. The

problems would arise if in such detailed draft, differences arise on some aspects between the society and

the developer. In the ongoing competition amongst the developers to procure the re-development project,

they are also ready and willing to take over the responsibility of obtaining conveyance and such other

documents and that too within the specified time period. While drafting such MOU, the basic principle

would apply that substance of the document and not the nomenclature of the document would decide

its true nature and therefore the substance of the terms of MOU should be such that it does not create

a development contract. The substance would also decide income tax implications. The society needs to

be quite cautious as on substance even MOU may become an enforceable contract. The society should

provide for expiry of the MOU at the end of an agreed period.

That the society must get conveyance is not a new law. Law has always been the same since 1963

onwards that the housing entity is entitled to conveyance of the land underneath and appurtenant to

the building(s) within the prescribed time period. However, as pre amended law was not effective at the

implementation stage, therefore, amended provisions provide easy procedure for deemed conveyance


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and the time limits have been cast upon the competent authority to decide the application for deemed

conveyance.

Lawwillhavetosettleinamannerthatonceasocietyorotherkindofhousingorganizationhasbeen

formed, then simply because a few agreements have not been stamped or registered cannot disentitle

thehousingorganizationfromthebenefitofdeemedconveyance.Thisisforthereasonthatprovisions

continue that a housing entity can be formed under an application by only 60% is of the flats. Once the

housing entity is formed, under the pre amended provisions also, there are numerous decisions of civil

courts and consumer courts wherein while directing the promoters to convey property in favour of a

housing entity, the courts have not, and very rightly so, looked into the aspect as to whether all the flat

purchase documents were subjected to stamp duty payment and registration requirements.

The provisions have been amended to be more beneficial in nature to provide for expeditions formation

of society and deemed conveyance against the failure by promoters to do so within prescribed time

period. Therefore, the amended provisions cannot deny the benefit which was available in the pre

amended provisions as the amendments have been brought to make the law more beneficial to the flat

purchasers.

By the competent authority as well as by some other quarters a view is propagated that for obtainingdeemed conveyance certificate, documents like building plans, commencement certificate, occupation

certificate, completion certificate, property cards, would be required to be furnished by the society. Such

a view appears to be beyond logic and not supported by the provisions of the law. Rules cannot travel

beyond the specific provisions of the law.

The matter of income tax on development agreements by transferable development rights has reached to

the Bombay High Court. If the High Court rules that such development agreement is not taxable, no cause

of concern arises. But in a possible adverse decision that such transaction per se is a taxable transaction,

then the question would arise in whose hands the same is taxable. If the society is the taxable entity, tax

burden would run into lacs or crores of rupees whereas the tax benefits available to individual assesses

can reduce the tax liability to nil or negligible level and keep the society and its members safe. Here it

may be noted that in the case of Aurovilla Co-operative Housing Society, argued by this writer, Income

Tax Tribunal held that the society is not taxable entity in such a transaction. From legal as well as taxpoints of view, concept that the beneficial and de facto and therefore true ownership of the property are

with the members and not the society is more appropriate view. Redevelopment transaction needs to be

structuredanddocumentedaccordingly.Suchconceptwouldrecognizeandprotectindividualproperty

rights of the members in a better way and would make the document more tax friendly.

Many legal, tax and stamp duty issues need to be discussed in the context of redevelopments so that the

professional colleagues play meaningful roles in this field and particularly in the matters in which they are

concerned either as stakeholders or as consultants. New concept of fungible FSI has been introduced

very recently and is likely to have much impact on the entitlements of the flat owners and tenants even

in cases where development agreements have been executed.

Many societies in suburban areas are either contemplating or are in the process of redevelopments

of their properties. The recent amendments in the Development Control Regulations would affect all

such societies. The benefit of new fungible FSI is maximum being 35% for residential buildings. For thecommercial and industrial buildings the same is quite moderate being only 20%.

The Development Control Regulations have been recently amended under which inter alia for a residential

building additional fungible FSI has been created to the extent of 35% including in respect of amenity

areas including dry balconies, porches, flower beds, pocket terraces etc. Such additional compensatory

FSIhasbeenfreezedat35%ofthenormalFSIincludingTDR-FSIimplyingthatiftheaggregateFSI

including TDR FSI is at 2 in respect of a plot of land, now in the proposed new residential building,

such additional FSI can be available to the extent of .70. Such FSI of .70 has been named fungible FSI


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which for all practicle purposes mean indirect increase in the FSI. Such FSI, except as available and to

beutilizedupontheexistingrehabportion,istobepurchasedbypaymentofpremiumcalculatedas

a percentage of the ready reckoner rates. However, to protect the interests of the existing owners and

occupiers so as to avoid the transfer of fungible FSI in respect of existing building to the free sale portion

by the developers, it has also been further clarified that the fungible FSI in respect of rehab portion wouldnot be transferable to the free sale area of the developer.

The Municipal Commissioner was quite aware about the uses and misuses of the flexible amenity areas

being created by the developers. In very few cases, hitherto the members of the societies were given the

benefit of amenity area exceeding 25%, although much more was created as amenity area. To ensure that

the benefits of redevelopment go to the members and tenants and is not unscrupulously transferred to sale

portions of the developers, the Municipal Commissioner has categorically provided that firstly the fungible

FSI emerging in respect of the rehab portion is to be used for rehab portion only and secondly that the

samewouldhavetobeutilizedproportionatelyforthemembersandtenantswithreferencetotheirexisting

premises. This has been done to ensure that the more influential members and tenants are not able to

corner the same in higher proportions for their premises to the disadvantage of less influential ones.

More importantly, the fungible FSI need not be distinguished from the normal FSI as far as design of

the premises is concerned with the result that overnight the possible enhanced area would increase by

35%. This 35% may be used for creating dry balcony, niche, flowerbeds and alternatively may be used

to create one more room. In most cases, a person having the choice now to have 35% for flower beds,

dry balcony etc. or to have one more room, is likely to decide that instead of new flat comprising one

bed room hall kitchen and flower bed, dry balcony, niche areas he would prefer to have outright a new

flat comprising two bed room hall kitchen.

Amended D. C. Rules will have overall positive effect as it would remove disparity between developers

who were capable to manage higher usable FSI vis a vis those who were not either capable or were

not willing to . Amended D. C. Rules will have more benefits for the members of the societies and the

tenants. Upright professionals with sound legal technical knowledge and strong leanings towards the

benefits and safety of the members and tenants only can enable them to reap the benefits created for

them.

Prevalent practice in respect of redevelopment of immoveable properties is that after obtaining Intimation

of Disapproval (IOD) from the municipal authorities, the developer gives a notice to the occupants in the

existing premises for the reasons inter alia that the terms of IOD require that only after the demolition of

the existing premises/structures, the developer would be entitled to apply for and obtain Commencement

Certificate(CC). This practice is fallacious in law as well as in logic. This practice is disadvantageous and

risky to the developers as well as to the flat owners/tenants/occupants. However, once enlightened, the

members of the society should be firm to get the same implemented.

IOD is issued under the provisions contained in the Mumbai Municipal Corporation Act, 1888. Thereafter,

the Maharashtra Regional Town Planning Act, 1966 got enacted. Section 2(7) of the MRTP Act contains

definition of the term development. According to this definition, the term development includes

inter alia demolition of any existing building, structure or erection or part of such building, structure

or erection. Provisions of section 43, 44 and 45 of the said MRTP Act require that no development cancommence without obtaining CC. Combined reading of the provisions of the MRTP Act would mean that

demolition is also a development or is a part of the development process, and development process

cannot commence without a CC from the concerned authority.

Legally speaking, IOD contains various conditions, fulfillment whereof only leads to obtainance of CC

implying that if any of the conditions of the IOD are not fulfilled, CC may not be granted.

In such a view of the matter, imagine the situation, wherein, the existing building has been demolished

on the basis of IOD and because of non-fulfillment of the conditions like aviation clearance, environmental


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clearance,permissionbytreeauthorityoranyofthemnotmaterializing.Insuchasituation,theproject

would get halted and the dwellers may become homeless. Early vacating of the existing premises is not

advantageous even for a developer because, amongst other things, the developer has to start paying

rental compensation from the date of vacating the premises.

The above risk factors to the occupants and disadvantage to the developer are the result of non

implementation of the correct position of the relevant law. Even if the developer is ready and willing to

go for demolition of the building on the basis of the IOD, the members of the society can point out the

correct law and dissent to such premature demolition.

The law has been consistently and logically interpreted by the Supreme Court that if there are two

statutes operating upon the subject matter and the provisions are contradictory then in that case, the

provisions, to the extent they are contradictory, of the later statute will prevail.

It is therefore very much necessary that the existing building is not allowed to be demolished before

a Commencement Certificate is obtained or in any case all other compliances necessary to obtain

Commencement Certificate are met.

PART II. ROLE OF PROJECT MANAGEMENT CONSULTANT IN REDEVELOPMENT OF A PROPERTY INA CO-OPERATIVE SOCIETY :

Model of Redevelopment Services by a Project Management Consultant

As a co-operative housing or premises society initiates process of redevelopment of its property, the

first legal requirement it needs to fulfill in terms of relevant circular the department of co-operation is

appointment of a project management consultant (pmc).

Appointment of pmc lays down foundation of entire redevelopment as successful completion of

redevelopment largely depends upon ability, integrity, uprightness and transparent and reasoned

approach of pmc. PMC should be knowledgeable on all legal and construction aspects of the

redevelopment and should be aware of the redevelopment business so that he applies his knowledge

and imagination to various stages of redevelopment in a manner that the society gets the best of the

terms without compromising at all with safety aspects.

Although nature and quantum of redevelopment services to be provided by a pmc would differ from case

tocasebutageneralizedmodellistispresentedbelowaspreparedonthebasisofexperienceofpgv

project management consultants. A society may select all or any of the services depending upon facts

of its case and after interaction with the pmc.

1. Preparation of the feasibility report in respect of the subject property.

2. Taking steps for conveyance in favour of the society.

3. Invite and receive offers from interested developers and present the same before the managing

committee with recommendation about selection. The recommendation report to be speaking and

reasoned one.

4. Draft of tender document or offer form in consultation with the society. Such draft should also be

given to interested members of the society who may like to invite the developers in their respective

contacts. News paper advertisement, if considered necessary should be drafted in consultation with

the managing committee. PMC to analyse the tenders analysed and to apprise managing committee

about such analysis. Interested developers may seek clarifications from pmc.

5. To each intending developer submitting the tender or offer form, pmc should issue an

acknowledgement receipt.


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6. Best of the financial terms including corpus fund, larger area flats for each member, hardship

compensation, rental compensation at prevailing market rate with due increment in case of rental

market going up, best of amenities, strict legal terms in documentation, flexibility on the part of the

developer to meet peculiar needs of society and its members should be some of the prominent

criteria for selection of the developer.

7. Managing committee should tentatively select developer on consideration of recommendation by

pmc and general body meeting should take final decision on selection of developer.

8. Offers should be submitted by all the developers in standard tender or offer format to allow

comparision.

9. PMC should draft Letter of Intent/Appointment on consideration of legal implications thereof.

10. PMC should co-ordinate with the office of registrar of co-operative societies in respect of

redevelopment process and should draft correspondence, papers and documents to be submitted

to the office of the registrar in connection with redevelopment process.

11. Drafting of redevelopment documents as per society instructions and in consideration of applicable

laws including MOFA, 1963, MCS Act, 1960, Transfer of Property Act, 1882 and other property laws,laws and regulations concerning developments and constructions, bye laws of the society.

12. Drafting documents on consideration of income tax, VAT, service tax laws.

13. Drafting/amending bank guarantee.

14. Drafting power of attorney.

15. Drafting individual agreement for each member.

16. Vetting TDR documentation from legal and taxes point of view.

17. Provision of services of the architect, engineer, chartered accountant, advocate in the matters

connected with the process of redevelopment.

18. As may be needed, attending meetings of members to explain and/or to interact with members.

19. Filing of income tax returns of the society for the years during which redevelopment project

continues.

20. Manner of disclosure of benefits of redevelopment in individual income tax returns of the members

in the relevant years, at the request of the member.

21. Drafting correspondence on behalf of the society with architect, municipal authorities and others in

relation to redevelopment project.

22. Drafting various circulars and letters and resolutions for the society in relation to matters connected

with redevelopment project.

23. Drafting documents should be in absolutely transparent manner.

24. PMC services should primarily be in the nature of consultat ion and suggestions. Drafting of

documents should also done after thorough discussion of the issues at stake and after considering

views of the society and after explaining pmcs views. Ultimate decisions should be left upon

the society. PMC should help society in decisions making process but should not insist that the

decisions must be taken only in the manner it wants.

Redevelopment is a subject wherein lot of misconceptions lie; wherein lot of public concern lies. Drafting

of iron clad documents is the single most important aspect in any redevelopment and the pmc should be


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able to assure that as far as redevelopment documentation is concerned, any member can compare the

same with that of any other society and the member will himself be able to satisfy that documentation is

the safest and takes care of every interest of the individual member as well as the interests of the society

as well as takes care of the safety of the committee members.

Drafting of tender form or offer form should be such that only the developers with merits and

commitment would come forward as the drafting would clearly convey message that draftsman knows

construction laws, property laws, stamp duty, registration laws, revenue laws, regulatory provisions

and more importantly the draftsman knows the possible wrongs in the redevelopment projects and the

necessary plugs to prevent such possible wrongs. Before accepting assignment, pmc should understand

expectations of society and should explain the exact role that the pmc would perform in a particular

project. PMC appointment should be under proper documentation.

Nothing speaks better than actual work.

PART III. DEEMED CONVEYANCE IN FAVOUR OF A CO-OPERATIVE HOUSING SOCIETY OR OTHER

HOUSING ENTITY:

1. MOFA, the regulatory territorial law in the State of Maharashtra :Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management

and transfer Act, 1963 (in this article referred to as the Act) popularly known as MOFA was

enacted initially for a temporary period of five years to regulate the promotion of construction, sale,

management and transfer of flats in the State of Maharasthtra. The duration of the Act was extended,

from time to time till 31st March, 2005. Thereafter, probably inadvertently, the Act was not extended

forsometime. Itwas realizedthat theacute shortage ofhousing inseveralareasof theStateof

Maharashtra, especially in metropolitan cities like Mumbai, Pune, Nagpur, etc., was increasing day by

day due to continuous flow of population from rural areas to urban areas and in order to prevent the

mal-practices it was expedient to have this Act as perpetuity. Therefore, an Ordiance was promulgated

extending the Act perpetually with a retrospective effect from 1st April, 2005.

2. Time bound provisions for formation of housing entity and execution of conveyance :Provisions contained in the Act since its enactment in 1963 did require a promoter including a

builder, developer, a cooperative housing society constructing flats for sale to take steps to form

a housing entity i.e. either a co-operative society, company or apartment ownership association,

by submitting application for formation of a co-operative society or a company or taking steps

for constitution of apartment ownership association, as the case may be, within 4 months from

the date on which 60% of the total number of the flats are sold. The original Act also provided

for mandatory conveyance of the subject land and building in favour of the housing entity either

within the agreed time period, and in the absence of any agreed time period, within 4 months from

the date of registration of cooperative society or a company or constitution of the association of

apartment owners, as the case may be.

3. MOFA in its original form did not have required teeth :

However, the Act did not have required teeth and as a consequence hardly any promoter must have

formed housing entity within the prescribed time period and in majority of the cases conveyances

have not been executed by the promoters for years. Although, it is possible to form a housing

entity of the flat purchasers without co-operation of the promoter but legal remedies available for

enforcing conveyance at the civil court for specific performance or at consumer court for deficiency

in service and/or at criminal court for violation of MOFA have been time consuming and the

problems are more compounded in the cases wherein landlord has expired and the legal heirs are

scattered.


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4. Implementation of MOFA has not been effective so far :

The very objective of MOFA since its enactment is to effectively prevent abuses and malpractices

duetoacuteshortageofhousingintheseveralareasof theState.Governmenthasrealizedthat

the implementation of the Act has not been effective enough particularly with reference to some

of its provisions with the result that the objective behind enactment of the Act has not been fullyachieved. Therefore, in the year 2005 Government initiated steps in an effort to remedy the situation.

5. Amendments carried out to MOFA and Rules :

It is in this background that effort of the Government in the form of amendments carried out by the

Amendment Act 2005 passed in the year 2008 and followed by amendment in rules as notified on

27 09 2010 is to be appreciation.

The amendments carried out by the Amendment Act 2005 and the MOFA Rules include provisions

for formation of a co-operative society within the prescribed time period and more importantly

provision for execution of conveyance in favour of the housing entity to be formed of flat purchasers

within the prescribed time period.

6. Amendments to the Act and Rules strengthen provisions for formation of housing entity and for

mandatory conveyance :

Amendments carried out to the Act and the Rules do strengthen provisions for formation of

a co-operative society, in case the promoter fails to do so within the prescribed time period.

Predominantly, the Act has been amended to strengthen the provision of execution of convenience

in favour of the housing entity within the prescribed time period by providing for issuance of

unilateral deemed conveyance in favour of the housing entity.

7. Flat agreements must be duly stamped and registered :

For registration of a co-operative society, the flat purchasers should elect a chief promoter at their

meeting. For enforcing formation of a co-operative society and for enforcing unilateral deemed

conveyance under amended MOFA and amended rules, it is necessary that agreements between the

promoter and the flat purchasers are duly stamped and registered as required under the provisionsof under Bombay Stamp Act 1958 and Registration Act 1908 respectively.

8. Competent Authority :

Task of implementation of amended provisions concerning mandatory formation of cooperative

society and granting unilateral deemed conveyance has been entrusted to a Competent Authority

being an officer not below that rank of District Deputy Registrar of Co-operative Societies to be

appointed by the State Government.

9. Provisions for mandatory formation of a co-operative society :

It is provided that if the promoter fails within the prescribed time period to submit an application

to the Registrar for registration of society in the manner provided in the Maharashtra Co-operative

Societies Act, 1960, the Competent Authority may, upon receiving an application, in the prescribedform, affixed with court fee stamps of Rs. 1,000/-, from the persons who have taken flats from

the promoter, after verifying authenticity of the applicants request and after giving the concerned

promoter a reasonable opportunity of being heard, direct the District Deputy Registrar, Deputy

Registrar or, as the case may be, Assistant Registrar concerned, to register the society. Such

application may be presented either by the Chief Promoter or an authorised agent accompanying

an authority letter duly signed by the applicant and accepted by the authorised representative. An

authorised agent may be an advocate or any other person.


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10. Provisions for unilateral deemed conveyance :

10.1. Submission of Application :

If the promoter fails to execute conveyance in favour of the housing entity, within the prescribed

period, the members of such housing entity may make an application in prescribed form affixedwith court fee stamps of Rs. 2,000/- to the concerned Competent Authority accompanied by the

true copies of the registered agreements for sale, executed with the promoter by each of the

individual members of the housing entity who have purchased flats and all other relevant documents

(including the occupation certificate, if any ), for issuance of unilateral deemed conveyance in its

favour and to have it registered. Such application may be presented either by the housing entity or

its authorised agent accompanying an authority letter duly signed by the applicant and accepted by

the authorised representative. An authorised agent may be an advocate or any other person.

10.2. Scrutiny and admission of application :

On receipt of an application, office of the Competent Authority shall endorse date of receipt

thereupon and shall as soon as possible, examine it and satisfy itself that the person presenting it

has authority to do so and that it conforms with all the provisions of the Act and the Rules made

thereunder.

If the Competent Authority is satisfied that the application is complete in all respect, it shall cause

the application to be registered, as admitted, in the appropriate register to be maintained in the

prescribed form.

However, if the application is not complete, the Competent Authority may send a notice in the

prescribed form to the applicant/s to rectify the defects or comply with such requirements, as it

may deem fit to conform with all the provisions of the Act, and the Rules, within a period of fifteen

days of the receipt of such notice, which for sufficient cause may be extended for a further period

of not more than 15 days.

If the stated defect in an application is rectified, the Competent Authority shall cause it to be

admitted and register the application in the appropriate register to be maintained in prescribed form.

10.3. Written statement by the Opponent:

On admitting the application, the Competent Authority shall, within a period of fifteen days

thereof, issue a notice in prescribed form to the opponent/s requiring him/them to file the written

statement on the day, date and place as may be specified therein. Such notice shall be served on

the opponents by registered post acknowledgment due or under certificate of posting on the last

known address.

On the date fixed as aforesaid, the opponent shall appear either in person or through his advocate

orhisauthorizedrepresentativebeforetheCompetentAuthorityandshallfileawrittenstatement.

10.4. Hearing of application :

The Competent Authority shall issue necessary notice to all the parties regarding the date fixed for

hearing the application and publish or display the date fixed for the hearing thereof on its office

notice board sufficiently in advance.

On the date of hearing, if the applicant appears and the opponent or any of the opponents, does

not or do not appear, as the case may be, the Competent Authority shall decide the application

ex-parte. However, if before deciding the application, the Opponent appears and shows a sufficient

cause for his non-appearance on the earlier occasion(s), he shall be heard in the matter as if he had

appeared before the Competent Authority on the earlier day.


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If on the date fixed for hearing or on any other day to which the hearing may be adjourned, the

applicant does not appear either in person or by his authorised representative, when application is

called for hearing, the Competent Authority may dismiss the application.

If, on the date fixed for hearing or any other day to which the hearing may be adjourned, the

Opponent/s does/do not appear either in person or through his/their authorised representative, when

the application is called for hearing, the Competent Authority may decide the same on merits after

hearing the applicant or his authorised representative, if present.

10.5. Production and inspection of documents:

The parties shall file the documents referred to in the pleadings at the time of filing application

and written statement, as the case may be. If either party satisfies the Competent Authority that

any document is relevant and the same is in the custody of the opposite party, the Competent

Authority may, by an order in writing, direct such party to produce such document on the next date

of hearing. If the party so ordered, fails to produce such documents on the next date of hearing,

the Competent Authority may draw adverse inference against such party and hearing of the original

application shall not be postponed till filing of such documents or for the reasons of such non

compliance of the order.

If the Competent Authority is satisfied that the documents required to be produced, cannot be

brought before the Competent Authority for sufficient reasons like its volume or otherwise, the

Competent Authority may allow the opposite part to take inspection of the documents within seven

days from the date of order of such inspection.

If the Competent Authority is satisfied that the opponent had no access to the documents earlier and

the filing of additional statement is necessary, it may allow the filing of such additional statement.

10.6. Procedure for hearing the application:

On receipt of the statement of the opponent, the applicant shall prove contents of the application

and also deal with the contention of defences. The opponent likewise may file reply in support of

the defence on the next date, if he so desires. No cross-examination of any of the parties shall bepermitted.

On receipt of the replies, the Competent Authority shall proceed to hear oral arguments of the

parties and after hearing, shall close the proceedings for the order.

10.7. Decision on application within 6 months :

The Competent Authority shall, within reasonable time and in any case not later than six months

from the date of receipt of the appl icat ion, after making such enquiry as may be deemed

necessary it and after verifying the authenticity of the documents submitted by the parties and

after hearing them and giving the parties sufficient opportunities as required under the Act and

the principles of natural justice, pass such appropriate order as it deems fit, as provided under

the Act.

10.8. Issuance of unilateral deemed conveyance by the Competent Authority :

On being satisfied that it is a fit case for issuing such certificate, the Competent Authority shall

issue a certificate to the Sub-Registrar or any other appropriate Registration Officer under the

Registrar or any other appropriate Registration Officer under the Registration Act, 1908, certifying

that it is a fit case for enforcing unilateral execution of conveyance deed conveying the right,

title and interest of the promoter in the land and building in favour of the applicant, as deemed

conveyance.


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10.9. Registration of unilateral deemed conveyance :

Along with the unilateral instrument of conveyance, the Sub-Registrar or the concerned appropriate

registration Officer shall, notwithstanding anything contained in the Registration Act, 1908, issue summons

to the promoter to show cause why such unilateral instrument should not be registered as deemed

conveyance and after giving the promoter and the applicant(s) a reasonable opportunity of being heard,may, on being satisfied that it was fit case for unilateral conveyance, register that instrument as deemed

conveyance..

PART IV : ISSUES IN DEEMED CONVEYANCE

Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management

and transfer Act,1963 (in this article referred to as the Act ) popularly known as MOFA regulating

promotion of construction, sale, management and transfer of flats in the State of Maharashtra did

have onerous provisions inter alia for formation of a housing entity and execution of conveyance in

a time bound frame.

However, the Act did not have required teeth. Provisions of deemed conveyance have recently

become operative. However, law and the procedure are yet to be digested. Here is an attempt toaddress some of the issues involved.

First of all the provisions of deemed conveyance can be activated only when the promoter (including

builder/developer ) has failed to execute conveyance within the prescribed time period. MOFA

continues to provide that only when no time period for conveyance has been agreed upon between

the flat purchasers and the promoter then the prescribed time period of four months from the date

of formation of the housing entity i.e. a co-operative society, an association of apartment owners or

a limited company. In all likelihood, the promoter will mention a longer time period for conveyance in

new agreements thereby making the deemed conveyance provisions inoperative during such agreed

time period.

Buyers have little or no choice but to sign the flat purchase agreements with the promoters on dotted

the lines.

Although, the law continues to provide an option to form a society, an association or a company and

duty has been cast upon promoter to form such housing entity within four months from the date of

sale of minimum 60% of the flats, amended provisions provide expeditious process for formation only

society type of entity. Formation of a company would not require a promoters involvement. Vaguely

worded amended provisions providing that if a promoter fails to form a society within prescribed time

period, then the Competent Authority may, upon receiving an application from the persons who have

taken flats from the promoter, direct the concerned co-operative registrar to register a society, cannot

mean that the amended provisions require that all the flat purchasers must apply for registration of

society as only 60% or above would suffice. This is because the Circular requiring that minimum 60%

of flat purchasers can file application for registration of society continues to be operative. Amended

provisions are only for facilitating expeditious registration of a society on default by promoter. If a

view is taken that all the flat purchasers would have to apply for registration of a society then the

very provisions enabling expeditious registration of a society would get defeated as there may be aflat purchaser being a relative of the promoter or a flat purchaser interested in acting for the benefit

of the developer for some reasons who may decline to join in formation of the society. In the matter

of registration of society, Court has, even in the pre-amended provisions, taken a logical and upright

view that a builder/developer has no locus standi to oppose such registration as his rights to sell his

flats do not in any manner get prejudiced by society registration. The most important issue arises

with regard to requirement of stamping and registration of individual flat agreements. Amended

provisions require that application for deemed conveyance will be accompanied by the true copies


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of the registered agreements for sale, executed with the promoter by each individual member of the

housing entity. Such wordings have led to a view that the purchase agreements in respect of all the

flats have to be stamped and registered. Such a view appears to be incorrect for reasons including

that provisions enabling formation of a society under an application by only 60% of the flats continue;

amended provisions are beneficial intending for expeditious formation of society; wordings of the

amended provisions refer to the members and not to flat purchasers. What will happen in a case

when all the agreements including, chain of agreements in cases of resales of flats, are either not

fully stamped or not registered Pre-amended provisions enabled societies to get conveyance without

reference to stamp duty payment and registration aspects of the individual flat purchase agreements.

Even if some of the flat purchase documents are not stamped, the government does not lose revenue,

because government in any case collects stamp duty on present market value of the entire property

minus stamp duty paid on flat purchase agreements with the promoter. Further, the government can

always enforce payment of stamp duty on unstamped or deficiently stamped documents. The society

can recover the loss due to defective documents of members billing the members. If non-payment

of stamp duty by a few flat purchasers results into non conveyance, it would mean an advantage

to delinquent promoter. Once a housing entity has been legally formed, conveyance should be an

automatic process as otherwise requirement of stamp duty and registration by all the flat purchaserswould tantamount loop holes against the spirit of the amended beneficial provisions.

Under the pre-amended provisions we have court decisions directing promoters to convey property in

favour of a housing entity without going into details, and very rightly and logically so, as to whether

stamp duty and registration requirements were complied with in respect of all flat transactions or not.

Under the law, if some flat agreements with promoter are unstamped or unregistered, the promoter

is more responsible if he has collected more than 20% of the price of the flat.

A view is being propagated that for obtaining deemed conveyance certificate, documents like building

plans, commencement certificate, occupation certificate, completion certificate, property cards,

would be required to be furnished by the society. Such a view seems grossly misplaced as such

requirements would be directly in contradiction to letter and spirit of amended provisions relating

to deemed conveyance which even otherwise have not specified such requirements. Providing

such documents are the duty and obligations of the promoter unless he has given the same to thehousing entity. It seems, such additional requirements are propagated so that non availability of such

documents can lead to unreasonable demands.

Competent Authority would only issue a certificate to Registration Authority that it is a fit case for

granting unilateral deemed conveyance in favour of the housing entity.

Thereafter, the Registration Authority would serve summons to promoter to show cause as to why

unilateral instrument of conveyance should not be registered as deemed conveyance. Apprehensions

are being expressed as to what kind of hearing will once again take place. It is submitted that the

Registration Authority cannot in any case review the decision already taken by the Competent

Authority that it is a fit case to grant unilateral deemed conveyance. Powers of Registering Authority

will have to be confined to as provided in the Registration Act,1908 in respect of verification of

documents and identity of persons appearing before it. No time limit has been specified within whichRegistration Authority would have to act but in the absence of substantial powers and duties on its

part, unreasonable delay may not be possible.


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Dr. Sanjay Chaturvedi a Commerce Graduate from University of Mumbai and was

conferred PhD degree in Real Estate Finance from University of Mumbai. He has

presented many papers in National and International conferences and published.

He authored eight books on various aspects of Real Estate and allied subject. He

is visiting faculty at Department of Commerce, University of Mumbai, NMIMS

University and other reputed institutions.

At present he is Executive Editor of Accommodation Times and Maharashra Co-

operative Housing Society Times. He is also Director at Accommodation Times

Institute of Real Estate Management and Research Foundation. In the past he had

freelanced for Reuters and other international news agencies


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Laws governing co- operative societies,

trusts, real estate transactionsDr. Sanjay Chaturvedi


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NAME : Shri. Manoj V. Daisaria

ADDRESS : 801, Skyline Epitome, Kirol Road, Nr.Jolly Gymkhana,

Vidyavihar (West),

Mumbai 400 086.

DATE OF BIRTH : 29th November, 1959

QUALIFICATION : H.S.C. K.J.Somaiya College, Mumbai.

GD ARCH. 1982 From Rachna, Sansad Academy of

Architecture, Mumbai.

B. ARCH. 1982 From Academy of Architecture, Mumbai.

EXPERIENCE : - Joined Fathers Firm in 1982

- Handled Project From Major, Developers in and around

Mumbai, Goa, Ahmedabad

- At present involved in development of I.T. Parks,

Multiplexes, Malls Corporate Offices, Residential Town

Ship, Slum Redevelopment etc.

- Also involved in Charitable works like Hospitals, Schools,

Cemetery etc

PROFESSIONAL EXPERIENCE AND ACHIEVEMENT

OurfirmisappointedasProjectManagementConsultantinCategoryAby

Maharashtra Housing Area Development Authority.

Shri.ManojDaisariawasappointedasaspecialinviteeforDistrictPlanning

Committee appointed by Government of Maharashtra in the year 2000.

ShriManojDaisariawasPresidentofPEATA(INDIA)(PracticingEngineers

Architect & Town Planners Association) (2007 2009)


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FACTS FIGURES FORMULAE

COMPILED BY:- MANOJ DAISARIA


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DCR 35(4) Compensatory FSI (FloorSpace Index):

Percentage PremiumResidential 35% 60%Industrial 20% 80%Commercial 20% 100%

DCR 33(7), 33(9), 33(10)

This FSI admissible for Rehab. component - without chargingpremium.

DCR 33(5) & Re-development in suburbs (1.0 + TDR)

Fungible fsi on consumed fsi of existing structure - without

charging premium. This fungible FSI for rehab. component to be used for over and

above eligible area for existing tenants and not for salecomponents.

Applicability :-

1) Not applicable if I.O.D. is issued but building is notcompleted and apply at the option of owner. Newrules can be availed.

2) If I.O.D. is issued for layouts / sub-divisions Thisrule to be applicable to balance plot potential.

3) The fungible FSI is useable as regular FSI.

4) Not permissible in C.R.Z


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RESIDENTIAL BUILDING

COMMERCIAL BUILDING

33(7) REDEVELOPMENT OF CESSED BUILDINGS

IN ISLAND CITY

REDEVELOPMENT IN SUBURBS

IMPACT ON:-

PROVISIONS PRIOR TO AND AFTER

MODIFIED D.C. REGULATION

OPEN SPACES


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FREE OF FSI AREA AS PER EARLIER REGULATION.


FREE OF FSI AREA AS PER PRESENT POLICY


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COMMERCIAL BUILDING

FREE OF FSI AREA AS PER EARLIER REGULATION.


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