MUMBAI GRAHAK PANCHAYAT Submissions to Hon ble Governor on

MUMBAI GRAHAK PANCHAYAT Submissions to Hon’ble Governor on Maharashtra Housing (Regulation & Development) Bill 2012 Adv. Shirish V. Deshpande Chairman, Mumbai Grahak Panchayat

Ref/ /mgp/2014 6 th February 2014 APPEAL BY MUMBAI GRAHAK PANCHAYAT TO ALL CO-OPERATIVE HOUSING SOCIEITIES IN THE INTEREST OF FLAT PURCHASERS Objectionable provisions in the Maharashtra Housing (Regulation & Development) Bill 2012 Dear Sir/ Madam, Mumbai Grahak Panchayat (MGP) is a registered voluntary consumer organisation engaged in consumer protection and consumer education activities for last 39 years. MGP has tackled various consumer protection issues in the interest of consumers. We have carefully studied the Maharashtra Housing (Regulation & Development) Bill - 2012. We are extremely concerned with certain provisions in the said Housing Bill which has been sent to the Hon'ble President of India for his assent. It is also noteworthy that the Central Government’s Real Estate (Regulation & Development) Bill - 2013, which is presently before Rajys Sabha, contains comparatively better provisions. In fact the original Real Estate (Regulation & Development) Bill - 2011 had much better provision of consumer protection. Some of the objectionable provisions of this Bill are as follows: FLATS-OWNERS IN OLD BUILDINGS GOING FOR RE-DEVELOPMENT DENIED PROTECTION IN THE NEW LAW. (Central Real Estate Bill - 2013 covers Flat owners undergoing Re-development). EXISTING PROVISIONS OF IMPRISONMENT FOR BUILDERS DROPPED. (Presently MOFA provides 3 to 5 years imprisonment) STATE HOUSING DEVELOPMENT AUTHORITIES (MHADA/CIDCO) EXCLUDED. (Central Real Estate Bill includes them) BUILDERS ALLOWED TO COLLECT 20 % WITHOUT AGREEMENT. (Central Bill allows to collect 10% only). HARSH PENALTIES FOR FLAT BUYERS & SOFT TREATMENT FOR ERRANT BUILDERS. (Central Bill soft on buyers & provides heavy penalties for builders)

HOUSING REGULATORY AUTHORITY & APPELLATE TRIBUNAL TO BE BOUND BY Civil Procedure Code & Indian Evidence Act WHICH WOULD LEAD TO LONG DELAYS IN DISPOSAL OF COMPLAINTS. (Central Bill specifically mentions that C. P. C. & Evidence Act not applicable to Regulatory Authority & Appellate Tribunal which will ensure speedy disposal of complaints. ). We, strongly feel the Hon’ble President should not give his assent to this bill and should return it back to Maharashtra Legislature for re-consideration or alternatively let the Real Estate (Regulation & Development) Bill initiated by the Central Government be made applicable to Maharashtra State. We are attaching herewith the specimen draft letter to be sent to Hon’ble President with a request to Chairman & Secretary of all co-op housing societies to send this letter to Hon’ble President on their letterheads, preferably with names & signatures of as many society members as possible. We are sure this collective strength of flat purchasers & society members will persuade President of India to return this anti-consumer Bill to back to Maharashtra. Thanking you, Yours sincerely, Shirish V. Deshpande Varsha Raut Chairman Head - Advocacy & Campaign Encl. : As above P. S. : For more details visit our website http: //mumbaigrahakpanchayat. org. After sending your letter to President of India, kindly inform us on campaign@mumbaigrahakpanchayat. org

Date: Hon’ble President of India, Rashtrapati Bhavan, New Delhi - 110 004 Email: pstopresident@rb. nic. in Subj: Plea To Return Maharashtra Housing (Regulation & Subj: Plea To Return Development) Bill -2012 for Reconsideration Hon’ble President, We are extremely concerned with certain provisions of the Maharashtra Housing (Regulation & Development) Bill 2012. This Bill is reportedly forwarded to you for your assent. 2012. This Bill Following are some of the objectionable provisions in the said Bill which merit your kind attention: LAKHS OF FLAT- OWNERS IN OLD BUILDINGS GOING FOR RE-DEVELOPMENT DENIED PROTECTION IN THE NEW LAW. EXISTING PROVISIONS OF IMPRISONMENT OF ERRANT BUILDERS DROPPED. SOFT TREATMENT FOR DEFAULTING BUILDERS BUT HARSH PENALTIES FOR FLAT BUYERS. BUILDERS ALLOWED TO COLLECT 20 % WITHOUT ENTERING INTO AGREEMENT WITH NO PROVISION FOR IMPRISONMENT IN CASE OF DEFAULT / MIS-APPROPRIATION OF FUNDS. STATE HOUSING DEVELOPMENT BOARDS (MHADA / CIDCO ) EXCLUDED FROM THE BILL THEREBY DENYING BENEFIT TO LAKHS OF CONSUMERS BUYING FLATS FROM SUCH STATE HOUSING BOARDS. The Real Estate (Regulation & Development) Bill-2013, which is presently before the Rajya Sabha, contains comparatively better provisions of consumer protection compared to Maharashtra Housing Bill-2012. Maharashtra Bill fails to adequately protect consumers from various mal-practices of the builders. In fact the original Real Estate (Regulation & Development) Bill – 2011 had much better provision of consumer protection. We therefore fully support Mumbai Grahak Panchayat’s Petition and URGE YOU TO PLEASE RETURN THE SAID MAHARASHTRA HOUSING BILL- 2012 FOR RE-CONSIDERATION BY THE STATE LEGISLATURE or alternatively let the Real Estate (Regulation & Development) Bill initiated by the Central Government be made applicable to Maharashtra State.

MUMBAI GRAHAK PANCHAYAT DIFFERENCE BETWEEN CENTRAL & STATE HOUSING BILL REAL ESTATE (REGULATION & DEVELOPMENT) BILL 2011 MAHARASHTRA HOUSING (REGULATION & DEVELOPMENT) BILL 2012 - CENTRAL BILL STATE BILL Central Bill expressly proclaims Protection of Consumer Interest as one of its State Bill is silent on Consumer Protection objective Bill defines “Allottee” and also includes person who subsequently acquires Bill does not define “Allottee” at allotment thru transfer or otherwise. [Sec 2(b)] Bill Defines “Interest” [Sec 2(u)] Bill further provides that “interest” chargeable from allottee shall not be more than the “interest” that Promoter would be liable to pay to the allottee in case of default. [Sec 2(u)] “Promoter” includes Housing Authorities and also Housing Societies which construct houses for its members. Bill does not define “interest” No such provision in State Bill excludes MHADA/BHADA from the purview of this Act. (Sec 54). Bill silent about CIDCO and Housing Societies Promoter cannot apply for Registration unless he has obtained approval/sanction Promoter can apply for Registration without obtaining such approval/sanction from the Competent Authority Promoter has to give declaration that 70 % of the amounts realized from allottees No such Declaration required under the State Bill would be deposited in the Scheduled Bank in a separate accountwithin 15 days of its realization [Sec 4(3) (b) (v)]. Real Estate Regulatory authority has powers to revoke the Registration of the No such power to the Housing Regulatory Authority under the State Bill. Promoter, among other things, also for his adopting Unfair Practices or Registration can be cancelled only in case agreement deriving his right to irregularities develop the real estate is declared invalid by any court of law. Promoter cannot accept any sum of money unless he enters into written agreement for sale (sec 11) Amount to be refunded with interest by the Promoter will be a charge on the land & structures thereon [Sec 15(2)] Promoter allowed to collect 20 % of the sale price without entering into an agreement for sale. (Sec 9) Such provision which was present in the original draft bill has been mysteriously dropped in the amended Bill (Sec 16) In case of Promoter’s default, Interest shall be payable from the dates he received Such provision which was present in the original draft Bill has been such sums. [Sec 15(2)] mysteriously dropped in the amended Bill (Sec 16) Real Estate Regulator shall take measures to make recommendations to Govt or No such provision in the State Bill Competent Authority on protection of interest of allottees. If Promoter fails to comply with Sec 3 he is punishable with imprisonment for No such imprisonment or even heavy penalty in State Bill. term upto 3 year or penalty upto 10 % of the project cost or both

ABOUT MUMBAI GRAHAK PANCHAYAT Largest Registered Voluntary Consumer Organisation since 1975 with Membership of 32, 000 families. Operates unique Distribution System for its Members on “No Loss, No Profit” basis. Member of Governing Council of Consumers International - London. Accredited Observer Member of ECOSOC and UNCTAD as a Civil Society Organisation. Assisting Government of Fiji in drafting Consumer

ABOUT MUMBAI GRAHAK PANCHAYAT Recipient of National Award of Government of India for outstanding contribution in Consumer Protection & CFBP Award for Ethical Practices. Representing Consumer Interest on MERC, CERC, FSSAI, CGRFs of BEST, TATA Power & MSEDCL. Global recognition as a Role Model for promoting Sustainable Consumption and Sustainable consumer organization. Complaints on behalf of 800 flat purchasers against the Builder in the final stage of securing refund + compensation worth Rs 24 crores.

Why Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature?

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The Bill dilutes the existing provisions in the Maharashtra Ownership Flats Act (MOFA). The Bill excludes MHADA / BHADA who are major Promoters / Developers. The Bill does not specifically include CIDCO which is another major Promoter / Developer. The Bill fails to achieve its objective of protecting public interest vis-à-vis the Promoters.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The Bill fails to ensure adequate transparency in transactions of Promoters. The Bill does not provide any measures to ensure smooth & speedy construction of flats & buildings. The Bill does not utter a word about the rampant practice of Black Money (Cash Transactions) in the Housing Industry.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The Bill inconsistent with and at times, contrary to the proposed Real Estate (Regulation & Development) Bill-2011 of the Central Government (hereinafter referred to as ‘Central Bill’) The Central Bill is more vocal than the State Bill in protecting consumer interest in Real Estate Sector. Welcome provisions in the Central Bill need to be incorporated in the State Bill for protecting Consumer Interest.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The State Bill does not define either the “flat owner” or the “allottee” for whose benefit this Bill is claimed to have been drafted. The State Bill does not include “landlord” in the definition of “Promoter” whereas the Conveyance of the property in favour of the Society is not complete without support & co-operation of the landlord. The State Bill covers only “Sale Component” of the Re-development Projects. “Rehab Component” excluded. Lakhs of tenants / flat owners to suffer.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? No Compensation provided in case of delayed possession by Promoters. The Bill prescribes a cap on the Interest payable by the Promoter to the flat purchaser in case of delay, but no such cap is prescribed on the Interest payable by the flat purchaser in case of his delay in payment of installment to the Promoter.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The Bill has allowed defaulting & errant Promoters to go scot-free by just paying fine. Punishment of imprisonment is dropped to favour the Promoters. The Bill fails to diagnose the real problems of the Flat purchasers. The major problems like delayed possession, failure to form Co-operative Society, failure to obtain Occupation Certificate, failure to execute Conveyance are treated very lightly by dropping punishment of imprisonment.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? Absence of punishment of imprisonment makes the Bill toothless. Flat purchasers will continue to remain vulnerable to exploitation by Promoters. The Bill fails to empower the Housing Regulatory Authority with adequate powers to adjudicate the complaints of flat purchasers. The Bill fails to make out a comprehensive Law whereby any aggrieved stake holder can get speedy, inexpensive & fair redressal in the Real Estate Sector.

Why The Maharashtra Housing (Regulation & Development) Bill 2012 needs to be returned to the Legislature? The Bill needs drastic improvements to ensure adequate Consumer Protection. The Bill ignores UN Guidelines for Consumer Protection which requires the Government to make legislations to adequately protect and empower Consumers against powerful players in the Market. (The changes required in the Bill, clause wise, are provided separately. )

Thank You Presented by: Adv. Shirish Deshpande, Chairman, Mumbai Grahak Panchayat