SC takes Hiranandani to task Upholds HC Order Barring Powai Construction

New Delhi: The Supreme Court on Friday refused to dilute the Bombay high court order that stopped Hiranandani Developers from carrying out further construction at its Powai township without first providing affordable housing. 

    Abench of Justices H L Dattu and C K Prasad was severe in its criticism of the developers for blatantly breaching a 1986 agreement with the state government and the MMRDA by which the group was allowed to develop 230 acres of land in Powai to construct affordable houses and hand over part of them to the state at cheap rates. 

    "We feel so sorry that private land was purchased by the government and given to you for development. That place was meant for below middle class people. But you built palaces for those who can afford Bentleys and Ferraris," the bench said. 

    In 1986, the state passed an award determining the compensation at the rate of Re 1 per hectare for the lands acquired from landholders. In return, the Hiranandanis were to construct affordable flats—half of 431 sq ft (40 sq m) and the rest of 861 sq ft (80 sq m). Beyond this, 15% of the flats were to be given to the state at Rs 135 per sq ft. Do we encourage only a set of people, asks SC 

New Delhi: The palatial houses built by Hiranandani Developers in Powai in violation of the agreement with the state government had prompted the Bombay high court to pass an order on February 22, directing the developer to stop all construction activity on the remaining plots under the Powai Area Development Scheme (PADS) and specify the vacancy position before the court. The HC order came in the wake of a public interest litigation filed by a group of social activists led by Medha Patkar, and two local residents. 

    The high court had directed the Hiranandanis to construct around 3,100 affordable houses—1,593 flats of around 861 sq ft (80 sq m) and 1,511 flats of 430 sq ft (40 sq m). Around 450 apartments from this lot, the court said, have to be offered to the state at a rate of Rs 135 per sq ft, which the government can then sell to its employees. Once these instructions have been complied with, the court said, the developer would have to take its permission and only then can it can embark on making further construction on the remaining land. The could had also allowed the petitioners to file criminal cases against the builder and "errant" government officers. 

    The Supreme Court bench on Friday asked senior advocates Mukul Rohatgi and Gopal Subramanaim, "As it is, middle class people in Mumbai are residing on roads. Can they afford even a square inch of land?" 

    When Rohatgi attempted to justify the developer's action by referring to the buildings and hospital built by them as part of PADS, the bench said, "The quality of houses is bound to be the best as it is for those people who can afford Bentleys and Ferraris. What we see is palaces-…Can you show us if you have built even a single house of 40 or 80 square metre?" 

    MMRDA counsel Shekhar Naphade informed the bench that "there has been rampant collusion between the officials of MMRDA and the developer in how the agreement was breached." 

    Though the court permitted the Hiranandanis to withdraw their appeal and pursue options before the Bombay high court, the court did not mince words and said, "It is all an eyewash. What are we doing in this country…. Do we encourage only a set of people in this country. Do other persons not have a right too?" 

    It said, "This sort of collusion between the developer and officials of state is contrary to the specific understanding on which the lands were acquired. HC has said what you are expected to do, saying out of 230 acres earmark 92 acres for downtrodden." 

HOUSE THAT VIOLATIONS BY HIRANANDANI DEVELOPERS, AS ALLEGED BY THE PETITIONERS IN HC 

Few Affordable Houses Built 

    Hiranandani was to construct 50% of flats of 431 sq ft and the rest of 861 sq ft 

    Flats were allowed to be merged to 4,000-5,000 sq ft and sold for up to Rs 7 crore 

Government Deprived Of Share 

    State was to get 15% of the FSI consumed in the form of flats. This would have meant around 1,800 flats spread over 10 lakh sq ft. State was not given its share 

Infrastructure Promises 

    Within 10 years, builder was supposed to leave open spaces for schools, parks, service industry and a hospital, which had to be handed over to the BMC. This was not fully complied with 

Commercial Interests 

    Hiranandani constructed commercial spaces such as offices that were not mentioned in the original agreements

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Big guns in fray for prime DLF land

Mumbai: Months of tough negotiations between prospective buyers and the owner of the 17-acre Mumbai Textile Mill property at Lower Parel has made little headway so far. 

    But despite the slowdown in the property market, builders find the DLF-owned property irresistible, and in the past few weeks, the race has heated up with several big names in the construction industry throwing their hats in the ring. 

    The latest entrants are the Wadhwa Group and Punebased builder Avinash Bhosale. . Industrialist Ajay Piramal's Piramal Realty, Runwal Group and Oberoi Realty are also believed to be some of the contenders along with two foreign funds. (Oberoi, however, claimed it is no longer negotiating for the plot). 

    The Vijay Wadhwa-led Wadhwa Group, which has a large presence in the commercial business district of Bandra-Kurla Complex, entered the fray recently. It is believed to have put in a joint bid with Sheth Developers. 

    Avinash Bhosale, who has built a real estate, hospitality and infrastructure empire, is believed to have tied up with developer Vallabh Sheth to bid for the Parel land. Piramal Realty, which has been aggressively picking up prime properties lately, has also offered a substantial amount, it is learnt. 

    But despite being on the block since last year, the transaction is still far from being complete. Market sources said the price is still a contentious issue between DLF and the prospective buyers. One contender told TOI that DLF was expecting Rs 3,000 crore plus. But clients are not offering more than Rs 2,000 crore. 

    "The land can fetch a much higher price if DLF agrees to deferred payment spread over three to four years. However, it wants the money upfront since it has a huge debt of over Rs 20,000 crore," said a developer, who is in the fray. 

    DLF initially expected its property to fetch over Rs 4,000 crore, but found few takers. Property market sources said the sale has been delayed after two policies were amended by civic chief Subodh Kumar and approved by the state government in the past few months. 

    The new development control rules and the amended public parking policy have affected DLF's land valuation because the humungous construction benefits it had derived no longer exist. 

    DLF's high valuation earlier was mainly because the state government had earlier cleared its proposal under the public parking policy. The developer was to receive additional FSI for building a multi-storeyed public car park and hand it over to the civic administration free of cost. But after the BMC reviewed the policy, the FSI benefit was severely restricted. 

    DLF, the country's largest real estate company, paid Rs 702 crore for the defunct mill in 2005. It was then touted as the country's largest property transaction. The land, which is just five acres smaller than Oval Maidan, is located along the Tulsi Pipe Road near Phoenix Mills.

ON THE BLOCK: The DLF's 17-acre Mumbai Textile Mill property

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Old socs puzzled over parking pitch

Mumbaikars Say Home Minister's Parking Warning Runs In The Face Of Paucity Of Space

Few can find flaw with home minister R R Patil's argument that garages must be used solely for parking rather than commercial activities or storage. However, the corollary that residents who park their cars on the road outside their compound will be penalized has caused heartburn in Mumbai and Navi Mumbai, particularly within old societies that simply do not have parking space. The minister also plans to abolish parking beneath flyovers—spaces that serves the working population as well as shoppers. In fact it is car-owners who risk damage and theft by exposing their expensive vehicles to unwanted elements in this way. 

    Residents of buildings along narrow lanes in Walkeshwar have a longrunning battle with the BMC over parking. Matters reached a head in 2005 when the authorities demolished the compound wall of Dani Sadan building for a roadwidening project that has not taken off to this day. 

    "Most buildings in the area are around 50 years old; so, we can barely manage space for one car per flat. (For example) Surya Darshan building simply has no compound. It is necessary to park on the road," says Dani Sadan resident Daisy Zatakia. 

    Mumbai sorely lacks adequate pay-and-park facilities. Pradnya Morje is former secretary of the Kamana Cooperative Housing Society near Siddhivinayak temple. "We are not allowed to park on the road for security reasons, but often owners of new cars who arrive to get their vehicles blessed at the temple park there. An old ambulance is permanently stationed along the footpath as well," she says. 

    Morje does not deny that garages must be used exclusively for parking. But she says that residents of housing societies pay parking charges to the society, and property and road taxes, yet do not get a proper footpath to walk on due to encroachments. "Only residents of housing societies should not be penalized while other car owners are allowed to go scot free. Public transport should be made so effective that we can dispense with private vehicles," she says. 

    In Navi Mumbai, residents of Sector 17, Vashi, are the worst-affected as the old residential-cum-commercial complexes there face acute shortage of parking space. Shops attract several customers daily, leading to a sharp increase in vehicular traffic. Visitors to a local mall, too, park here to evade parking fee. 

    The Navi Mumbai Municipal Corporation has failed to provide public parking space in Vashi and is yet to issue permission for multilevel parking decks within housing societies. A proposal to create a parking bay over an open nullah along Palm Beach Road is pending for lack of funds. Work on building a smaller parking lot over a sewage channel in Sector 16 has begun, but it will be some time before motorists' woes are solved. 

BMC'S PARKING RULES FOR HOUSING SOCIETIES 

    While buying a flat, one should keep in mind that parking is either stilt parking, which is in the basement of the building, or open parking 

    Find out from the builder if he/she is selling the space or not. By law, a builder can only sell flats. Unless the builder has used FSI in creating stilt parking, which is usually FSI-free, he cannot legally sell the space 

    By law, a builder can only sell flats that have been constructed with FSI. Open spaces such as terraces or parking lots have to be conveyed to the cooperative society 

As per Section 36 (2) of the Development Control Rules, in Malabar Hill, Cumballa Hill, Fort, Colaba, Pali Hill (Bandra), Juhu Vile Parle Development Scheme, Sassoon Docks and Jagmohandas Marg (Nepean Sea Road), one parking space is to be allotted for every: 

Tenement with a carpet area up to 45 sq m 2/3 tenement with carpet area exceeding 45 sq m, but not exceeding 100 sq m 1/2 tenement with carpet area exceeding 100 sq m In addition to parking spaces for these three categories, at least 25% of the entire parking space should be reserved for visitors 

In the rest of the island city, the suburbs and the extended suburbs, one parking space is to be allotted for every: 

    4 tenements with carpet area above 35 sq m 

    2 tenements with carpet area exceeding 45 sq m, but not exceeding 

70 sq m 

    1 tenement with carpet area exceeding 70 sq m 

    In addition to parking spaces for these three categories, at least 10% of the entire parking space should be reserved for visitors 

    Text: Sukhada Tatke 

    Creating multideck parking lots 

    within societies or public parking spaces will take both time and money. It is not something that can happen overnight. Playgrounds can definitely not be sacrificed for this. This is a difficult problem that calls for efficient planning and systematic execution. The authorities must first offer solutions and then think of taking action 

    Seema Pai | HOMEMAKER We taxpayers are waiting for the authorities to address more pertinent issues. Water tankers entering the Fourth Cross Lane in Lokhandwala Complex often turn back because they are unable to enter the compound owing to illegal parking by members of the gym in their lane 

Ketan Joshi | ANDHERI RESIDENT 

If the Navi Mumbai Municipal Corporation allots additional FSI or allows multilevel parking within societies, the parking problems of the city will be solved. Also, there is enough space below high-tension power lines to explore 

Leena Ahluwalia | NAVI MUMBAI RESIDENT

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New property tax system to be tabled today

Mumbai: After rejecting the new property tax system twice last year, the proposal for implementing the capitalvalue based property tax system is once again to be tabled at the standing committee on Wednesday. With no consensus among political parties, the new system was put in cold storage as no party wanted to take the risk ahead of the civic polls. 

    In the budget speech a few days ago, municipal commissioner Subodh Kumar had mentioned that the civic administration would "adopt property taxes based on the capital value system" but was awaiting the standing committee's nod. Data for around 50,000 properties has been entered into the capital value system. "The administration can issue special notices and also finalize property tax bills on capital value as soon as rules for fixation of capital value and rates of property taxes are approved by the standing committee and the corporation. The rules and rates have been proposed to the standing committee," said Kumar. 

    The BMC plans to shift the property tax calculation structure from the rateable value system, based on rent, to a capital value system—based on the property's market price. Under the present structure, property tax is computed on the basis of rent paid by tenants, but now it will be computed on the market rate. 

    The civic body has missed the deadline for implementation of the capital value-based property tax regime. The state cabinet has granted a year's extension for implementation of the system. The legislature had approved the switchover in March 2010. 

    The civic body was expected to introduce the system from April 1, 2010. But, with the BMC unable to frame business rules, decide tax rates and collect data of properties to be assessed on time, it was granted the extension. It was again granted time to complete procedures by the end of 2011-12 and implement the new regime from April 1, 2012. 

Govt scraps octroi in Ulhasnagar 

    The Maharashtra government has decided to abolish octroi in Ulhasnagar from March 31; it will be replaced by a local body tax (LBT) from April 1. Traders are happy with the abolition but instead of the LBT system, prefer the Gujarat pattern. The government plans to do away with octroi in all D class municipal bodies in a phased manner. Traders here have often protested against octroi, alleging harassment by Konark Infrastructure, which has been collecting octroi for four years. Prakash Bajaj, president, Ulhasnagar Mobile Association, said, "For many years, the contract has been going to a contractor who has been harassing our traders." Naresh Durgani, president, Federation of Sindhunagar Vyapari Association, said, "We prefer the Gujarat pattern, where the local body charges one percent of the goods." –Pradeep Gupta

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Leave-licence: State plans 16,000% hike in stamp duty

Move Will Hit City's Realty Market Hard

Mumbai: The cash-strapped Maharashtra government says it wants to restore Mumbai to its past glory of being the country's global financial capital. But the way it is going about is bound to leave many investors gasping. Seeking to increase its kitty, the government has proposed an up to 160 times hike in stamp duty for leave -and-licence agreements for residential and commercial properties. 

    The government has proposed 0.1% stamp duty on the market value of the residential property, or 1% of the premium plus average annual rent (deposit) paid (whichever is higher) for up to 36 months. 

    For commercial lease agreements, the duty for 60 months would be 0.4% of the property value. The maximum stamp duty payable now for commercial premises is Rs 50,000 for 60 months and Rs 25,000 for 60 months for residential ones. 

The govt will earn 

1,000cr a year, but at what cost? 

• A bank or an MNC that has signed a leave-and-licence agreement for one lakh sq ft for 60 months in BKC will now have to pay Rs 80 lakh as stamp duty. Currently, the maximum stamp duty payable is Rs 50,000 

• An individual renting a flat in Nariman Point for 36 months will have to pay Rs 41,000 as stamp duty. If the agreement is for 60 months, he will have to shell out Rs 82,000 against the prevailing maximum stamp duty of Rs 25,000 High rates will make stamp duty dearer 

    If the proposal to amend the Maharashtra Stamp Act, 1958—which is likely to be tabled in the state legislature soon—is accepted, it is bound to have an impact on the city's already sluggish commercial market. 

    For individual leases between 36 and 60 months, the rate proposed is 0.2% of the market value of the residential property or 2% of the premium, plus average annual rent paid (whichever is higher). For commercial leases, the proposed duty is 0.4% of the market value of the property. So a bank or corporate entity that has signed a leave and licence agreement for one lakh sq ft for 60 months in the BKC would have to fork out Rs 80 lakh on the property valued at Rs 200 crore. Similar is the case with residential premises. An individual will have to pay Rs 41,000 as stamp duty for a Rs 4 crore flat taken on leave and licence for 36 months at Nariman Point. If the agreement is for 60 months, the lessee will have to shell out Rs 82,000. Pranay Vakil, chairman of Knight Frank, says on the face of it the impact of the hike seems tremendous as property rates in the city are high. Of the state's total tax collection, nearly 60% comes from VAT and 20% from stamp duty. The balance 20% is mobilized from state excise tax, electricity duty and vehicle tax. The government hopes to mobilize at least Rs 1,000 crore annually from its proposed revision.

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‘Property Registrations in Mumbai Fall 11% in Feb’

Small discounts fail to work; buyers hold back on hopes of rate cuts

Property registrations in Mumbai fell 11% year on year in February, as consumers continued to shy away from buying homes and offices. However, developers can draw some relief from the fact that the absolute number of registrations rose to 4,203, which is relatively higher than the bottom of 4,060 witnessed in November 2011. 

Property sales dipped 19% in the island part of Mumbai, while suburbs saw the number fall 9% from a year ago, according to a report by the broking firm Prabhudas Lilladher. In the month, the number of lease transactions grew to 8,515, up 6% from a year ago. However, no offer or incentive scheme seems to be working as outright sales numbers remain weak. Market experts expect this to improve with new launches starting around Gudi Padwa — considered an auspicious time for new purchases — later this week. 
Developers are also pinning their hopes on new launches and are expecting a revival in sales volume on hopes of interest rate cuts by the Reserve Bank of India soon. But many of them are not sure if anything other than a price cut will work. 
"Sales volume has been falling for over a year and a half now, it's scary. It clearly indicates that developers will have to cut prices across the board now, and announce it than making it customer specific," said Ramesh Nair, managing director - west, Jones Lang LaSalle India. 
Although some prospective home buyers are waiting for an interest rate cut, price correction will be the most feasible factor that will attract customers, he said. However, developers do not seem to be convinced that prices can be reduced now. "Given the various proposals in the Union Budget, construction cost will go up by 5%. Apart from this, there is the additional burden of service tax, all of which will be passed on to the consumer. Not much of supply is also likely to hit the market as approvals from various committees and departments are still taking time," said Sunil Mantri, chairman, Real Estate Committee of Indian Merchants Chamber. 
Following the clarity emerging on amended development control rules in January, new launches have started gaining the momentum. However, most developers are in the process of submitting revised project plans to the civic authority to take advantage of new fungible floor space index. This may affect execution at these projects for some time as approvals under new DCR would take at least three months, acting as a further dampener on sales, said Kejal Mehta, real estate analyst at Prabhudas Lilladher. 
Developers have almost failed to attract home buyers in Mumbai, the country's biggest property market, with marginal price discounts and other incentives as they are deferring their decision to buy property in the anticipation of an interest rate cut. In January, property registrations had declined 13% from a year ago to around 4,427 in Mumbai, after witnessing a spike in December to 5,900, led by higher transactions in the secondary market. 
kailash.babar@timesgroup.com 

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Free Housing on Mill Land: CM Forms Panel

While making it clear that free housing for mill workers on mill land in Mumbai will not be possible, Maharashtra CM Prithviraj Chavan announced setting up of a special committee to sort out the issue of providing subsidised housing to mill workers through MHADA on land where mills have shut down. The panel has been asked to prepare its first report within seven days." 

Making a statement on the issue in the Maharashtra legislative council, Chavan said, "The state government had brought in a formula in 2006 for 58 mills which have shut down to utilise their land. According to the formula, 33% of the land was to be handed over to BMC, 33% to mill owners and the remaining 33% to MHADA for affordable housing. MHADA has taken possession of 9.12 hectares of land at 25 mills so far." 
On Tuesday, opposition parties took out a rally in support of mill workers at Azad Maidan. The government has calculated the average cost of each flat in this scheme to be close to . 8.50 lakh.

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State govt nod for 2 parking FSI projects

Bldrs To Fork Out 150cr For Construction Mumbai: The state governmenthasclearedtwo public parking projects in Mulund and Worli under its parking floor space index (FSI) policy and will earn nearly Rs 150 crore as premium from builders developing them.      The policy stipulates that a developer who builds a public parking lot on a part of his land and surrenders it free of cost to the BMC, will receive additional construction rights as compensation on the remaining portion.      Allegations of graft were levelled at the policy, which was introduced in 2008, forcing chief minister Prithviraj Chavan to scrap it in 2011. New guidelines formulated by BMC chief Subodh Kumar levied a premium on builders opting for the scheme. Last month, the state government sanctioned Runwal Group's proposal to build a parking lot spread over one million sq ft in Mulund. The land is part of a 20-acre plot where the builder is setting up a residential complex. The amenity will have ground and two underground basements. As compensation Runwal will receive an FSI of 3 for constructing the facility free of cost for the civic body. The builder will also pay a premium of Rs 40 crore, which will be shared equally by the state government and the BMC.      "The parking lot will have a separate entry and exit from the residential complex," said group director Subodh Runwal.      The state government and the BMC will earn Rs 108 crore as premium fromdeveloper K Raheja Corp, whose plan was cleared sometime ago. Raheja will build the public amenity on a portion of its two-acre property in Worli. Late last year, the BMC withdrew the initial permission to 10 of the 15 developers and asked them to submit their proposals under the amended policy framed by Kumar.      The new policy devalued the price of their lands by 30% to 40% because thesedeveloperswereentitledtohefty building concessions under the original policy. The original policy allowed developers to build public parking towers as high as 15 to 20 storeys. In return,thebuilder received a bonanza in the form of additional FSI.      Using the extra FSI, some builders who benefited, announced plans to build luxury skyscrapers. Activists slammed the policy saying it would benefit builders under the guise of providing public parking.  On The Cards  • Runwal Group's proposal to build a parking lot for 1,700 vehicles in Mulund • K Raheja Corp's parking lot for 800 vehicles in Worli

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Now, BMC pushes TDR in island city

Mumbai: A BMC proposal seeks to completely overhaul the transfer of development rights (TDR) policy to make it more equitable, in a move that is expected to have far-reaching repercussions on the city's development plan. 

    In his plan which is to be submitted to the state government soon, BMC chief Subodh Kumar has proposed that TDR be allowed anywhere in the city, not be restricted to the suburbs. Its selective use in highend areas of the western suburbs has led to lopsided development, especially in the Bandra-Khar-Juhu belt. 
    A construction boom due to TDR in these localities has put a severe strain on the civic infrastructure, with towers rising on narrow roads with inadequate parking.
PLOTTING A CHANGE 

• Plan says TDR must not be restricted to suburbs. Move to check lopsided development and quicken land acquisition for public welfare 

• Owners to get 1.3 times the plot potential as TDR 

• Non-cessed buildings in island city to get extra 1.33 FSI as TDR 

• Ready reckoner rates of area to determine TDR Activists may oppose new TDR proposal 
Mumbai: With construction boom in some parts of the city putting a strain on infrastructure in those areas, civic commissioner Subodh Kumar is keen to put an end to this "serious distortion" that has been going on for two decades. 
    TDR, introduced in 1991, is a compensation given to private land owners whose properties are reserved by the BMC for public amenities like parks and playgrounds. The owner receives equivalent construction rights which can be used anywhere north of the plot he has surrendered. However, most land owners with high-value properties in the island city were reluctant to hand over their lands because the TDR value in the suburbs was not lucrative enough. As a result, the BMC failed to acquire such amenity plots and the policy faltered. On the other hand, builders redeveloping slum pockets in low-value localities (Mankhurd--Trombay for instance) made obscene profits by using the TDR entitled to them in premium areas like Bandra, Khar and Juhu. 
    The BMC has now proposed that land owners be offered 1.3 times the plot potential as TDR. "This will ensure that compensation is in line with the actual market value, or marginally less or more…the development plan will get implemented speedily without financial cost to the BMC and land acquisition will not be long-drawn,'' the corporation's proposal said. 
    Kumar refused to comment on the new policy, but a developer who has procured a copy of the proposal told TOI, "The new policy may help improve availability of open spaces and reduce discrepancies in the TDR business." However, the proposal is likely to be opposed by urban experts and activists, who fear that allowing TDR in the island city will aggravate the problem. 
    But Kumar's plan says TDR should be generated and consumed uniformly across the city, "reversing imbalanced development in the suburbs". It has recommended that non-cessed buildings in the island city—currently allowed a floor space index (FSI) of just 1.33 during redevelopment, be sanctioned another 1.33 as TDR, taking the total FSI to 2.66. However, cessed buildings, most of which were built more than 70 years ago, today receive virtually unlimitedFSI when they are redeveloped. The commissioner has suggested that FSI up to 4 be allowed on such plots. "The balance, if any, shall be given in the form of TDR'' which can be utilized at another place. "The new policy will take into account relative values of the stamp duty ready reckoner from the area where TDR is generated, the place where it is used and the year in which it is utilized,'' it says. The TDR value will now be linked to the place where it is generated.

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