“I tell people to not use the RERA Act to walk out of the project. RERA Act is there to give you a home. A completed home.” - Gautam Chatterjee, MahaRERA Chairman
Maharashtra has been at the forefront in implementing the Real Estate (Regulation and Development) Act (RERA) and MahaRERA has seen the maximum registration of housing projects across the country. In an effort to understand the challenges faced by MahaRERA officials and also understand whether implementation of the act has helped consumers, Moneylife interviewed MahaRERA’s chariman Gautam Chatterjee.
 
ML: Could you tell us a little bit about how MahaRERA was set up in Mumbai and Maharashtra? After all, this is one of the most complex cities in India? What were your thoughts about how to make it work. 
Gautam Chatterjee (GC): Well, the advantage we had was that Maharashtra had the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA), although it was not very effective due to problems in implementation. There were several amendments to the Act, including the concept of ‘deemed conveyance’, which was brought in to deal with the delay in effecting conveyance; it needed to be sorted out with better implementation. I had dealt with these issues because of my association with this sector in various capacities in those times. When we are dealing with this subject in the State the Central government too was toying with the idea of bringing in a Central regulation to deal with this sector. Maharashtra had already taken strides in having this legislation to regulate the sector, the subject being in the concurrent list. 
 
If you go back to the fine print of that state legislation, you will see it was almost similar to the new Central RERA legislation. However, Maharashtra had kept out public sector entities like the Maharashtra Housing and Area Development Authority (MHADA) and the City and Industrial Development Corporation of Maharashtra (CIDCO) out of the ambit, because we felt that if there were issues related to these entities, they could be dealt with by the state. 
 
However, if you look at the other ingredients of what is there in the new RERA legislation, and the Maharashtra Housing Regulation Act of 2011-12 and MOFA of 1963, you will see there is 80%-90% commonality. The Maharashtra Housing Regulation Act was on the verge of receiving Presidential assent, but since the Central RERA legislation was brought in, it was decided to repeal the state Act. 
 
I had the advantage of being part of the thinking process of bringing in a regulation for this unregulated and very problematic sector.  So we had the clarity on what we are trying to achieve through the legislation.  In sum, it was to address all the problems faced by stakeholders and find a solution to them. 
 
So, what were the main problems? 
 

Information Asymmetry: 

The first was information asymmetry. Any home-buyer faced the problem of having no access to information while buying a home. If you go back to the fine print of MOFA, we were clear that I must know what I was buying into and have every single detail, when I am putting my life savings into it. That was simply not available. 
 
How did we tackle this? MoFA merely said that developers should give all information, indicate completion date, sign the agreement in a certain manner, etc. But we had no answer about what to do if the developer did not comply. 
 
By the time we came to RERA and MahaRERA, we had the benefit of information & communication technology (ICT).  It told us how to use ICT to put out information in the public domain. So transparency through ‘mandatory disclosures’ was adopted, putting the onus on the developer to put all mandatory details in the public domain. A developer could be held for non-compliance for failing to comply with what is ‘mandatory’.
 
The Securities Exchange Board of India (SEBI) had already adopted disclosure-based regulation. So we opted for transparency through adequate and complete disclosure, to tackle information asymmetry. 
 
Project Completion by Tackling Obstacles:
The second problem was that getting my house/flat was a never-ending process and I as a buyer had no certainty about when it would be constructed and delivered to me. So the aspect of registration was brought in to bring it under the ambit of this Authority. The main objective of  registration was to ensure completion. We brought this aspect to the attention of all the promoters—we said, it will not be a 'license' that you are seeking when you are applying for registration, so that I use every restrictive parameter to decide whether you are eligible for a registration and thereafter use the same to punish you for not abiding with the so called conditions of the 'license'. I am doing it in your interest as well, because once a project is registered, the regulator is also part of the process of looking at how it will be completed. The regulator will assist in tackling every obstacle in your path and all stakeholders who try to delay or play spoilsport will be dealt with. 
 
Since we had this thinking and clarity, we have over 21,500 projects registered in Maharashtra alone, against 19,000 projects registered across the country. This happened because we do not waste time in sending out piece-meal queries questioning developers who have applied for registration of their project, which has necessary building plan approvals from the competent planning authority. We ensure through our robust software that mandatory disclosures required as part of the online registration process, are put out in public domain through the registration web-page of the registered project—without it, the software would not allow the application to be filed in. So the software ensures all fields are completed, but the onus is on the developer to ensure correct and complete disclosures. Once that is done, the information is available in the public domain for all and sundry to see and raise questions, through on-line complaints, if there is incomplete or false information. 
 
We have had complaints about these as well and we have also passed orders on such complaints. That was in fact the objective. 
 
We were also able to convince developers that all ongoing projects, which are incomplete, should be brought under the ambit of MahaRERA to see what are the obstacles there and how do we remove them and complete the project. So, out of over 21,500 registered projects of MahaRERA (which translate to 2.15 million homes) as many as 13,000 projects are of the past – legacy projects which should have been completed but had not. There was a time over-run in as many as 8,000 projects. Both the Parliament and the Hon’ble Bombay High Court wanted these incomplete projects to be brought under the legislation, since ‘incompleteness’ is something we are trying to tackle by ensuring project completion. Interestingly, a majority of such projects were included only in Maharashtra. 
 
Getting a large number of projects registered is good, but it is also a major challenge how to ensure that these projects are completed in the next three years. I will come to that later. 
 
Trust Deficit: 
A third challenge is the huge trust deficit between a buyer and seller. When you are buying a home, with your life savings, it is a very uncomfortable situation that you don't have full and accurate information and are uncertain about when it will be delivered and I tremendously mistrust the person from whom I am buying. How do we deal with this?
 
We decided that when complaints come to us, the first effort must be to make the two sides sit face to face and talk transparently and find a way out. I’m happy, that of the 8000 odd complaints that have come to us, a majority have been cases where the two sides did talk and understood one another’s perspective and said, ‘give us time we will resolve things ourselves’. I think this is the correct way to go about. 
 
About 60% of the complaints were resolved through dialogue and 10% were not happy with our decisions and are in the Appellate Tribunal.
 
We are in the process of setting up Self-regulatory organization (SRO) of developers because developers and promoters need to be professional in their approach as well as compliant with the provisions of RERA, unlike in the past when anyone could become a developer overnight. We felt that industry organisations like National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) and others would have to work beyond what they were doing until now, which was largely to lobby the government for concessions. 
 
We said, you now need to focus on how all the players in the sector behave in a professional and compliant matter.
 
We created a conciliation forum, which was enabled under the Act. The Act provides for the developers’ forum and the consumers forum could come together to form a conciliation forum to resolve disputes. We have the Mumbai Grahak Panchayat (MGP) which was very active, and agreed to participate in the conciliation process. Today, over 1,000 people have taken the conciliation route to resolve their issues. In Pune, the success rate of the conciliation forum is 90%. So I would say, it is a matter of time the entire industry becomes cleaner and more professional and ethical. The worst period is now; it is the effort of getting a large and unregulated sector, which has a big contribution to the GDP to become professional. That is a very painful transition and I am suffering from the challenge of achieving this. 
 
ML: Do you think there’s an added pain today because the realty industry got a lot of money after 2008 (the global crisis), which allowed them to hold on to projects and keep prices high.  It is probably why projects such as Amrapali, Jaypee, Unitech, and DS Kulkarni and many others are in serious financial trouble. 
GC: Financial problems are a different matter. Suppose the project has run into rough weather, there is a time overrun and debt servicing makes the cost shoot up, making all calculations go haywire. In this situation, if you have a regulator in place who says that you must deliver all projects in time and at the same time the Act allows you to walk out of the project with interest and compensation especially when prices have fallen, then it creates different challenges. People, sometimes are advised to adopt this route and walk out, in the hope they may even be able to buy back the same apartment in the project later, at a lower price. 
 
In fact, there are multiple challenges today. For instance, if 50% of the buyers have committed to a higher price and the cost of the remaining 50% is likely to drop due to the market situation, then those who are already in, may wonder why should they pay more. They may want to encash and go and buy a cheaper flat somewhere else, or may be in the same project. If half the number of unsold apartments in the project are mortgaged to a financial institution, it has other challenges since the financier will wonder what happens if prices fall even more. Here too, the challenge for the developer is to find ways to complete the project and raise funds to ensure it. Today, there is a serious problem of liquidity and with 48%-50% of unsold units, the situation is just not sustainable. Unless these stocks are sold out, money will not come in and the situation won’t improve. It is a huge challenge we are facing. 
 
ML: Sir, many states have been given the power to dilute the RERA Act. Do you feel this is wrong? Do you feel this is happening in various states?
GC: The Act has not been diluted. The states have the power to enact subordinate legislation; but the rules and regulations under that legislation have to be in line with the parent Act, they cannot go beyond it. If it has happened and some states have gone beyond the parent Act, then that needs to be challenged in court or by going to the state. 
 
In some states where an ongoing project has been defined, there was some apprehension about whether to include it or not. There has to be clarity on this and if you explain this to every developer, why will they not want to be a part of the legislation. It is not in anyone’s interest to keep projects out of the ambit of RERA. 
 
ML: Could you give us some examples of how MahaRERA has helped in completion of projects? 
GC: We have had a case where a person has come to us and said my project is complete, I have applied for the occupation certificate (OC), but I am not getting it. My colleague, member of MahaRERA, issued a notice to the concerned officer, who was supposed to issue the OC; on the day of the hearing, the person came and handed over the OC. 
 

The Act has restricted our powers to issue directions only to builders, real estate agents and home-buyers. We have told the ministry that we should also be given the power to issue directions to all stakeholders by extending Section 37 to cover all stakeholders. The Act has given us powers under the civil code to summon anybody and that is what we use. Like the case above, we issued a summons asking the official to come and explain why the OC was not issued and he acted. 

 
In another case that I handled, the officer was sitting on clearances in the Vasai-Virar area and was not taking a decision. We asked him to come and explain. He came and explained the issue. It turned out that a larger player who was the developer of the larger layout was involved. We called him also. I am happy to say that in the past three months, the OCs have started being issued. 
 
But these are relatively simple. A major problem that is coming up is how to resolve projects that have become stalled, stressed and sick.  In this case, provisions of many other Acts are conflicting with RERA and making a solution difficult. In the DS Kulkarni case, we were dealing with the issue when the state government, under the Maharashtra Protection of Interest of Depositors (MPID) Act, attached all the properties of DS Kulkarni (DSK). 
 
Now RERA is a brilliant Act and under Sections 7 and 8 there are provisions where we could bring various stakeholders, including banks/financiers together to find a solution. We were in the process of doing that. We looked at the DSK project and it was 80% complete, we found out the cost of completing the remaining 20%. Suppose it is Rs15 crore-Rs20 crore and out of this, existing buyers are expected to bring in another Rs7 crore (their remaining payment). Now suppose the unsold flats are mortgaged to say, ICICI Bank. We talked to the Bank and told them, you put in Rs13 crore and let us work towards completion of the project. An unfinished flat is of zero value. A finished flat has value for all stakeholders. 
 
Even if there was a gap, say of Rs1 crore, people agreed to pay, because eventually the project was getting completed and the extra cost incurred will remain as a charge on the original developer. So our effort is to get the project completed, by bringing in liquidity. 
 
ML: So, what is happening with issues like the conflict with MPID? 
GC: I have written to the chief minister. I have said, DSK has more than 250 properties, of which 20 are registered with MahaRERA. Take the 20 out of the purview of Economic Offences Wing (EOW), and allow us to deal with them, because MahaRERA is the regulator. So this is about MPID, then you have the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) and Insolvency and Bankruptcy Code (IBC) Acts, which also conflict with RERA.
 
I personally feel that when you have created an Act, specifically for the realty sector, you should allow it to deal with it. There is the stand that SEBI has taken. In a matter, which has gone to the IBC, SEBI has gone to the Supreme Court saying that I am the specific authority for financial matters and if it is a financial issue, I alone must deal with it. 
 
ML: So, are you doing this as well? 
GC: I have apprised the state government. MahaRERA is not a National body like SEBI, we are only a state regulator. 
 
ML: In a conflict between SARFAESI and NCLT, how would you personally like to handle it?  Would you like to decide it first?
GC: I had once suggested to the member of NCLT, Mumbai that if anyone approaches NCLT, and if you admit it, Section 14 moratorium applies. Before you admit the matter, please find out if is related to a RERA-registered project. If yes, I think you should refer it to RERA and take his view on it. Is he dealing with complaints in that project; has he already made strides in completing the project; therefore, give him some reasonable time to deal with it. It he is able to find a solution and come back to you with a specific proposal, then allow it to be resolved by MahaRERA.
 
Our resolution is not liquidation, but how to activate things so that the same home-buyers get their home. The IBC regulation treats a home-buyer as a creditor, so he might have to take a sharp haircut. As a homebuyer, if I have paid Rs60 lakh, but as a creditor I get only 40% like a financial institution then imaging the plight. Also, once the project is liquidated or acquired, I will again have to deal with a new developer, who may charge me Rs2 crore for the same flat for which I have already paid Rs60 lakh. That is not a correct solution. I believe it should be done in this matter, but can be handled in the manner I have suggested. 
 
But the SARFAESI Act has other issues and banks were (until the recent change in the RBI circular) compelled to initiate action. I strongly feel that having created a real estate regulator, let him treat that registered project as his child, and ask him to sort out the problems that the child has. 
 
ML: So at least in Maharashtra you are taking it up and are probably watching what is happening in the Supreme Court (with Aamrapali, Jaypee, Unitech etc). They have been treated as operational creditors, but a solution is still elusive. How would you help those buyers, if it was left to you?
GC: Ultimately, the point there is that many of the large developers have collected money from homebuyers and financiers and diverted it. So there is a big mismatch between the amount required to complete the project, and the amount coming in from stakeholders. Someone will have to chip in to fill that gap. If there is a huge misappropriation, or diversion of funds, the gap is huge. Fortunately, since we had the MOFA in Maharashtra, it is only in very rare cases that you will have such a large gap.
 
Even in case of DS Kulkarni, if I go into the 20-odd projects registered with me, there is no such great mismatch. The amount of money the homebuyers have paid, is commensurate to the work done on site. Those who have gone to MPID are investors, who invested in fixed deposits of the company and have not got their money. When it comes to home buyers, the construction is commensurate with the money they have paid and in most cases we think the projects can be completed with the money that buyers are to put in and by selling the remaining flats.
 
ML: Would you tell us what role RERA will play in affordable housing, which was a very important mention in the Budget this time. 
GC: RERA is playing the role of regulator in the sector, by telling anyone who is taking a project that you have to make commitments upfront and abide by them. Failure to comply has serious consequences. They must design and offer products for which there are takers. Most new projects today are one/two bedroom-hall-kitchen(BHK) projects. In fact, of the 7,500 to 8,000 new projects that are registered under RERA, 70% of them are 1BHK apartments.
 
There is a dovetailing of the types of homes being built and that can be linked with the Pradhan Mantri Awas Yojana  (PMAY), and some interest subvention might be provided. But, the fact remains that there is no clear cut matching of the number of persons in a particular location who are eligible for the PMAY scheme, to ensure that only that many apartments get constructed in the projects, which are commensurate to the demand in the said location. I feel there are too many new launches and there is mismatch even in the affordable sector.
 

The question is: At what stage should a developer know that his launch of a new project is moving in the right direction? I believe it is best when the promoter gets 30% booking within three months of the launch, 50% as soon as the plinth is completed and by the time the superstructure is in place, bookings have reached a healthy 75%. That is the best scenario and you will be able to complete the project with the money you have raised from your home buyers, without requiring any bridge finance.
 
It that doesn't happen, you need bridge finance, especially when buyers feel they would rather wait until the project is completed or has progressed substantially. But it is not always so; when RERA is part of the project, it will get built in time because there is regulatory oversight. Unfortunately, unsold inventory in the state still remains very high and needs to come down. The cost of institutional finance is also too much. If you take institutional money and complete the project, it does not help. 
 
ML: With the whole NBFC panic, and liquidity crisis, how do you see that being resolved? 
GC: I sincerely feel and would like that it should be resolved soon. Sixty per cent of the money in home loan and construction loans was coming from NBFCs and the banks were happily giving money to the NBFCs. The NBFCs are today not getting the money, so sanctioned home loans are not getting disbursed. It is a major problem. So if the NBFCs are not in a position to disburse, RBI may need to ask the banks to disburse home/construction loans directly. Money has to be given to under construction projects, because if you have a situation where he homebuyer is delaying his buying decision, the problem of huge amount of unsold inventory in under construction projects will never get resolved. If you don’t have the bridge finance coming, how do projects get completed? 
 
ML: Before we go to the next section, do you have the infrastructure to deal with all the cases that are coming up before MahaRERA? Or do you feel you need bigger infrastructure?
GC: The most problematic cases that are coming up now are under Sections 7 & 8. Here, the process under Section 7/8 gets initiated when the association of allottees feel that the developer does not seem to be the right person to take the project towards completion. We have issued detailed orders/instructions on this which are available on our MahaRERA website. We have also tried to use the conciliation forum as our extended arm.
 
Out of the 15 conciliation benches we have, we have shortlisted four or five, who would deal with Section 7/8 matters and help the association of allottees to arrive at a blueprint on how the project can get completed. We are now at the threshold of this process. Over the coming six months to one year, we would also learn how it is progressing. But, in the middle of this, if someone goes to MPID, Sarfaesi or IBC the project completion under the provisions of RERA will get stalled and may not take us to the logical conclusion. 
 
ML: When it comes to conciliation, we have seen some instances where terms agreed to under conciliation are not complied with. What happens then? 
GC: If the terms are not complied with, the aggrieved party files online complaint with MahaRERA. When the matter comes before us, we call both parties and find out what went wrong and then pass a reasoned order, taking due cognisance of the non-compliance. 
 
But, though we ensure protection of the interest of the consumers, we are not a consumer court when dealing with individual complaints. The problem is that the representative who appears on behalf of the home-buyer complainant believes that the redressal of the grievance means that this MahaRERA forum must award getting money in the form of interest/compensation to be given out of the project fund – either he should be allowed to walk out of the project with interest and compensation or if wishes to continue in the unfinished project and there is a delay, give interest for delay.
 
If you look upon MahaRERA as an ATM machine, then I’m afraid, you are not understanding the Act. We created this Act and brought unfinished projects under its ambit in order to ensure project completion, so that home-buyers get their completed apartments. The Act itself allowed extension of the completion timelines for ongoing projects and creation of a ring-fenced fund (RERA account) and monitoring of the fund to ensure project completion; that is what is the essence of this Act. 
 

Suppose you have a housing project and two people are not satisfied with it and wants to walk out, where will the money come from in stressed times? It can only come from the ring-fenced fund, which is meant to complete the project. So should the money go to the two dissatisfied persons who want to walk out or the 200 people who have invested their life savings and are waiting for the project to be completed? This is a point I continuously keep on debating and explaining to aggrieved home buyers; most of the times they do understand. 

 

ML: So what happens in these cases? 

GC: Well, over 200 of MahaRERA orders have remained unexecuted! And the media is after me saying, “Oh! Toothless MahaRERA!”  But these 200 are out of the 5,000 orders that MahaRERA has passed. If I have to put the interests of these 200 who want to walk out of a project, against the interest of the 4,000 who want projects to be completed, I will say let the latter, i.e., the association of allottees decide the correct course of action.
 
In a case referred to the Collector for non-execution of MahaRERA orders, the Collector wanted to implement MahaRERA order for non-execution through the Maharashtra Land Revenue Code – do you know what happened? It became like a Jet Airways crisis situation. The tehsildar put a lock on the project. 200 workers who were working on the project were now out of work, another 200 home buyers who were hoping to get homes after the project was completed do not know what will be their fate and who will now complete the project.
 
Only a handful of vocal people who wanted to walk out of the project, got orders of MahaRERA awarding them their refund with compensation and interest, and when did not get their orders executed they went to the media and called us toothless. I am afraid, only their voices are being heard by the media, not the voices of the other 200 who are in greater distress and want their homes completed. 
 
I will tell you what happened thereafter. The 200 affected home buyers came to us and asked why the project was stopped. We asked them to prevail upon this smaller group of homebuyers and make them agree to remain associated with the project and enable restart of the project construction work. It is in the interest of all the buyers that the project gets completed. If you don’t want to continue with the apartment, first get your home completed and then sell it off. At this juncture, if the project goes into insolvency and is auctioned off, there is no value that incomplete homes will fetch. It will only be a haircut for all the home-buyers. This clarity has to be brought in. 
 
ML: Completion is the primary aim of the Act?
GC: Absolutely. I am very clear there that any case that I take up, I must check whether the decision MahaRERA takes would adversely affect the project. There I am sometimes criticised that I am pro-builder, but I am very clear and I know that I am actually pro-project-completion. I am doing it in the interest of all the buyers in the project. Anyone who comes here with a complaint feels that I am a consumer, and I must get an order in my favour. When that doesn't happen, they have every reason to complain and often they vent their ire in the media or social media. But this is the reality of this realty sector that I am dealing with and the pain that I have to go through, practically daily. 
 
ML: Suppose there are cases where there is a structural flaw in the building that a developer is hiding, or there is a problem with construction quality, then wouldn’t they be justified in wanting to walk out and safeguard their interest? Completion may not be relevant to them. 
GC: Without casting any aspersion on the person who wants to walk out, I would say, if he has booked a flat when its cost was Rs10 crore and wants to walk out today when it is come down to say Rs7 crore, I would first assume that he/she is looking for some reason or excuse to walk out.
 
Having said that, if the reasons cited are genuine, we will go to the root of the problem and resolve it; the Act provides for it, the developer cannot get away. It provides for an architect/ structural engineer to actually say that everything is in accordance with the approvals and after completion, for a competent planning authority to issue an occupancy certificate saying everything is as per plan. Additionally, there is a five-year defect liability period covering structural defects, workmanship defects and defect in services, from the date of taking possession. Compensation can be sought for violations in the defect liability period. If, in spite of all this, you ignore all of it, I may have doubts about your real reason for walking out of the project. 
 
ML: We noticed that no state RERA has a requirement for a quality of construction certificate. Why would this be? Websites, such as Magicbricks, however, have created a rating system on the basis of material used. Can MahaRERA do this? 
GC: MahaRERA has. You may not be up-to-date. All projects registered after 1 December 2018, onwards, are supposed to file form 2A, every quarter. An engineer has to certify whether various input materials conform to the industry standards or not. This is specific to MahaRERA only and it has been made applicable prospectively.
 
I cannot have a star rating system like that. Who will decide what is 4-star or 5-star? In the Act, there is an enabling provision of grading of projects. But that will happen only later, in due course. Today, all I can do is ensure that projects registered with MahaRERA should use quality material and someone should be held accountable for that. That’s what we have done. A skilling initiative to train all workmen associated with MahaRERA registered projects has also been initiated, which will add to the quality of work.
 

So all the projects registered from 1st December 2018, are quarterly filing Form 2A for quality. This would ensure that in future when some complaint regarding defect in quality comes up, we can hold the site engineer/structural engineer accountable. After all, accountability is one of the pillars of RERA.
 
ML: Does MahaRERA intend to verify the quality of projects constructed?
GC: Again, it is an issue of perspective and understanding what RERA is about. The whole idea of RERA is not to do micromanagement. If you want RERA to be implemented like that, I’m afraid that you will only create another mammoth body which will then be prone to rent-seeking behavior. Please be very clear what you want. This whole sector is known for rent-seeking behaviour. So if you create this body consisting of a large number of personnel who will go into verification and certification and micro-management, that is precisely what may happen. 
 
ML: Do you have a lot of complaints about agreements that are not in consonance with the model agreement prescribed by RERA? For instance, additional clauses being introduced by builders that are against the consumers’ interest? 
GC: Not many. There have been a few such cases, and we have passed orders in this regard too and we have asked for such clauses to be deleted or disregarded. We have also found several instances where agents have filed wrong information inadvertently, or sometimes deliberately. When this comes to our notice we correct it, and/or punish them. We have passed orders when people have not disclosed litigation or put incorrect information.
 
MahaRERA usually does not take suo motu action. Though in some serious cases, we have taken up matters suo motu, because the Act provides for it. If we use the suo motu option as the default option, that will require us to change from a 40-person organisation to a 400-person organisation. But, MahaRERA wanted minimum government, maximum governance. The whole idea was to put all information in the public domain, remove information asymmetry, so that anyone who is aggrieved can file an online complaint and MahaRERA shall then take action. 
 
ML: Do you believe that the increased number of members would also help? 
GC: It may not. The present composition of Chairman, two members and three adjudicating officer are effectively dealing with the complaints filed with MahaRERA.
 
ML: What would be your method of conveying this to people? I’ve seen a lot of advocates appearing before you who probably need to understand that the larger public interest must be first. 
GC: They are understanding this the hard way. Earlier, when I told advocates, don’t look the resolution of the complaint through the prism of your client only, but from the perspective of the project completion, they said, “my client doesn’t want to listen.” In one case I had to say, I want to talk to the client directly and explain the project perspective. This is not a court, it is a quasi-judicial body, so I can do this. In a few cases, I could convince the complainants by explaining to them.
 

MahaRERA, today has over 200 unexecuted orders, where the persons who wanted to walk out are left in the lurch—they are not accepted in the association of allottees who are attempting completion of the project under provisions of section 7/8 of the Act, and the money owed to them by the developer only sits as a charge on the developer, who probably is not in a position to pay them immediately.  So they are left in the lurch. I tell people to not use the RERA Act to walk out of the project. RERA Act is there to give you a home. A completed home.
 

If the developer is not completing the project we have powers under section 7, 8, 7(3), where we can bring in the association of allottees into the decision making process and find a way to complete unfinished projects. MahaRERA will stand with the buyers, help them put in place a blueprint to ensure that the project is completed. Now we are attempting that. I hope that in the next one year it happens. Certainly, it will. 

 
ML: Stamp duty is still on built-up area, while RERA requires everything on carpet area. 
GC: I am the wrong person to ask this. As far as RERA is concerned, everything is on carpet area. It is up to the state government to do this and convert the calculation of duty on carpet area. It is as simple as that. Today, there is no question of built-up and super built-up, everything is on carpet area—so duty should also be on the same basis. It is as simple as that. 
 
ML: What are the issues that still need to be addressed in the realty industry?
GC: The state government has to address the cleanliness of the land records. There is a land titles Bill in the offing, it needs to happen. You see, no insurance can tackle that problem if there are risks involved in the land title itself. The government, which is a land record holder, cannot say that they keep a record of presumptive title. It must say, it is a definitive title and certify this on the digital land record, along with charges on it. 
 
ML: Apart from land titles, is there anything else that you think the government needs to do to make the sector clean? 
GC: Other thing is that as cities grow old, we have issues of redevelopment. New homes are not the only homes coming up. New homes also come up through brownfield projects. So we have a large number of slum redevelopment, cessed building redevelopment, society redevelopment, MHADA’s 105 old colonies that are being redeveloped. Now whenever redevelopment has taken place, Maharashtra has said that it would take place with a certain amount of cross-subsidy of extra FSI.
 
The Act requires the sale portion of the project being the only part to be mandatorily registered. I believe that there are many redevelopment projects in the city that are languishing; people have given up their properties and have been moved out, but have stopped getting rent from the developer after the building has been demolished. This is a problem and I have told the government, that the rehabilitation portion of the project should also be part of RERA. I have talked to the government about this.
 
ML: Tell us how. 
GC: The Maharashtra government has defined, in its rules what should be a phase in which you should register a project. It has also defined what is redevelopment project. The Act and the rules allow phase wise development—a phase can be a few floors or a separate wing. These phases can also get a part OC, even as the remaining construction goes on. So, the Act and rules allows breaking a project into phases. However, we have suggested that in redevelopment projects, as defined in the rules, a phase should include both rehab and free sale. This itself will make a big difference.
 
 
 
 
 
 
 
  • Like this story? Get our top stories by email.

    User

    COMMENTS

    MOHAMMED ASLAM ANSARI

    5 days ago

    I have a very bad experience from Mr. Chatterjee. Without giving me a chance to explain my case he declared the judgement against me. The hearing lasted for less than two minutes. He didn't see that I refused to sign on MOFA agreement because I was demanding RERA agreement from the builder. If documents are not inspected for judgement then why sets of documents are asked to be submitted? The builder has taken the advantage and yet to pay back my hard earned money.

    Garima Kushwaha

    3 weeks ago

    My builder stopped working on the project. I took home loan and paid full amount.I filed case in maharera 1 year back still no conclusion. Builder also sold projects amenity space land to some other third party. Builder also keep on selling remaining plots but not updating any details on rera website.Maharera is of no use. Judge S B Bhale in pune not even asked once to builder about why he is not working on project. Builder not adhering to any rules and responsibilities as per rera law. The worst part is now he has got 1 year extension God knows on what basic. Project registered in maharera in 2017 and till date not even 10 percent completion. Builders website not working , their sales office closed, not receiving buyer calls, not replying messages. Builder also mortgaged some of plots to Andhra Bank and also sold them to the buyers.

    Sudhir Marathe

    3 weeks ago

    I noticed the different case, well-known developer launched project in 2015 and more than 200 booked the flats . Within two months project declared illegal , on assurance CC will come people wait for more than 1and half year. And assurance from developer cancellation letters were accepted by developers on mail .And refused to pay refund.
    When ReRa cane into force ,15days before implementation developers paid small amount as refund. For more one year people followed for refund.people filed in ReRA but ReRa argued and rejected consumer saying it is case before ReRa came into force.In few cases ReRa settled in few cases ReRa refused there is different judgements for same case. There is no choice to consumer , atleast Those rejected there ReRA should consider the reply from developer but ReRA dismissed the case as it is before May 2017.Till developer is not ready to give any assurance of refund , and director saying go wherever you want to go.
    Who will give justice for such cases.
    Gautam sir ,please look into such issues.There is opinion difference between adjusting officers. How consumers will get justice in such cases.I know you are doing good job but till needs corrections , ReRa should not differentiate the consumers before ReRA or after ReRa as all ongoing projects are registered though no cc received from 2015. Example Kandi vali East Uptown.

    Satish Mishra

    3 weeks ago

    In fact , this is the right sentiment. To proceed with an issue towards solution not just about agitation. Since there are thousands involved granting refund may hamper the interests of other.

    Shreeram Mulay

    3 weeks ago

    WHY have U not given Justice in DSK Cases? We came to U for Possession., You said any Judgment in DSK Case is UNTENABLE. Now you are saying that you are stressing on Project completion. What are u saying Sir.
    Please be prudent in your lies atleast.
    Please dont give WRONG information to the Press.
    I have a RECOVERY Warrant in DSK Case. What happened ? is the Collector Honouring your Recovery Warrant ? Why are U not taking Interest in Executing my order ?

    We come to U for Posession - you say NO
    we come to You for REfund Order U/s 18, You say No..

    HAVE U SUCCEEDED IN ANY SINGLE CASE IN DSK SCAM MATTER ?

    HAS UR AUTHORITY GIVEN JUSTICE TO A SINGLE CASE IN DSK MATTER ?

    WHAT ARE U SAYING SIR.. IF U ARE TRYE TO ur words.. TAKE THE MATTER UP.. and GIVE US POSESSION.. NOW DONT SAY THAT WHO IS SITTING WITH A BAG OF MONEY TO COMPLETE UR PROJECT... USE THE REMOVAL OF DIFFICULTIES CLAUSE AND ALL CLAUSES IN RERA ACT AND STAND BY your WORDS.

    Please dont tell wrong in press to improve ur position. You are Respectable person in the society.

    Let Us. the allottees also appriciate your effort, provided you put in any to resolve our issues.

    JHOOT BOLE :: KAVVA KATE !!!

    KALE KAVE SE DARIYO !!!

    Do We Want To Kill the Industry that Truly Makes in India?
    At the annual convention of the Society of Indian Automobile Manufacturers, or SIAM, the industry association of makers of cars, trucks and two-wheelers, on 8 September 2017, Nitin Gadkari, the minister of roads, transport and highways, said: “We should move towards alternative fuel… I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it.”
     
    By making this very strong statement, Mr Gadkari made the headlines of leading newspapers across the globe, with plans to make India an EV (electric vehicle) nation by 2030 – the first country that would become so. 
     
    In comparison, when French President Emmanuel Macron announced his government’s plans to ban the sale of petrol and diesel vehicles by 2040, the move looked positively tame compared to Mr Gadkari’s strident pronouncements. 
     
    Even China, which has been leading the EV 'movement' globally, did not have as ambitious a plan as India’s.
     
    Yet, by February 2018, it was obvious that Mr Gadkari’s and the Union government’s plan for making India an 'EV nation by 2030' was unrealistic. 
     
    A proposal by the Indian automakers’ lobby, SIAM, suggested that India could realistically look at a target of 40% of automobile sales to be of EVs by 2030, and aim at 100% only by 2047.
     
    In 2018, India produced more than 5.17 million four-wheelers (cars, commercial vehicles and buses), which took it to the fourth place amongst the car-making nations of the world, behind China (27.8 million), the US (11.3 million) and Japan (9.7 million), but just ahead of Germany, which had manufactured 5.12 million cars, trucks and buses during the year. 
     
    For the financial year 2018-2019, as many as 24.5 million two-wheelers and over 1.2 million three-wheelers were also produced in India, making the country, in all likelihood, the largest two-/three-wheeler manufacturing nation in the world.
     
    (China’s figure for fossil-fuelled two-wheelers is lower than India, but the country may have made more if the numbers for electric two-/three-wheelers are also included, which come under the category of cycles in that country.)
     
    The one industry in India, which perhaps exemplifies the concept of 'Make in India' best, has been the automobile industry. With exports of all automobiles (two/three/four-wheelers) amounting to almost four million vehicles in 2018, the industry has also been an important foreign exchange earner for the country. 
     
    Yet, a series of pronouncements, policy announcements and fiscal steps taken by the government over the past two years, has brought this once-burgeoning industry to its knees, as sales of cars during August 2019 plummeted to just 195,524 units, compared to 287,198 in August 2018, a crash of 31.57%, the worst since 1997-98. 
     
    It has been a similar story for two-wheelers too, as well as commercial vehicles, with the entire industry in a free fall.
     
    Reasons for the Free Fall
     
    What could be the reasons? The weakening economic growth is one. The other is liquidity crunch brought about by the collapse of some of the non-banking financial companies (NBFCs), which used to account for a significant share of automobile financing. 
     
    Demonetisation and the imposing of GST (goods and services tax) , as well as the implementation of stricter emission norms, BS-6, for all cars on sale in India, could be some of the other factors impacting demand.
     
    Some of the other reasons suggested by several experts and observers are: excessive price of the automobiles, recession and trade wars in the global economy, the rise of Ola, Uber and car share apps, and the Indian companies having it a bit too good. 
     
    Among the Indian carmakers, only Maruti Suzuki and Hyundai (accounting for two-thirds of the total car market between themselves) have been making money over the past many years. Most others have been losing money. Which is why General Motors and Fiat crashed out of India and Ford has been seriously considering quitting.
     
    Given the protection provided to the industry, in the form of tariff barriers, historically, recessions in the international markets has hardly ever reflected in the Indian marketplace. 
     
    When car sales fell dramatically across the globe during the recession of 2008-2010, sales of automobiles in India kept growing, albeit at a slower rate than before. 
     
    The argument of shared mobility, as propounded by the finance minister (FM) Nirmala Sitharaman, may not be valid either. In the past one year, Paris has seen remarkable growth in shared electric scooters, with more than 20,000 of them available at the tap of an app button. 
     
    What the operators had not reckoned was the life of these no-one-owns-one products. More than three-quarters perished within three months, due to the very rough usage. Thus, the fleet needed to be replenished three-to-four times every year... and so there goes all the calculations of one such vehicle replacing three to four vehicles.
     
    Moreover, it may not be valid for cars either. Instead of the vehicle perishing in three months, these shared cars perish in three-to-four years. Most of Paris’s first shared mobility programme, Autolib’s purpose-designed Bollore Bluecars were written off in less than four years of intense usage. The average lifespan of a car in Europe—under personal ownership – is upwards of 16 years.
     
    The other argument has been about the high price of automobiles in India. This is not true for cars priced up to Rs10 lakh or so. For instance, the price of the Maruti Suzuki Swift diesel starts at Rs6 lakh. The same model in Europe retails at close to €14,000, or Rs11 lakh. 
     
    Of course, the base model in Europe has more equipment than the one in India (such as airbags). Otherwise, the specifications are very similar. 
     
    On the other hand, the price of a Skoda Octavia in India starts at Rs16 lakhs, as compared to less than €16,000 (Rs12.8 lakh) in Europe. It is a reflection of the extent of localisation: as most of the cars up to Rs10 lakh are close to 100% localized, the prices are very competitive, compared to cars like the Octavia with limited localisation. 
     
    This price competiveness is despite the fact that taxes in India is markedly higher than in Europe—with the government still treating automobiles as a luxury good, harking back to Nehruvian thinking. GST (plus cess) for cars range from 28%-50% in India, depending on size and specs. VAT (GST in Europe) is between 18%-21%. Lowering of GST could lower prices—for the sub-Rs10 lakh cars—even more markedly.
     
    Needed: A Road Map
     
    What could really help save the industry though is a road map. The single most important factor that may have caused this (drive) train wreck of the industry, may have been the uncertainty of government policy and direction. 
     
    With the government’s aggressive barrage of pronouncements on going electric, banning diesel, phasing out petrol-engine vehicles to scrappage of older vehicles, the consumer, as well as the automobile industry, is completely confused. 
     
    Should one replace one’s car with a petrol-powered vehicle, or wait until EVs come into the marketplace? Will it be possible to run a diesel-engine vehicle a few years down the line? Will cars over 15-years-old, will they be scrapped in my city? BS4 versus BS6, EV versus ICE (internal combustion engine), shared versus owned? 
     
    If the main complaint earlier was that of a government that did not do anything. The problem today is of a government that is firing on all cylinders… and chaos reigning everywhere, as the one “Make in India” industry is getting unmade by the same government that has coined this phrase. 
     
    (Gautam Sen is acknowledged globally as a leading automotive journalist, writer, automotive design consultant and expert from India. He founded the country’s first newsstand car magazine Indian Auto in 1986, followed by Auto India, Auto Motor & Sports and BBC’s TopGear. Mr Sen has also been directly involved with the automobile industry in India and Europe, and has worked with eminent designers such as Gerard Godfroy, Tom Tjaarda and Marcello Gandini.)
  • Like this story? Get our top stories by email.

    User

    COMMENTS

    Garima Kushwaha

    3 weeks ago

    My builder is not working on the project. I filed case in maharera 1 year back still no conclusion. Builder also sold project land to some other third party. Builder also keep on selling remaining plots but not updating any details on rera website.Maharera is of no use.

    Ramesh Poapt

    3 weeks ago

    mr gadkari is right. suitable policy/incentives to be given.

    Harinee Mosur

    4 weeks ago

    Very good article. Also too many models released with no differences and advantages especially the crossover SUV has been overkill where all look same.Innovation is seriously lacking in the car segment right now. We need cars which will handle the hits of traffic(body material needs change), drive over potholes and allow more space.Why will buy a new car to see a dent within a week driving in the city? No I am not a bad driver but its inevitable within a week or month.

    P S SHANKAR

    4 weeks ago

    The author makes very valid points about the hyper activity of the government. Too many initiatives at the same time - GST, BS 6, EVs - has slowed the industry down.

    This article also addresses the common reasons many believe for the auto sector slowdown - ride sharing and cars being costlier in India.

    However we should note that comparing car costs in the same Euro currency is not fair, since people in India earn much lesser than their Euro counterparts. For cars made in India, safety features are less, service quality is low and maintenance costs are very high.

    I believe that the housing market slowdown is an important factor in car sales slowdown, because most Indians would buy a car only after getting their housing right. In congested cities, buying a car is not an option for many Indians with means who may be waiting to move to a suitable house.

    Not just the government, a majority of Indians think cars are a luxury. The slowdown in the real estate sector has made many Indians to rethink/pause their car (luxury) purchase plans.

    Kochar Bipin

    4 weeks ago

    One of the key strengths of the auto industry in India is the low cost of manufacturing quality cars due to a very strong component manufacturing network -

    Maruti has been investing over 4000 cr annually on R&D and royalties for latest state of the art technology, this can easily take advantage of this slowdown to export over 50% of its production like has been done by Bajaj Auto

    Bhuvaneswaran K

    4 weeks ago

    one thing the article has not mentioned is the global slowdown. Germany's Center for Automotive Research has already warned about global slowdown mainly due to US and Chinese markets. India also exports the vehicles, and even most part of the sales for Tata motors comes from its JLR business. So Global slowdown, declining exports and declining Indian sales(after May'19 especially, as the sales numbers till May'19 doesnt look bad, from the numbers in Autopunditz) seems to showing this result. Will action from India make any remarkable improvement?! I hope it does.

    Amazon, Flipkart festival sales violate FDI norms: CAIT
    Reiterating its demand for ban on festival sales by Amazon and Flipkart, the Confederation of All India Traders (CAIT) on Tuesday said that the two e-commerce majors are flouting the norms for foreign direct investment (FDI) by carrying out festival sales.
     
    The traders' body urged the Commerce Minister to look into the violation of the FDI policy by these e-commerce companies and impose a ban on the declared festival sales. It also urged the government to institute an investigation into the business models of these companies.
     
    "Holding such sales and offering deep discounts are clear violations of Press Note No.2 of FDI policy 2018. The CAIT has earlier written to Union Commerce Minister Piyush Goyal to ban the declared festival sales by these e-commerce portals," a CAIT statement said.
     
    "CAIT Secretary General Praveen Khandelwal strongly opposed the statements of Amazon and Flipkart that appeared in media couple of days back that they empower the sellers on their respective platforms to decide the prices and offer their choice of selection to customers at the prices they deem fit and offer best value of their products to consumers.
     
    "The said statement of both the companies are devoid of any logic and just an eye wash to keep right the wrong practices they are conducting on their platform," it said.
     
    Khandelwal also said that these companies are indulging in blatant violation of the FDI policy of the Centre. CAIT noted that the key provisions of the FDI policy say that 100 per cent FDI is allowed in the e-commerce marketplace model and under which e-commerce companies can act only act as technical platforms.
     
    The policy clearly says that e-commerce entities will not influence the prices directly or indirectly and shall maintain a level playing field, the statement said.
     
    "Since these e-commerce companies are not owners of the inventory how can they offer deep discounts on the inventory hold by the sellers registered on their platform. As per policy, it should be the seller offering discounts but in this case the discounts are offered by e-commerce companies which is again a violation of e-commerce policy.
     
    "Such festive sales offering deep discounts are nothing but influencing the prices directly or indirectly which is a clear violation of the policy," it said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • User

    COMMENTS

    ASHOK KAMBLI

    3 weeks ago

    Chaterji sir not leasent buyer he favour talk on builder so builder get benifit & haress to buyer we ger experience

    AAR

    4 weeks ago

    Low prices are good for customers. Why make noise?

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone