Flat owners in a fix in Mumbai's co-op housing societies

In land-starved Mumbai, managing committees of cooperative housing societies tango with builders to beat the law and browbeat flat owners by opting to redevelop buildings


Geetanjali Minhas | July 20, 2013

Grand Paradi building, Kemps Corner, Mumbai
Grand Paradi building, Kemps Corner, Mumbai

When Sunil Ajwani, 33, a finance executive and a resident of Bandra Amar Jivan Cooperative Housing Society, in the plush Mumbai suburb, objected to irregularities in redevelopment agreement executed between the managing committee of his residential building and a builder, his mother, who owns the flat, was expelled from membership of the society.

Reason: the Ajwanis, the managing committee (MC) ‘ruled’, was not toeing their line.

Ajwani’s mother Indira, 60, a widow and physically disabled for the last nearly three decades, had inherited the flat from her mother.

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Besides other irregularities, the redevelopment agreement with owners of one- and two-bedroom flats includes a “notorious clause” that requires owners of larger flats to sell part of their carpet area to smaller flat owners. The clause, Ajwani says, led to a weirdly one-sided arithmetic: 37 square feet carpet area of their flat was to be taken away – floor space index (FSI) was to be calculated and allotted at Rs 15,000 sq ft. This, when the prevailing market rate is anything between Rs 60,000 and Rs 70,000 per sq ft in a new building!

“Without following any rules or law, and against by-laws, the society invited tenders arbitrarily from among a few preselected builders. After marathon and rushed meetings within themselves chose the builder in November 2008, though they knew redevelopment rules were coming out in January 2009,” Ajwani says.

“The agreement, however, was drafted only in 2010 – against a maximum six months, as mandated by rules. Similarly, against government guidelines the society formed its own managing and construction committee and issued redevelopment clauses. Barring a private structural auditor, who in his report declared the building structurally damaged, no project management consultant or architect was appointed for independent surveys.”

But even after all these years, the structure still stands without any damage, Ajwani says.

Though they sound a lot, all these are just one set of problems for people like Sunil Ajwani who live in cooperative housing societies in the Maximum City. And much of it emanating from a term equally popular and dreaded in Mumbai – redevelopment of a housing society, or razing it to the ground and raising it afresh.

According to real estate experts, Mumbai has around 30,000 cooperative housing societies, and if you pull in Greater Mumbai (including MMRDA and Vashi) into the equation, the number goes up to 50,000. In land-starved Mumbai, redevelopment is the only viable option to provide extra housing.

On paper, if the redevelopment process is transparent, it’s a win-win situation for all: profit for builders, revenue for the government, and new and larger premises for residents in the same area.

But that’s precisely where life gets into a knot for the likes of Ajwani, for in most cases transparency is the idea farthest from the minds of at least two parties involved – office-bearers of the society’s managing committee that allegedly makes a killing from this redevelopment and the builders, who make a bigger killing. The third party concerned – the government – is alleged to be conspicuous by its absence from the scene, while the last one – the flat owner, or at least a sizeable chunk – comes out the worst.

Depending on its condition and age, a building may go for redevelopment after only 15 years of its construction, though it is mandatory that a BrihanMumbai Municipal Corporation (BMC)-empanelled structural auditor has certified the redevelopment plan.

Disputes galore
According to legal and realty experts, while the laws are generally good, society MCs take advantage of sundry shortcomings to connive with builders at the time of executing redevelopment contracts. As a result, tens of redevelopment cases end up in courts. While cases between housing societies and their members land in cooperative courts, a feud among a society, its members and a third party goes to the high court.

At the ward/department level, there are lakhs of cases of such disputes.

The government’s taciturn approach does not help either – legal experts say the departments concerned turn a blind eye to the “dictatorial manner” in which MCs function by flouting laws and disregarding rules.

While Hemant Aggarwal, an advocate with expertise in cooperative societies says neither housing societies nor their members take the legal route “unless absolutely necessary”, due to the time- and money-consuming nature of such legal disputes, Dilip Shah, senior counsel who deals with redevelopment cases says MCs’ propensity to overlook government guidelines and ill-drafted agreements and legal documents are the major reason for increasing redevelopment disputes. “Even if 90 percent redevelopment projects follow transparent methods and are completed on time, it is a lucrative proposition for both the builder and the society,” Shah says.

That, however, is easier said than done.

So why is redevelopment such a lucrative proposition?

According to experts and several flat owners fighting with their respective MCs, lured by builders, the committees make “mistakes” in selecting developers (read pick them with a predetermined pact), funds are diverted, members are cheated and projects delayed and even scrapped. In all this, it is alleged, MC office-bearers get a share of the project profit, which depends on the situation, size, area and land on the building is located and number of residents it houses.

Explaining the “autocratic” work style of a typical MC, JB Patel, an expert on cooperative housing societies and part of Maharashtra CHS RTI Union, an online help forum for residents facing such “harassment”, says: “Once in power, vested members of MC flout rules, yet exert power on others. Most residents are browbeaten suppressed and not allowed to speak (in general body meetings, or GBMs). Most residents prefer not to attend GBMs since they do not want to get into any undue mess. Using this, scores of MCs pass resolutions to their advantage even with the presence of as little as 20-30 percent of general body members who attend meetings.”

Weak laws, harassments aplenty
Many experts are of the view that the Redevelopment Directives of January 2009 U/S 79 are broad guidelines, and are one-sided – they are meant only for members to follow and lack any provision for penalty or punishment for the errant builders. Despite many projects being delayed, no builder has so far been put behind bars, prompting Dilip Shah, senior counsel, redevelopment, to quip, “This is a major lacuna. And builders know that a common man cannot afford to get into a long-drawn legal battle.”

Aggarwal says: “(Housing society) members must understand the importance of drafting a detailed agreement that specifies each parameter, penalty (clause) and details. Because the agreement is drafted from the builder’s side, it is pro-builder by default. Enticed by money, most managing committees sign it blindly.”

Aggarwal also reiterates that MCs regularly misuse the “majority concept”, whereby they would need a majority vote to pass any resolution in GBMs. “To address this, the Commissioner for Cooperation and Registrar of Cooperative Societies, Pune, issued a circular (dated March 15, 2010) to video-record meetings (in housing societies). Any dispute arising in these would be heard by cooperative courts, and not the deputy registrar,” he says.

“Unless this is strictly implemented, the concept of cooperation is far-fetched.”

While Dilip Shah points out that under law, “even a single member  can stall redevelopment” if the court is convinced that either an MC or the builder went about the redevelopment process in a non-transparent manner by flouting government guidelines, Aggarwal reiterates that individuals stall the legal process till the very last moment. “Even if a court issues summons or orders to the MC, besides harassing the member concerned, MC office-bearers start a campaign to malign the person. There are cases of indirect blackmail and other tactics to demoralise and cow down the person into taking back the complaint,” Aggarwal says.

Rajiv Patel, a mechanical engineer by profession and resident of New Kavita Cooperative Housing Society in Santacruz, knows that harassment bit all too well. While there was no hitch when he let out part of his flat for short-term bread and breakfast services for tourists in 2003, issues cropped up after talks of redeveloping the building began in 2004.

When Patel opposed, he was allegedly ostracised. According to Patel, his children were not allowed to play in the society compound by other children, they stopped guests to Patels’ home, his windows were broken, air-conditioners punctured to leak gas, cable wires cut off and electric wires snapped. “Finally, to tarnish my image, they (society representatives) got signatures to purportedly protest the fact that I ran a prostitution racket and that immoral activities were going on in my flat,” Patel says.

“Sixty signatures? The society only has a total of 18 members,” he adds.

The way out
As an alternative to cooperative housing societies, Aggarwal suggests forming a welfare association under the Indian Societies Act, under which up to 100 members/flat owners can come together and make their own by-laws. Once adopted, these by-laws become a contract, to be governed by the Civil Procedure Code, he says. There will be no government interference, the building will be managed professionally rather than by ‘honorary workers’ in the guise of MC, and result in bringing down disputes considerably, Aggarwal says. 

Patel, who has assisted many in getting deputy registrar’s permission and police help to video-record their meetings, says attempts at the government’s level to introduce transparency are being killed by the housing societies. “Despite having good laws, there is lethargy to implement them due to corruption and inadequate staff. Besides the presence of a representative from DR’s office and compulsory video-recording of each meeting, any member who wants should be allowed to do his/her own recording as a safeguard against manipulation in recordings by MC,” he says. “It should be made mandatory for MCs to distribute among residents minutes of all meetings within 7-15 days.”

"When the Maharashtra government takes more than a year to make simple amendments in the MCS Act as per the Constitutional (97th Amendment) Act 2011 [see box], how does  it expect thousands of housing society MCs to hold AGMs and conduct account and audit work on time?” Aggarwal asks, quizzically.

Govt doing too little, too late?
* After lapse of a year, Maharashtra cooperative ministry could not adopt the 97th Constitutional Amendment Act (definition Articles 243-ZH to 243-ZT) incorporated by the Centre on January 1, 2012.
* It subsequently went to the state governor.
* Around that time, state legislature rejected the by-laws and sent them back to the legal cell for reconsideration.
* A PIL subsequently filed against the central amendment in Gujarat high court.
* While upholding the amendment to form a co-op society, the court declared the articles ultra vires (unconstitutional).
* The state govt has now tabled the Maharashtra Cooperative Societies (Amendment and Continuance) Ordinance, 2013 at the start of the ongoing assembly session.

(This is second in a series of stories on flouting of norms by managing committees of cooperative housing societies in Mumbai)



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