In its recent ruling, the Supreme Court dismissed the Bombay High Court’s decision of granting the leading developer, Shapoorji Pallonji Group to participate in Worli BDD Chawl redevelopment project costing Rs 10,600-crore.
Since the Shapoorji Pallonji failed to submit its bid for the project before the last date of July 27, 2017. Later it was claimed by the group that due to a technical problem in the National Informatics Centre (NIC) portal and Maharashtra Housing and Area Development Authority(MHADA), it could not submit the bid and requested the tenders to be called once again.
The NIC was handling the e-tendering process for MHADA. And later MHADA rejected the company’s plea. Following it, Shapoorji Pallonji moved to the Bombay High Court and found a ruling in its favour, saying, “When technology fails, humans have to intervene.” In response, MHADA went to the Supreme Court.
The argument by the MAHDA’s lawyers was that the NIC has so far handled nearly 80 lakh e-tenders without facing any problems, so Shapoorji Pallonji’s claim about a technical glitch preventing them from submitting the bid is not acceptable at all. And if the HC order is accepted now, then the sanctity of the tendering process will become questionable.
Also, supporting their argument was the fact about the other successful submission of the e-bids made by Shapoorji Pallonji for the redevelopment projects of BDD chawls at Naigaon and NM Joshi Marg, and their full awareness during the process.
Justice Ranjan Gogoi observed in his ruling in MHADA’s favour, that the absence of any acknowledgement in the technology and the generation of such acknowledgements in respect of other bidders indicates that the bid submitted by the first respondent (Shapoorji Pallonji) was not a valid bid. Also the directions issued by the High Court in favour of Shapoorji Pallonji virtually gives the respondent a second opportunity, which cannot be allowed.
Justice Gogoi further added that the High Court was not correct in issuing directions to MHADA and NIC to reconsider Shapoorji Pallonji’s bid. There were no comments from the senior MHADA officials.
The BDD chawls, Bombay Development Directorate chawls were constructed by the British at Worli, NM Joshi Marg, Naigaon, and Sewri in Central Mumbai in the 1920s as a low-cost housing project, which has now turned into an ambitious redevelopment project, pegged at Rs 16,000 crore.
The nodal agency for the project, MHADA, will get to build around 13,000 affordable houses, after rehabilitation of existing residents in 500 sq ft flats. The tendering process for the project at Worli is underway, as the bidding process is over for NM Joshi Marg and Naigaon. Shapoorji Pallonji has won the project at NM Joshi, whereas L&T has bagged the contract to develop Naigaon project.
Venkaiah Naidu Urges To Correct Land Prices For Low-Cost Homes
M Venkaiah Naidu, Vice President on Thursday mentioned that there is an urgent requirement for correction in the prices of land in order to making home buying affordable for the common man.
He said, “The cost of real estate goes up not because of the cost of construction but because of land prices. There is a need for correction of prices. Prices of land in Indian cities are even sometimes equivalent to prices of Washington and New York. Cost of units is going up not because of the cost of construction but mainly because of the cost of land, land being held by the middlemen. There is a need for correction. Reality has to come in the real estate sector,” while speaking at CREDAI’s real estate conclave 2018 titled Real Estate 2.0, Embracing Change.
He urged the realtors’ apex body, CREDAI to not let any back sheep affect the masses and execute a self-code of conduct to keep all the violators and defaulters at bay. Further adding, he said, “The law alone will not help in dealing with this disease as there are legal ways to fight cases for years together.” The best way is to come up with a voluntary code of conduct and whoever violates the norms, such defaulters should be deterred from any similar activities to happen in the future.
Only taking such actions would improve the credibility and acceptability of CREDAI. Naidu said, “This is the need of the hour for the real estate sector.” He also pointed out that most of them believe that the affordable housing segment will be the force to influence the real estate sector in the coming months owing to the supportive measures taken by the government.
Jaxay Shah, CREDAI’s President said that since 2017, when the members of the realtors’ body were announced, they have been able to develop over 375 affordable housing projects across the country. Around 10 lakh affordable housing units have already been undertaken by Maharashtra and Rajasthan CREDAI members and will be closely monitored by KPMG every three months.
On the first day of the conclave, the realtors’ body has demanded a reduction in the GST and easier bank financing for land purchase to develop affordable housing. Also single-window clearance for real estate project approvals with an aim to boost the sector.
The real estate sector which faced a twist of events in the form of GST, demonetization and the new reality law is undergoing a ‘critical moment’, said Shah. He went on to urge the Ministry of Housing and Urban Affairs to take these matters up with the government on its behalf.
Proper financing by the banks should be in place to purchase land for affordable housing projects and the area norms should be removed for the middle-income groups in order to accelerate the purchasing power of the people under government’s credit-linked subsidy scheme.
In lines with affordable housing, the GST should also be 8% for the entire sector to create demand for under-construction flats. As the current effective GST rate is 12% after an abatement and no GST on completed flats.
Getamber Anand, CREDAI Chairman, said there should be proper land abatement as the prices of land differ from city to city. Taking this argument further Pankaj Bajaj, CREDAI NCR President suggested that the government can give abatement prices on the basis of circle rate depending on each city.
Other issues raised by the association was the delay in approval of projects, especially with respect to environment clearances. It also said India’s ranking when it comes to ease of doing business will improve further if the government decides to have a single-window clearance.
CREDAI has over 12,000 members in 23 states and 178 city chapters.
Eight Mumbai Builders Penalized By Maharera For Voilating Rules
Eight developers in Mumbai has been imposed with penalty of Rs 2 lakh to Rs 10 lakh by the Maharashtra Real Estate Regulatory Authority (MahaRERA). This fine is due to the false advertisements of their respective projects in the city. The builders failed to procure a RERA registration for their projects and didn’t mentioned the authority’s website address in their advertisements as well. This action by MahaRERA has been called under Suo-Motu basis.
Listed firstly among these builders is Tridhaatu Morya, which has been fined for Rs10 lakh for advertising a non-registered project. Rest of the builders are the Wadhwa Group, Jyoti Builders, Haware Properties, Parinee Building Properties, Ipsit project and Karrm Infrastructure. These have been fined Rs. 2 lakh for advertising real estate project without mentioning the authority’s website address.
RERA-Real Estate Regulatory Authority came into effect from May 1, 2017, for laying rules and regulation for the real estate sector and is aimed to bring efficiency, transparency that will further strengthen home buyers’ confidence. A former state government bureaucrat, Gautam Chatterjee was appointed as the Chairman of the Maharashtra Real Estate Regulatory Authority (Maha RERA). Under RERA, Maharastra government had established Maha RERA on March 8 for regulation and promotion of real estate sector in the state.
While levying the penalty, Chatterjee cautioned the builders to ensure that such violation is not repeated in future. Under the section 11(2) of the Real Estate (Regulation and Development) Act, 2016, the advertisement or prospectus published or issued by the promoter is supposed to mention the website address of the authority which will include the project’s MahaRERA registration number and wherein all details of the registered project are entered.
According to the section 3(1) of the Real Estate (Regulation and Development) Act, 2016 states that no builder is allowed to advertise, book, sell or offer for sale, market, or invite persons to purchase in any manner any plot, building or apartment, as the case may be, in any part of real estate project, in any planning area, without registering the project with the authority.
No Rise In RR Rates In MMR Seeks Builders’ Body To Boost Sector
Builders apex body in order to boost the slump in the real estate sector wants no hike in the RR rates in the Mumbai Metropolitan Region (MMR) this year. A sub-committee of ministers had suggested the no hike policy and the builders have come upon support of the same.
The state government on the basis of assessments known as Ready Reckoner (RR) rates, levy a stamp duty and registration charges according to the of the valuation of the property that is then paid by the owner. The rates are usually revised every year on April 1 by the government.
The sub-committee was appointed by the state government under the chairmanship of revenue minister Chandrakant Patil, finance minister Sudhir Mungantiwar, health minister Deepak Sawant and housing minister Prakash Mehta. The panel has recommended the extension of the 2015-16 rates in MMR, according to the sources in the government. Chief minister Devendra Fadnavis has the recommendations, presently.
The Confederation of Real Estate Developers Association of India’s (Credai) Maharashtra chapter, ahead of the announcement on April 1 for the next RR rate has urged the CM to let the government comprehend the panel’s recommendations for the entire state of Maharashtra.
The source said, “The rates were hiked last year for MMR and rolled back to the 2015-16 rates,” also added that high rates could not be announced for the rest of the state if there’s no hike in MMR and Mumbai.
Shantilal Kataria, Credai-Maharashtra president mentioned that the sector was going through a rough time and lakhs of homes were lying vacant in the Mumbai Metropolitan Region. Kataria said, “The government should think about the sector and not just about revenue collection. We have sent our requests to the chief minister and revenue minister and are awaiting a positive response.”
The housing rates have escalated owing to higher stamp duty calculated on the basis of the RR rates and GST which is burdened on the buyers making it unaffordable state Credai. Kataria said, “The ongoing year has seen a 1% rise in stamp duty in rural and effective areas, generating enough revenue.”
Home buyers had to pay 12% GST along with the stamp duty, in 2017. Earlier they only had to pay a service tax of 5.5%.
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