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An RTI Activist’s Defense of Maharashtra Housing Act 2011, which is being wrongly maligned

20 April 2012 No Comment

An RTI Activist’s Defense of Maharashtra Housing Act 2011, which is being wrongly maligned

How things work with MHA 2011

Jt.Editor & RTI Activist Krishnaraj Rao sheds light and comparision on Maharashtra Housing Act 2011 and MOFA 1963

Over the past three days, I have intensively studied the Maharashtra Housing Act 2011, which is like a cross between RTI ‘the Sunshine’ Act 2005 and MOFA 1963. I feel that it has the potential to force builders to reveal all their cards in the public domain, thereby curbing the undue gains that builder-lobby currently enjoys under cover of darkness.

A number of housing industry professionals like chartered accountants and advocates have launched a high-decibel campaign against the Maharashtra Housing Act 2011 Bill (MHA 2011), which was tabled in the Maharashtra Assembly. This bill, which aims to introduce the Housing Regulatory Authority and Housing Appellate Tribunal, and endow it with powers to regulate the building industry, is being viciously maligned as a legislation that is intended to favour builders.

 

How things work with MOFA 1963

The truth is exactly the opposite. I fear that the passing of this Act is being actively obstructed, and that some of the forces aligned against it are backed by the builder lobby. I fear that activists, well-meaning citizens and journalists are being actively misled by a propaganda campaign. I fear that the widespread mistrust of the Congress-led government and the habitual anti-establishment thinking of all of us activists can be, and will be, used as a delaying tactic. It will stall this excellent bill that would definitely protect and benefit flat purchasers and RTI Activists alike. Please think of the struggles that we currently go through for getting information about various illegalities performed under the cloak of confidentiality and secrecy; and then read this Act; you will see that it is like a Section 4 declaration of the entire housing industry, with lots of added teeth, and penalties that go upto one crore rupees.

 

Download word file of Maharashtra Housing Act 2011 (Regulation and promotion of construction, sale, management and transfer):

Make no mistake: I am not arguing that there is no scope for improvement. But, while there is always scope for improving anything and everything, there is a clear and present danger that if you stall a good thing sufficiently, the “golden hour” passes, and then the chances of that good thing happening diminish. My earnest plea to you is that you must not allow that to happen at any cost.

Download MOFA 1963: http://tinyurl.com/MOFA-1963

 

MHA 2011 is like MOFA with lots of teeth and muscles added, and with its head and heart in the right places.

 

In this article, I shall talk about three things:

  • The problems currently being faced by the common man vis-à-vis building industry, and the benefits that the common man will receive from MHA 2011
  • Give diagrams to show how MHA 2011 is miles ahead of MOFA 1963, which it will replace
  • Examine & rebut the main arguments against MHA 2011

I. PROBLEMS CURRENTLY FACED BY THE COMMON MAN, WHICH MHA 2011 WILL REMEDY

 1) BUILDERS OFTEN ANNOUNCE PROJECTS WITHOUT GROUNDWORK. It is an open secret that many builders duping investors by doing ‘jugaad’, announcing and advertizing projects without even gaining proper title over the land, leave alone permissions and plan approvals. Although this is widely known, such builders get away unpunished as no authority is empowered to take suo  moto notice of such wrongdoings and initiate proceedings. Remedy: MHA 2011 creates the Housing Regulatory Authority, which can take suo moto notice of such wrongdoings, issue warnings and show-cause notices, issue penalties and also initiate legal action. And in case of disputes, MHA 2011 creates a Housing Appellate Authority.

2) LAKHS OF FLAT BUYERS ENTER INTO THE TRANSACTION BLINDFOLDED. At present, flat purchasers and investors enter into this important and life-changing transaction without the essential documents. MOFA 1963 specifies the full range of documents, plans and specifications that builders or promoters must disclose, but it does not designate a specific authority or enforcement mechanism. It does not specify deadlines for disclosure, nor any penalties for failure to disclose. So, as a rule, builders hide almost every important document, and disclose only the ones that suit them. Flat buyers are forced to knowingly ignore numerous wrongdoings. Remedy: MHA specifies that the builder cannot advertize and announce booking without putting the particulars of his project on the Housing Regulatory Authority website. Unlike MOFA, Maharashtra Housing Act 2011 specifies that all the essentials documents must be put up on the WEBSITE of the Housing Regulatory Authority. Sanctions and approvals received from various local authorities must be uploaded within 72 hours. Failure to upload the particulars of the project can result in a penalty of Rs 1000 per day, besides other consequences.

3) RTI ACTIVISTS STRUGGLE TO GET DOCUMENTS UNDER RTI FROM CIVIC AUTHORITIES. In order to pinpoint the wrongdoings of builders, lakhs of RTI applicants in various towns are struggling to procure necessary documents from MCGM’s building proposal department, MMRDA, Urban Development etc.. The builders connive with officials to stonewall and mislead information seekers, and also threaten and assault them. Remedy: Section 4 of Maharashtra Housing Act 2011 is like the much-talked about “Section 4 compliance” of RTI Act – enforcement of suo moto disclosure requirements. The website of the Housing Regulatory Authority will be an effective tool for holding the builder as well as various licensing authorities and regulatory bodies accountable.

4) TO SEEK REMEDIES, FLAT BUYERS ARE FORCED TO ENGAGE LAWYERS TO GO TO COURT. As there is no quasi-judicial authority where the flat buyers may themselves put up the facts of the matter, flat purchasers or public spirited citizens are forced to go to consumer court or civil court. The common man is ill-equipped for endless litigations that go on for years or decades, and to foot the lawyers’ bills! Remedy: Aggrieved flat-buyers as well as public spirited RTI activists will be able to represent their own case before the Housing Regulatory Authority and Housing Appellate Authority. There is no need of lawyers for fighting the case before these bodies, which are very similar in structure to first and second appellate authorities under RTI Act 2005. Further, if these authorities are convinced of the builder’s wrongdoing, then they will have the authority to make recommendations to the various state government authorities, and initiate proceedings against him in a court of law, besides levying orders and very substantial cash penalties against him, ranging from Rs 1000 to Rs 1 crore. (See Sections 43 to 49 in this file:  Maharashtra Housing Act 2011 (Regulation and promotion of construction, sale, management and transfer):

 

II. DIAGRAMS OF MOFA 1963 & MHA 2011 WORKING

MOFA 1963: http://tinyurl.com/MOFA-1963-fig

MHA 2011: http://tinyurl.com/Maharashtra-Housing-Act2011fig

 

III. REBUTTALS TO MAIN CRITICISMS AGAINST MHA 2011

You can read the main criticisms here: http://tinyurl.com/MHA-2011-critics

1)      FALSE: NO PUBLIC CONSULTATION WAS HELD. The detractors of MHA 2011 argue that MHA 2011 was not earlier circulated for discussion in the public domain. That is false. Google ‘Maharashtra Housing Regulatory Authority’ etc, and you will see that this bill has been described, dissected and DEBATED IN THE MEDIA AT LEAST SINCE JANUARY 2012, if not earlier.

 2)      FALSE: MHA 2011 REPLACES AN EFFECTIVE AND USEFUL ACT, NAMELY MOFA (Maharashtra Ownership Flats Act 1963). MOFA had no teeth to implement its own mandates, and it essentially left everything to happen between the builder and the courts. If you read the provisions of MHA 2011 and MOFA 1963 side-by-side, you will see that actually, MHA 2011 IS NOTHING BUT MOFA WITH TEETH ADDED.

 3)      HALF-TRUTH: MOFA HAD PRISON SENTENCE FOR BUILDER, MHA DOES NOT. This is a populist argument that IGNORES THE KEY QUESTION: How many builders have been actually been thrown behind bars for MOFA violations since 1963? You may count them on the fingers of one hand!

4)      FALSE: MHA 2011 GOES EASY ON BUILDERS. The fact is, if properly implemented, MHA 2011 has the potential to impose more stiff penalties on builders in the first one year of its existence than Bombay High Court and Supreme Court did in all the previous years since Independence.

 5)      FALSE: MHA 2011 IS A WATERED-DOWN VERSION OF CENTRAL RERA BILL. This is UNTRUE. In fact, some provisions of MHA are more stringent than Central RERA. E.g. Under MHA, the builder is required to deposit 100% of the amounts he collects towards building maintenance, electricity charges etc. in a separate account, to be used only for the purpose of that building. RERA requires him to deposit only 70% of the amount collected in a separate account, giving him a discretionary fund of 30%. (Read Sec 4(3)(b)(v) of Central Real Estate Regulatory Act: http://tinyurl.com/Central-RERA-Bill )

6)       FALSE: MHA 2011 LETS BUILDERS ENCROACH ON COMMON AMENITIES BY SELLING PARKING. The fact is that Maharashtra Housing Act clearly segregates parking from common amenities and open spaces. Currently, it is all mixed up, and despite the Supreme Court order that parking must not be sold, builders are merrily stating in their sale agreements that parking is being sold.

The handful of building industry professionals who are campaigning against MHA 2011 are not correctly informing the public. By exaggerating the few flaws that this excellent Act may have, and by involving activists who may themselves not have studied the act, these people are whipping up public sentiment against this Act. It is always easy to oppose, given the anti-government and anti-establishment mindset that prevails, especially among activists.

Yes, now that the floor is open for debate, let us scrutinize the Maharashtra Housing (Regulation and promotion of construction, sale, management and transfer) Act, 2011. But let us do so keeping in mind that if this Act is not passed for any reason, the beneficiaries will definitely be the builder lobby, who will happily carry on business as usual.

Fellow citizens, I earnestly urge you not to let MHA 2011 languish, otherwise it will be a great opportunity lost for all of us.

PS: My sincere thanks to Ramesh Prabhu for making the material available for all this analysis. I could not have done it without his active facilitation. However much we may differ in our views, nothing can take away from my gratitude to him for throwing open this important topic for debate.

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