The Campa Cola case is a true eye opener for home buyers and co-operative housing societies and would make them vigilant while purchasing their dream flat
Campa Cola Society in Worli area of Mumbai has become a glaring example about residents getting duped twice over, due to lacunae in the laws and their oversight. What is shocking is that 96 flat owners from seven high-rise buildings could be homeless over the next few days, while the lessee and builder benefit from the destruction of these flats.
First, the builder constructed extra floors even though he had permission only for six floors. He then sold these ‘illegal’ flats to buyers. However, Brihanmumbai Municipal Corporation's (BMC), the civic body, never gave the occupation certificate to the builder and to buyers. In addition, since the builder constructed illegal floors, it never handed over the land of the plot to the Society (deemed conveyance) as mandated under the laws. Since the Supreme Court had ordered demolition of 35 illegal flats, these families would be homeless. Also, they cannot even claim any rights on the property.
According to a report from Times of India, the lone beneficiary of the demolition will be the unscrupulous builders or the new builder, who can approach the civic body with fresh building plans for the extra floor space index (FSI) available in the Campa Cola Compound.
“After demolishing 35 illegal flats across seven buildings in the society, the developer can construct on 6,200sqm of FSI and sell new flats. The plot measuring a total of 18,049 sq m is not sub-divided and still shows as a single plan under the BMC,” the reports says.
Permissible built up area 17,356 sq mt
Area beyond permissible FSI limits 1,774 sq mt
Area that Supreme Court ordered demolished 7,916 sq mt
The apartments in the Campa Cola Compound were constructed on land leased in 1955 to Pure Drinks Ltd. Pure Drinks was later allowed by the BMC in 1980 to build residential apartments. Seven high-rise buildings were constructed at the compound between 1981 and 1989 by developers Yusuf Patel, PSB Constructions and BK Gupta.
Illegal floors of Midtown Apartments, Esha Ekta Apartments, Shubh Apartments, Patel Apartments (two buildings, six floors each), BY Apartments and Orchid Apartments comprise 140 flats. While the builders were granted permission for ground-plus-five floors, Midtown has 20 floors, Orchid has 17, Esha Ekta has eight, Shubh has seven while BY and Patel have six floors each.
As per the records of BMC, since Pure Drinks is the lessee of the land, it can therefore, claim the right to development of this FSI.
This also means that the lessee and developers who built illegal floors would benefit from the demolition, but it would be a double whammy to flat buyers. In addition, so far, while the buyers are being punished for buying flats in illegally constructed floors, there is no punishment to the lessee, builders and developers. Even the officials of BMC, who failed to stop the construction of these illegal have so far remained scot free.
However, this case will prove to be an eye opener for home buyers and co-operative housing societies for two reasons. One, they must make sure that the building in which they are buying flat has all legal permissions in place and second, the plot of land is transferred to the housing society. The conveyance of land would make sure that in case of re-development, the FSI and right to develop remains with people who had paid the money for buying home.
BRIEF CASE SUMMARY of CAMPA COLA COMPOUND
• In 1955, the BMC leased 17905 sq.mt of land in Worli, Mumbai to Pure Drinks Ltd for the Coca Cola factory. In 1980 the BMC permitted Pure Drinks to convert a large part of the land (13049 sq.mt.) into a residential plot. However, the land is not sub-divided.
• Pure Drinks joined hands with PSB construction, Yusuf Patel and BK Gupta to build nine 5-story buildings. Later the builders amended the plans to construct two towers and five smaller buildings of 6 to 8- stories. These plans were not approved, but the builders continued to construct and were fined by the BMC. The builders paid the fines but refused to pay the revised penalty that the BMC imposed later. The builders eventually built 1,774 sq mt more than the permitted 17,355 sq.mt.
• By 1989, the builders had sold the flats and given possession, concealing the fact that the plans were not sanctioned and that there were FSI violations. Individual building societies started forming in 1991. However the builders did not convey the land and buildings to the buyers, nor did they provide the Occupation Certificates to the flat owners. As a result the BMC did not supply water to the buildings.
• In 2002, when the Campa Cola Association applied to the BMC to get the objected plans of the buildings sanctioned in accordance with the newly introduced rules DC ’91.The application was rejected as construction was commenced in 1981. In 2010, the then chief minister, Ashok Chavan also rejected the appeal on the same grounds, stating that the violation beyond permitted FSI was 1,774 sq mt., and the buildings were within CRZ 2 zone.
• In 2005 the association went to court for a water connection and regularisation. The Court reprimanded the municipal commissioner for his inaction and instructed him to take time bound action. Instead of initiating any action against the builders, he promptly issued 96 demolition notices to the flats above the 5th floor, since they were beyond the sanctioned plans. These notices amounted to demolition of app 8000 sq mt area was far greater than the actual violation area.
• The demolition notices were challenged in the City Civil Court, which granted a stay.
In 2007, Pure Drinks Ltd. sold the development rights for the remaining industrial plot to M/s Krishna Developers Pvt. Ltd, who approached the BMC for permission to build. The BMC rejected their plans as the plot was not subdivided and the FSI violation on the residential plot had not been resolved.
• Krishna Developers, as an affected party, intervened in the litigation in the City Civil Court, who evicted the stay in 2010. The members also lost the case in the High Court in 2011 and finally, lost the battle in February 2013 in the Supreme Court.
• The court ordered the BMC to expedite the action on the notices and directed the state govt. and corporation employees not to interfere in the execution of these notices. On 27th April, the BMC issued Notice No 488 asking the residents to vacate as the demolition would commence after 48 hours. The High Court rejected their appeal for a stay against these notices, but the Supreme Court gave them a five month reprieve, provided they gave an undertaking to vacate their flats.
• The residents went back to the Supreme Court on 11 September 2013 requesting permission to approach the BMC to self demolish 1774.10 sq mt and to regularise the rest of the structures which is beyond the permissible limits as mentioned in the chief minister’s order. The SC granted their prayer. However BMC rejected their formal application.
• A writ filed in High Court was also dismissed, and on 1 October 2013, Supreme Court also dismissed the write. However, the Supreme Court extended the eviction date to 11 November 2013.
Gruh Finance’s net profit increased to Rs34.35 crore in September quarter on 25% growth in its sanctioned loans
Gruh Finance Ltd, a subsidiary of Housing Development Finance Corp (HDFC) reported a net profit of Rs34.35 crore for the quarter ended September 2013, compared with Rs27.21 crore last year.
For the three months ended September, the company’s revenues grew to Rs210.50 crore from Rs156.98 crore for the same period last year. During the second quarter, its total loan disbursements increased 25% to Rs1,197.15 cores from 989.96 crore same period a year ago.
The company’s capital adequacy ratio (CAR) stood at 17%.
Gruh Finance said its total loan assets increased to Rs6,142.90 crore for the second quarter, a growth of 32%. The company’s gross non-performing assets (GNPA) stood at Rs24.93 crore, or 0.41% of its loan assets, compared to last year’s Rs27.88 crore.
On Friday, Gruh Finance closed 1.25% down at Rs221.35 on the BSE, while the benchmark S&P BSE Sensex ended the day 256 points up at 20,529.
The crucial question is whether it is worth our while to go in for domestic expansion of the fertiliser units, by adding up new production capacities, or to make the hard choice of continuing imports until the new sources of gas supplies have been located in India?
Once again, the Comptroller and Auditor General of India (CAG) has bowled a "googly" and this time, it has been aimed at Reliance, who is still battling the issue of low gas production in KG-D6 and the petroleum ministry refusing to accept their proposal to appoint a third party independent reservoir consultant to verify their claim.
Apart from charging Reliance, CAG has held the UPA being responsible for non development of the fertiliser industry in the country and costing the exchequer Rs79,743 crore in doling out subsidy as a result.
Due to the short fall in production, 475 lakh tonnes of urea had to be imported, and CAG's report states that by using LNG/RLNG 78.34 lakh tonnes of urea, valued at Rs8,159 crore could have been saved as subsidy. Non supply of natural gas has been considered the main reason for this increased dependence on imports. It also points out that if the natural gas supplies had been made available, as originally envisaged, the cost of production would have come down indigenously, resulting in lower subsidy.
During the implementation of the 11th Five Year Plan (2007-12) the government had hoped to put up four new fertiliser plants, based on the natural gas supplies. But, with the steep fall in production of gas, this has not been possible, so far. In fact, there has been no major development in the existing 17 plants, including the expansion, due to constraints of fuel supply. Price of imported urea, for instance, has been hovering around $310 per tonne.
Out the 17 plants, 13 are urea makers in the country. Four major producers like IFFCO, RCF, Chambal Fertilisers and Tata Chemicals have shown interest to expand their existing production capacities while two new players have plans to go in for greenfield production with a 1.3 million tonnes capacity. However, the recent government announcement, under the New Urea Investment Policy, that there is "no guaranteed buy-back" of the production has dampened the interest. On the top of this, natural gas supplies are a great bottleneck, resulting in the need to obtain other forms of fuel LNG at great cost. As long as price control exists and government would not like to withdraw or reduce subsidy, this will be very difficult issue to debate.
The other major fertiliser that is imported into the country is potash, mostly from Russia, Canada and USA. During the current year, 3.5 million tonnes are expected to be imported from these countries. Until recently, 40% of potash sales came via the Russia-Belarus cartel at a price of around $400 per tonne. The Belarusian potash company, owned by the Russian, Uralkali and Belaruskali, literally controlled supplies. Both India and China had jointly approached the Belarus President to deal directly with them, instead of routing the business through Russia. While full details are not available, it appears, this appeal was accepted, and now direct dealing with Belarus has become possible.
As a result, Indian Potash Ltd and Zuari Industries expect to renegotiate the prices for supplies, which would be lower at around $350 per tonne.
The other global suppliers are Canpotex, representing Potash Corporation and Mosaic co of Canada and Agrium Inc of USA. This group covers 38% of the global potash capacity.
At the end of the day, the crucial question is whether it is worth our while to go in for domestic expansion of the fertiliser units, by adding up new production capacities, or to make the hard choice of continuing imports until the new sources of gas supplies have been located in the country? Also, efforts should be made to seriously look at the joint venture possibilities with gas producers like Qatar and other countries in the gulf.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)