Mumbai-based Navbharat Development Corp did not execute a conveyance deed with a society for over 26 years
The Mumbai Suburban District Consumer Disputes Redressal Forum fined a city-based developer Navbharat Development Corporation last month for failing to execute a conveyance deed with a registered co-operative housing society for over 26 years. The forum also directed the developer to bear the burden of the difference of the charges in the stamp-duty, which was increased from 1984 (from 1980-1984, the stamp duty was 1% of the value of the property), obtain the full Occupancy Certificate (OC) and Building Completion Certificate (BCC) within three months.
"It is a benchmark decision by the forum and now developers can no longer ignore conveying the land to the society. If the purchaser is paying all the charges levied by the government and the developer, he/she should legally owe the property completely," said Vinod C Sampat, advocate and proprietor, Vinod C Sampat and Co.
If Navbharat Development Corp fails to comply with the order, it has to pay a fine of Rs500 per day from the date of expiry of the stipulated period (three months) till all the certificates are handed over to the society. The developer is also expected to pay Rs5,000 as penalty besides the above mentioned charges, the forum said in its order.
The case relates to Bandra-based Natalia Co-operative Housing Society Ltd. While selling flats, Navbharat Development Corp collected Rs500 from each purchaser towards performance of agreement, Rs251 towards share money and entrance fee and Rs20,400 towards stamp-duty.
The buyers were given possession of their apartments in 1983 and within a year's time, they formed a co-operative housing society by registering the same with the regional authorities.
Despite the formation of a registered housing society, the developer was not willing to sign a conveyance deed (a document that conveys the title of ownership of a property from the original owner to the ultimate purchaser, in this case to flat owners). After failing to get a positive response from the developer despite repeated requests and reminders, on 15 July 2008 the society filed a case against the developer in the consumer forum.
Earlier in June, another district consumer forum from Mumbai sentenced a developer to two year's jail for not executing the conveyance deed in favour of a society despite directives by the National Consumer Disputes Redressal Commission.
Similarly, many developers do not provide BCC to flat owners. Instead they issue the OC. Therefore, almost 95% of the buildings in Mumbai do not have BCC and conveyance.
According to another developer, there is no specific definition on what constitutes 'completion' of a property. Every state has a different definition of 'completion'.
Industry sources told Moneylife, developers find it easy to procure the OC rather than spend a huge amount to get a BCC from the authorities. The OC is issued when developers receive civic permission for water connections and sewage facilities. Many developers do not even try to procure BCCs, revealed a source.
The authorities issue the OC only when the property is fit for occupancy. Later nobody really bothers about the BCC, he said. The developers can no more escape from completing all the formalities while selling apartments.
Net outflows from equity funds reach a whopping Rs11,560 crore since entry load ban since August 2009, 30% of it in just July itself!
Equity funds are witnessing continuous redemptions since the entry load ban in August 2009 but in July it has turned into a massive haemorrhage. A humungous Rs3400 crores flew out of mutual funds in July alone. Including the outflow of last month, net outflows since August 2009 stand at a whopping Rs11,560 crore.
The sales of new equity schemes stood at Rs705 crore In (Mirae Asset Emerging Bluechip Fund and SBI PSU Fund were launched) while sales of existing equity schemes was Rs4308 crores in July. But last month, redemptions from existing equity schemes stood at Rs8,413 crore meaning that equity mutual funds suffered a Rs3,400 crore of net outflow in July 2010. In June investors pulled out Rs1,446 crore from equity schemes.
Liquid funds have seen a healthy inflow of Rs34,303 due to improved liquidity situation while balanced funds recorded Rs43 crore outflows in July. As on July 2010, the assets under management (AUM) of the industry stood at Rs6.68 lakh crore.
Commenting on the severe outflow, Jimmy Patel, CEO, Quantum Mutual Fund said, “distributors seem to be pushing ULIPs as they are more lucrative and their new norms will be implemented shortly. Equity funds are also witnessing new sales but nothing really major as it is still very much a “push product.”
Ever since the Securities and Exchange Board of India (SEBI) banned the entry load for mutual fund schemes, fund companies have been suffering from a steady haemorrhage of cash from their equity schemes. Over the last 12 months, funds have recorded positive inflows only in just two months. This is all the more galling for the fund industry, because mutual funds normally benefit from inflow of funds when the market is rising. Between March 2009 and July 2009 when the Sensex was up 88%, the fund industry saw an inflow of Rs7,429 crore. Indeed, even when the Sensex came down crashing by 39% between April 2008-December 2008, the mutual fund industry still saw an inflow of Rs1,254 crore.
Therefore, the continuous outflow of cash can only be attributed to SEBI’s order of banning entry loads and forcing fund distributors to make money by ‘advising’ investors. Distributors have simply stopped selling funds.
The truth is that, the ban on entry loads has dried up the distributors’ revenues and they are now asking investors to consider Unit-linked Insurance Plans (ULIPs) and company fixed deposits as the next best investment opportunity.
This is unfortunate because ULIPs are no better than equity funds unless they are held for a longer period while fixed deposits are unsecured investments. But the commissions on ULIPs and FDs are extremely attractive which is why distributors are pushing them.
I met an investor who had a list of more than 50 mutual fund schemes that he had invested in. In...