Companies & Sectors
Land ceiling Act repealed, but litigation goes on

The Urban Land Ceiling Act was repealed in November 2007. However, real-estate developers are still fighting cases related to this repealed legislation in the Bombay High Court

The repealed Urban Land Ceiling (ULC) Act has held up more than 100 projects across Maharashtra. The Maharashtra government came up with the ULC Act in 1976 to impose a ceiling limit on vacant land in urban areas. The Act was repealed in November 2007. However, the Bombay High Court is still hearing cases related to this repealed Act—on a daily basis.

You can’t but wonder about the sheer irony of the situation, when a law does not exist any more, but hearings on cases under a repealed Act are being conducted everyday.

According to industry sources, such cases against various developers are being struck down by the Bombay High Court, because the Maharashtra government had placed the names of the properties of various developers in its revenue record, so that it can show that it has a claim on these properties. This move by the government, say sources, was carried out after the repeal of the ULC Act.

Various developers claim that the government had simply acquired their properties by placing them under the revenue record. This was done without giving due notice to various developers. In a few cases, claim developers, the properties were not even physically acquired by the government, but they were simply placed under the revenue record.

Neptune Group has recently won four cases which were stuck under the repealed ULC Act. “We are happy that we have won the case filed under the ULC Act related to our Swarajya Ambivali project. We knew that we would win it, as the government had wrongfully placed these properties under their revenue record,” said Sachin Deshmukh, director, Neptune Group.

“It takes a minimum of four years to physically transfer a property between two parties. But the government finished the procedure of acquisition in two months after the law was repealed. Everyday, developers are winning cases (against the government). This is because the government either did not follow the full procedure of physical acquisition, nor did the developer receive a notice from the government,” said Rajesh Shukla, legal adviser, Neptune Group.

“Our projects were put under the ULC Act in February 2008 after the law was repealed in November 2007. In a number of such cases, the High Court has passed judgement in favour of the developer,” added Mr Shukla.

Godrej Properties Ltd and K Raheja Universal are also fighting similar cases in the Bombay High Court.

Whenever these cases come up in the Bombay High Court for hearing, the court refers to the Voltas Switchgear Ltd case. The company had about 27,000 sq metres of land in Thane which was stuck up under the ULC Act for almost two years. The company filed a case way back in 2006 against the acquisition of its land, and it subsequently won the case on 25 July 2008, as the court decreed that the land was not physically acquired by the government.

“We also have a few cases in the Bombay High Court, but we know we will win it as the government has not physically acquired our land. We are also thinking of developing a township on these lands,” said Mofatraj P Munot, chairman & founder-promoter, Kalpataru Group.
“In Thane, five to six projects on Ghodbunder Road are stuck up under this (repealed) law. The developers whose lands are stuck up in such cases, and who have (ownership of) 100 acres, are converting their land into townships. The UCL Act does not apply to townships anyway,” said Pankaj Kapoor, founder, Liases Foras.

Ergo, developers in possession of land above 100 acres are converting them into townships to stay on the right side of the law. In Pune, four such townships have come up. Hiranandani Constructions is coming up with a similar township in Panvel.

“If you have more than 100 acres of land, the ULC Act does not apply. But if you had been served a notice by the government for acquisition of your land (below 100 acres) before the ULC Act was repealed, you will have to go through the complete legal procedure to free your land from the government’s clutch,” said Omar Vanjara, associate partner, Solomon & Co, advocates and solicitors. 



Kiran Joshi

6 years ago

We salute the govt decesion. since I would like to suggest that, once the Act is reappeal there should be automatic system the land to be revert back and a list of clear land to be published on specific web site of ULC govt of maha. ACtual the Addl. collector, ULC Bandra Mr.S.R.Jodhanle should publish such a list so that open public may get the idea of the same. It is my humble request to govt machineries


7 years ago

If the law is not existing why cases are going on & it is totally waste of time and money as well .in mumbai if you wonts to devlope a city its the one thing which is coming in between as lots of projects has stuck up.The goverment has to take dicision very fast.

Bond market in a quandary

Yields on government bonds have witnessed wide fluctuations as participants speculated on the impending rate hike—but the government still remains non-committal on the timing of this move

Over the past few days, yields on the benchmark 10-year bonds have seen volatile movements, as traders speculate on the awaited monetary actions by the government. Although the Centre has given strong signals for a withdrawal from its supportive stance on interest rates, it is not clear when and how the government will put its plans into motion.

 The yield on the 6.35% note due January 2020 fell two basis points to 7.55% yesterday after Planning Commission deputy chairman Montek Singh Ahluwalia dismissed rumours of the Reserve Bank of India (RBI) raising interest rates before the January monetary policy review. Earlier, the 10-year bond yields were pushed to their highest level in about 14 months, amid speculation that rising inflation would prompt the central bank into hiking interest rates.

Indeed, the government has been sending mixed signals from time to time, with no clear indications of the timing and extent of rate hike. It has been putting off the upward revision in interest rates in the light of continued sluggishness in credit growth. Bank credit grew by just 10.5% in November, which may force the RBI to further bring down its credit growth target from 18%. At the same time, the rapidly accelerating food and wholesale price inflation is keeping the central bank on its toes.

This has also put bond markets in a spot of bother. RVS Sridhar, treasury head of Axis Bank confirms, “Currently, the bond market is worried about the rate hike. It is not sure what would be the extent of action, though it knows that RBI would tighten rates soon. At some stage, in the matter of the next few quarters, markets are pricing in the hike in reverse repo rate.”

The RBI is widely expected to implement a hike in the cash reserve ratio (CRR), the percentage of excess reserves banks should keep with the RBI, sometime around January. Mr Sridhar also believes that there is a high probability of CRR hike from next month. “It could be announced even before the policy. Hike in the reverse repo rate, to my mind, is unlikely before June 2010.”

Mr Sridhar opines that the 10-year yields will move in a band of 7.50%-7.75% until March 2010. He expects rates to remain around 7.75% around June.


Hanung Toys wins significant order from US

Hanung Toys has won an order worth Rs280 crore from the US. This indicates the strength of the American economic recovery

Hanung Toys & Textiles Ltd, India’s largest manufacturer and exporter of soft toys, decorative cushions and children’s room furnishings has said that it has signed an export order tie-up with a leading US buyer, for exporting home furnishing. The deal is valued at $60 million (about Rs280 crore) which is to be completed by December 2012.

The size of the deal underlines the fact that order flows from the US have started in full swing. It is a significant pointer for companies exporting garments (Nahar Spinning & RSWM) and furnishing (Welspun & Himatsingka Siede). We expect a series of order flows in the coming year which is starting on a bullish note. For the September 2009 quarter, Hanung posted an operating profit of Rs31.48 crore and sales of Rs182.61 crore, higher than the sales of Rs168.29 crore and an operating profit of Rs27.65 crore in the year-ago period. Its operating profit margin has averaged 16% over the past three quarters. The current valuation of textiles and other export companies is depressed because the US economy is seen to be in a weak recovery mode. Hanung’s market cap is 0.38 times its sales and 2.22 times its operating profit of the September quarter. This latest US order deal has helped the stock regain its momentum which it lost since October 2009 after hitting a high of Rs132. On Thursday, the stock shot up 5%, ending the day at Rs116.


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