FIRs to serve as deterrent for builders

PUNE: Registration of FIRs against builders who cheat home buyers and violate building norms would serve as a major deterrent for property developers.

Legal experts said this here on Tuesday, adding that developers would now have to be more alert about fulfilling their statutory obligations.

Experts described the latest directive to police stations across Maharashtra to register such FIRs on complaints by home buyers as a much-needed step. that would benefit aggrieved consumers. “Especially at a time when instances of builders cheating or exploiting unsuspecting buyers have gone up significantly,” lawyer V D Karjatkar, who specialises in real estate and conveyancing, told media on Tuesday.

For instance, consumer body Akhil Bharatiya Grahak Panchayat is spearheading a campaign against 40 property developers in Pune who have allegedly violated laws governing construction of building and flat ownership. Builders booked for making misleading claims about schemes on lands without any sanctions and not refunding money collected from buyers have also been reported recently.

Most complaints by individual homebuyers relate to builders failing to hand over possession in time or developers who deliver apartments without procuring the mandatory completion certificate and building occupation certificate. Other issues are of non-execution of registered agreement with buyer after accepting 20% of the flat price, failure to form and register a housing cooperative society, executing deed of apartment and conveyance in favour of society. Police can now register complaints and probe such matters.

The directive, issued by special inspector general of police Prabhat Kumar on July 1, should also put to rest the troubles a flat purchaser has to go through when approaching police with a complaint against a builder. Police generally label it a civil dispute and tell the purchaser to seek remedy before a civil court.

The directive has caused concern among builders. “These provisions are there in the Maharashtra Ownership Flats Act (MOFA) for many years, why is it coming up now? Builders must be given a fair chance to explain themselves before an FIR is registered, otherwise such action becomes arbitrary,” Jaiprakash P Shroff, chairman and managing director of Shroff Group, said.

Realtors blame the lack of clarity vis-a-vis remedies available to consumers. “The issue is to do with individual homebuyers and the problems they face at an individual level. These consumers have the option to file cases in civil as well as consumer courts. Often, customers file complaints with municipal authorities as well. It is primarily this lack of clarity that has been a roadblock in police not entertaining consumer grievances at individual levels,” said Rohit Gera, vice-president of realtor’s body Credai-Pune Metro.

Currently, Consumer Protection Act (CPA) and MOFA are the two primary enactments under which a homebuyer wronged by a developer can seek remedy.

Consumer lawyer Rushikesh Ganu said, “In case of CPA, the deterrence factor comes only at the stage of execution proceeding regarding non-compliance of consumer court’s order. Till then, a property developer only has to file written statements and affidavits in response to complaint. However, with the registration of an FIR, the prospect of criminal prosecution and arrest, and arranging for bail will be greater deterrents to developers.”

He said, “Unless these rules are framed and tribunals and appellate bodies are set up and become functional, MOFA will remain the best available remedy, apart from CPA. MOFA has not been repealed yet and any complaint lodged with the police under this act will be correct. Post-notification of RERA what has been repealed is the state enactment of 2012 which provided for similar regulation of construction industry.”

Karjatkar said, “As and when the RERA gets effective in terms of the tribunals and appellate bodies adjudicating disputes between homebuyers and realtors, all the ongoing schemes launched after May 1 will come within the ambit of the new enactment.”

: Key provisions of MOFA

Section 3 of the Act deals with liabilities of a promoter such as full and true disclosure of the nature of title to the land; all encumbrances on such land including any right, title, interest or claim of any person over it; facilitating inspection of plans and building specifications; written undertaking about flat possession date, not allowing possession till completion certificate is obtained; full disclosure of outgoings like rent, taxes, water/ electricity charges, and full disclosure of particulars like carpet area, balcony shown separately and description of common areas and other facilities

Section 4 casts a statutory obligation on builder to enter into an agreement of sale with the buyer and register such agreement before accepting an advance of not more than 20% of the flat price. The agreement must mention date of possession and price of flat

Section 5 mandates a builder to maintain separate accounts of advance or deposit collected from buyer, money collected towards formation of cooperative society, municipal and local taxes, water and electricity charges

Section 7 restricts a builder from making any alterations or additions without the consent of the flat purchaser, after the plans and specifications are disclosed

Section 11 casts an obligation on the builder to convey title and execute documents according to agreement

Sections 13 & 14 provide for punishments including sentencing from 3 to 5 years in case of violations of provisions by the builder and empowers a first class judicial magistrate court to pronounce such sentences on conviction of a builder.

Credits ET Realty

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