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A state police circular, directing the police stations across Maharashtra, to register complaints against builders who cheat home buyers and violate building norms, has evoked a mixed response from developers and home buyers.
Swadesh Arya, who has not received possession of her flat in Mira Road for the past six years, says, “We went to the police station many times in the past two years. However, the police refused to register our complaint against the builders under the Maharashtra Ownership Flats Act, 1963 (MOFA) and told us that this was a civil case. So, we finally filed a case with the consumer forum. The circular will definitely bring relief to buyers, who have been cheated by their builders.”
After this move, aggrieved buyers can now file an FIR against the developer, for not giving the possession of flats on time as per the agreement and as per the provisions of the MOFA. The other issues covered by the circular, include delivery of the apartment by the developer without procuring the mandatory occupancy certificate and violations in the sanctioned plan.
The residents of illegal buildings, can also complain against the builder. The circular also seeks to act against developers, who accept 20% of the flat price but do not register the agreement, or those builders who fail to form a housing society within four months of handing over the flats to the buyers. In all these cases, the builder is liable to be imprisoned under the MOFA and hence, the police should register FIRs against such builders.
Activists are optimistic that buyers will not have to face harassment, at the hands of police officials. “Most of the time, aggrieved people felt that the police favoured the developer and in spite of giving documentary evidence, they were not given any importance,” explains housing activist, Prakash Paddikal.
Even developers are welcoming this circular. According to Rohit Poddar, managing director of Poddar Housing and Development Ltd, “Remedial measures that allow speedy justice, are always welcome, given the context of how long judicial interventions take. Errant builders should surely be taken to task. However, the police should also use their discretion before registering FIRs that have no sound basis in the law.”
Nishant Agarwal, managing director of Avighna India Ltd, concurs that each case should be examined separately, as the developer may not be at fault, many times. “Of late, amendments in policies have been a major reason for delays. Fraudulent complainants also misuse the RTI Act and lodge false complaints, in an attempt to extort money from developers. While it is important to fix accountability and responsibility on developers, it is also critical to ensure that a developer isn’t penalised due to frauds committed by individuals. If implemented holistically, this move will support the builders, who are transparent and law-abiding,” he asserts.
Industry experts feel that this step will encourage potential buyers and instil faith that they will not be cheated. Chintan Sheth, director of Sheth Corp, adds that this move will deter fly-by-night operators, who give a bad name to the industry. “This sector attracts people from various fields, with no qualifications or experience required. We need a regulator, a comprehensive one, and transparent systems in place,” he says.
Developers feel the heat
Some industry players, however, feel that this move is irrational and will discourage developers. Dharmesh Jain, president of MCHI – CREDAI, opines that the circular is ‘disturbing’. “It holds the developer solely responsible for delays but there are many issues, which are not in our control. Cornering the real estate sector like this, will spread a negative signal within the industry which is trying to recover,” he complains.
Rajesh Prajapati, managing director of Prajapati Constructions Ltd says, “It is utterly unfair to put the blame on a soft target, like developers. The onus should also be on the concerned officials, who delay permissions. The government should rethink the order and be practical in dealing with the real estate industry.”
Is it a long-term solution?
The other area of concern, is that after the implementation of Real Estate Regulation Act (RERA), the agreements will not be covered under MOFA as the act doesn’t have the same provisions. Mohit Bhardwaj, an aggrieved buyer, explains that “Section 13(2) of the MOFA, states that violation of Section 5, is punishable with five years. As per the Criminal Procedure Code (CrPC) first schedule table II, the offence is cognisable and an FIR can be filed by the police and should be as per the law. However, for other MOFA violations, the police may not be able to take cognisance, as the punishment is less than three years. The RERA has mentioned punishment for three years, if a project is sold without registration and is not cognisable and thus, the police cannot register an FIR. In a few years, most MOFA agreements will be extinct and this will affect the circular.”
Legal experts like Vinod Sampat, point out that this could also increase bribery. “These people will try to use the office of the housing department, to pressurise the chief minister to withdraw the circular or challenge the circular in court,” he cautions.
Dealing with a refusal to file FIR
If the police official at your local police station refuses to file the FIR, buyers can complain to the commissioner, mentioning the policeman’s designation and batch number and the reason he has given, for not filing the complaint.