Property Advocate Article:

LEGAL ASPECTS OFVALUATION WITH PARTICULAR REFERENCE TO SECURITISATION AND RECONSTRUCTION OFFINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT

There can be no doubt that the subject of ‘valuation’ is a specialised one and covers a wide range of purposes.  In our country the study of valuation as far as its legal aspect is concerned began with the enactment of Land Acquisition Act of1894.  Whenever acquisition of land and building has to take place under the provisions of the Land Acquisition Act estimating the market value of such land and building became necessary for the purpose of assessing and payment of compensation.

1.   With the passage of time valuation came to be studied in other different areas and contexts.  Some of them are the following.

a)     MunicipalTaxation, Income tax, Wealth tax and Gift Tax Laws for the purposes of charging and imposition of taxes on the property/particularly the real estate property.

b)       Insurance Laws for the purposes of determining the premium, salvage value of the property.

c)              Town planning Law for the levy of betterment charges.

d)       Stamp Laws for determining the stamp duty payable on the market  value of the property.

e)         Indian Electricity Act which lays down a specific procedure for valuing  assets when an undertaking of a licensee (a person Licensed to supply  electricity under the Act) is to be sold on revocation of a Licence.

2.   One of the most recent of the enactments which has provided for valuation of the assets is the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act for short) and the rules framed there under.  The said Act was passed to regulate securitization and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto.  While a detailed study of the Act and rules is unnecessary for the present purposes certain salient features of the Act and rules are enclosed to this paper.

3.   It may be noted that under the SARFAESI Act the valuation of assets would become necessary under the following circumstances.

Under Section 12 of the Act which empowers the RBI to give directions to a securitization company or an asset reconstruction company as to

a)        The type of financial asset of a Bank or Financial Institution which can be acquired by and procedure for acquisition of such assets and valuation thereof.

b)        The aggregate value of financial assets which may be acquired by any Securitisation company or reconstruction company.

Under the Security Interest (Enforcement) Rules 2002, valuation of movable and immovable assets taken possession of by the authorised officer of the Bank for the purposes of recovery of the dues of the Bank is mandatory.  The relevant rules read as under.

Rule 5 :

Valuation of Movable Secured Assets :

After taking possession under sub-rule (1) of rule 4 and in any case before sale, the authorised officer shall obtain the estimated value of the movable secured assets and thereafter if considered necessary, fix in consultation with the secured creditor, the reserve price of the assets to be sold in realization of the dues of the secured creditor.

Rule 8 sub rule 5 :

Before effecting sale of the immovable property referred to in sub rule (1) of rule 9 the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods.

Rule (2) :

(c) defines an approved valuer which reads as under “Approved Valuer” means a valuer as approved by the Board of Directors or Board of Trustees of the secured creditor as the case may be.

4.   Reserve Bank of India has framed guidelines regarding registration and functioning of Securitisation and Asset Reconstruction Companies.

General guidelines for securitisation companies / reconstruction companies have also been framed.

As regards acquisition of Financial Assets para 3 (viii) and (ix) are the relevant provisions of the said guidelines which provide as under.

viii)    The valuation process should be uniform for assets of same profile and a standard valuation method should be adopted to ensure that the valuation of Financial Assets be done in scientific and objective manner.  Valuation may be done internally and or by engaging an independent agency depending upon the value of the assets ideally, be entrusted to an asset acquisition committee which shall carry out the task in line with an Asset acquisition policy laid down by the Board in this regard.

ix)  A record indicating therein the details of deviations made from the prescriptions of the Board in the matter of asset acquisitions pricing, etc should be maintained.

5.   UnderSARFAESI Act therefore valuation of Financial Assets and of properties over which security interest is created would become necessary “Financial Asset” as defined in Section 2(l) of the said Act.  This is an inclusive definition which defines financial asset as debt or receivables including a claim to any debt or receivables or part thereof which may be secured by the mortgage, charge of movable / immovable property.  Security interest as per Section 2 (zf) of the SARFAESI Act means right, title and interest of any ki9nd whatsoever upon property created in favour of a secured creditor including any mortgage, charge, hypothecation, assignment.  Some charges are excluded from the definition of security interest as provided in section 31 of the SARFAESI Act.

6.   Essentially, while acquisition of Financial assets by the Securitisation or Asset Reconstruction Company has to take place, the valuation of such assets has to be done in a scientific and objective manner and when valuation is entrusted to an internal committee such committee has to carry out the task in line with the assets acquisition policy laid down in this regard by the Board of the Securitisation Company or the Asset Reconstruction company as the case may be.

7.   under the relevant rules framed under SARFAESI Act, valuation of secured assets by the approved valuer is mandatory.  Rule 5 prescribes that Authorised officer of the Bank while enforcing security interest shall obtain the estimated value of the movable assets and under rule 8 valuation of immovable property is required to be taken before sale of such property.

8.   The valuation process is undertaken to enable the authorised officer to fix a reserve price in consultation with the secured creditor and thereafter sell the assets for realisation of the dues of the secured creditor.  The endeavour should therefore be to ensure that such sales are upheld.  In this connection certain rulings given by the courts while considering validity of sale in execution of a decree or during liquidation proceedings will be relevant.

In S. Sunderarajan vs Khaka Mahomed Ismail Saheb AIR 1940 Madras page 42 the Madras High Court ruled that the auction sale is subject to confirmation by court which power is necessary to interfere in case the sale is for an inadequate price.  The Hon’ble Court has observed as under.

“It is only right and proper that the sale should be subject to the confirmation of the court.  The condition is a safeguard against irregularity or fraud in connection with the sale and against property being sold at an inadequate price.”

In A Subbaraya Mudaliar v/s K. Sundararajan AIR 1951 Madras Page 986, the same court has observed as follows.

“ It will therefore be not only proper but necessary that the court in exercising the discretion which it undoubtedly has of accepting or refusing to accept highest bid at the auction in pursuance of its orders should see that the price fetched at the auction is an adequate price.”

The Hon’ble Supreme Court of India in Union Bank of India v/s Official Liquidator reported in 2000(4) SCC 554 held

“At the outset, we would state that in the proceedings for winding up of the company under Liquidator, the court acts as a custodian for the interest of the company and the creditors.  Therefore, before sanctioning the sale of its assets, the court is required to exercise judicialdiscretion to see that properties are sold at a reasonable price.

For deciding what would be reasonable price, valuation report of an expert is a must.  Not only that it is the duty of the court to disclose the valuation report to the secured creditors and other interested persons including officers.  Further it is the duty of the court to apply its mind to the valuation report for verifying whether the report indicates reasonable market value of the property even if objections are not raised.”

The Supreme Court has relied on its earlier decisions Allahabad Bank v/s Bengal Paper Mills Co. reported in 1994 (4) S.C.C. 383 and M/s. Navalkha and sons v/s Sri. Ramanyadaa and others reported in 1969(3) Sec 537 at page 540.

  

9.   Therefore whenever valuation is made the above principles be kept in view to sustain the sale conducted by the authorised officer of the Bank so that all efforts can be made to fetch adequate and reasonable price for the property sold and the amount due to the Bank/Financial Institution is recovered in full and surplus if any could be made over to the Borrower.

For more:  http://www.advocateselvakumar.com

   K.R.KEERTHI

 Assistan General manager(law)

State Bank of Mysore, head Office, Bangalore

              (Source-Seminar on valuation Scenario)

                                          

Property Advocate Article Regarding “Confirmation Deed and Cancellation Deed/Supplementary Documents to rectify the mistakes in your deed”

(property advocates in Bangalore, property lawyers in Bangalore)

It is very common that many a times the main documents of sale, mortgage, lease are drafted by inexperienced and unqualified people, as a result of which defects creep into the documents. This necessitates the requirements of supplementary documents to remedy the mistakes. Deeds of confirmation, rectification and cancellation are some of the important supplemental deeds. We have already dealt with rectification deed. This write up deals with confirmation deed and cancellation deed.

There are two types of confirmation deeds, one of the types is, where a person confirms and assents to the documents of conveyance executed by another person. This becomes necessary, when a person is not made a party to the main document of conveyance either by oversight or by ignorance or by some other reasons.

Another type is very important. Here the party to a document has made some mistake in signing the main document or has failed to admit the execution before the sub-registrar within the prescribed time, and consequently the sub-registrar has refused to register the document as far as the said party is concerned or in some other respect. It is very common though the parties execute the documents, but fails to turn up at sub-registrars office to admit execution, and the registering authority, refuses to register the document. In order to remedy this defect, a deed of confirmation has to be executed from the concerned party, wherein the confirms the execution of principal deed and further adds that the principal deed is valid and binding on him. He also confirms that he has no right, interest, title to the property transferred which belongs to the purchaser/transferee.

As a precautionary measure a copy of principal deed should be annexed to the deed of confirmation and such copy should also be signed by the party executing the confirmation deed. However, whether such a document cures the defects of the main documents is debatable, but such documents would act as promissory estoppels against the party. This would avoid execution of fresh documents, payment of stamp duty and registration charges.

The word confirmation in strict parlance means approbation or assent to the estate already created, by which confirmation party further strengthens and gives legal validity to such estate so far at it is his powers.

The confirmation may be given in variety of ways (1) by acquiescence (2) by limitation (3) by deeds. Confirmations of acquiescence and by limitations are the outcome of operation of law.

The Indian registration recognizes confirmation deeds. Sec. 17(1) provides any deed confirming any interest in immovable property needs to be registered.

The confirmation deed attracts stamp duty. If the main documents is registered or to be registered the corresponding confirmation deed also requires registration.

Deed of Cancellation:

Section 13 of Specific Relief Act 1963, deals with the cancellation deeds. There may be certain written documents, which by their nature or by operation of law or by some other reasons are void, violable. Such documents if left as they are and outstanding may harm the interest, right, titles privileges of some party. Such person may institute a suit, praying for cancellation of such written documents, and the court in its discretion if thinks it proper may order for Cancellation of such written document.

There may be documents of contract, which are void as they are against Law Public Policy or violable if they are vitiated by fraud coercion or other similar grounds. The parties to the document may also cancel such documents by mutual consent without referring to the court. An agreement for sale, lease, mortgage, license, partition, may be cancelled by the parties with consent of all parties.

But at times, the matter of cancellation of document may not be so simple as some parties may want to take undue advantage, or very mature of document may not make it simple task.

A deed of conveyance, which is duly executed and registered, cannot be cancelled by mere deed of cancellation. The proper course would be to execute a reconveyance deed and get it duly registered. But if of fraud, coercions or incase of any disagreement among the parties, the chances of mutual consent to cancel the agreement are very remote. In such cases, the affected party has to seek the intervention of the court by filing suit as per the provisions of section 13 of Specific Relief Act.

If any of the documents are unregistered, it may be cancelled by consent of all the parties by scoring off or by endorsing it about cancellation. But in both cases, all the parties should sign the document for having cancelled.

Cancellation deed attracts the stamp duty as per section 17 of Indian Stamp Act, that is stamp duty is payable only if it is attested by witness. A cancellation deed, which is not attested, attracts stamp duty as per agreement.

If the main deed needs to be registered. Cancellation deed also needs to be registered.

For more: http://www.advocateselvakumar.com

Property Advocate Article Regarding "Prohibition on Registration of immovable properties"

Realty Bites by S.Selvakumar

Prohibitionon Registration of immovable properties

Property market in Bangalore was buoyant in recent times. Rates which were upwardly mobile were settling, as mostly end users were purchasing the property. As the Real estate which is considered as mother of all industries, trades, was pulsating, many other sectors, which depend on this sector, were also prospering.

But recent government orders have stalled the growth of the property market; the sudden unexpected decisions have the effect of applying airbrake to fast moving vehicle, jolting the passengers.

Prohibitionon registration:

Registering authorities have stopped the registering the sale, gift, exchange, mortgage, agreement to sell, lease or assignment or otherwise of the following properties from 06.05.2005; consequent to government notification dated 23/April/2005.

1.    Site with or without building in agricultural land which is not converted for non-agricultural purpose under section 95 of Karnataka Land Revenue Act 1964.

2.    Site described as Gramathana site (form no. 9, 10) or other site declared under form no. 19 under rules framed Karnataka Municipality Act 1964, but not actually converted as such site.

3.    Site on a revenue land described as Gramathana Site or other site or a site with a building on which no layout plan is approved and a release certificate is issued from local planning authority like BDA, BMRDA, BIAAPA, BMIC, etc.

4.    Site on a revenue land described as Gramathana site or other site, flats, industrial site, commercial site, without requisite permission under section 79 A and B read with section 109 of Karnataka Land Reforms Act.

Thus the transfer of only the following properties are permitted.

a.    Properties falling under Bangalore Mahanagara Palike.

b.   Properties allotted by BDA

c.    Properties in BDA approved layouts

d.   Properties in layouts approved by other local planning authorities like BMRDA, BIAAPA, BMIC etc.

This prohibition on registration of transfer of certain properties has given a death blow to the property market in and around Bangalore and kept it in suspended animation.

To further compound the issue, the government by its order dated 02/05/2005 has ordered not to grant permission for conversation of agricultural land in and around Bangalore until further orders. Conversion of land is prior requisite for any development, and formation of layouts. By suspending the conversion of land, the government is promoting artificial scarcity of land, it will also lead to construction of unauthorized structures.

Impact:

Many people have entered into sale agreements for purchase of properties in areas of village panchayats, City Municipalities by paying substantial amounts of advance. Most of them are of middle class. It would be difficult to get the refund of the advance paid, and the limitation period also operates against the purchaser. The properties cannot be registered. Thus hard earned money gets blocked, or may have lost for ever.

Many property developers have also invested crores of rupees in properties in forming layouts, constructing flats, villas, houses, but such layouts are not approved by planning authorities. BDA and other planning authorities are very lethargic and do not have proper infrastructure to approve the layouts in this fast developing sector. Prohibiting the registration of sites, flats in such layouts causes heavy loss to investors. Cordial relationships existed between the vendors and purchasers would disappear, and may lead to enimity, court cases.

The expected revenue from 12 registering offices in Bangalore is about 1000 crores. This is likely to go down by 50% as number of registrations come down, because of the said prohibition on registration.

Demandfor sites:

The worst impact will be on price of the land, which was settling to a reasonable level in recent times. As the availability of the land is considerably reduced the property prices will shoot up to unaffordable level, as even before this prohibition the supply was short of demand. About 20,000 sites are blocked in Arkavathy Layout and their availability for public will be after protracted legal battle depending upon court verdict. The BDA has introduced the system of 10 years Lease cum Sale method, which will make the availability of the land very scarce.

Importantly, the method of operation will change. The parties will transfer the properties by executing power of attorneys, clandestine transactions will dominate the market, and no legally valid title will pass. The middle man will exploit the common man.

No, doubt the action of the government is correct in order to ensure proper and orderly grow of Bangalore and other cities and to avoid exploitation of innocent agriculturists from land mafia. But this should have been done much earlier. It would have been better if the government has allowed registration of dealings agreed under agreements upto a particular date.

The government should have fore-warned before issuing such far reaching notification. The value of the properties will increase in some pockets, and it will reduce in certain pockets where the registration is prohibited. People who are unaware of the government notification will invest money on such properties and finally have to loose the money.

The author is an advocate who specialises in property matters. He can be reached in E-mail: editor@realestatereporter.net. Ph: 25526644/45.

For more:http://www.advocateselvakumar.com

Property Advocate Article Regarding "COMMENCEMENT AND OCCUPANCY CERTIFICATES FOR THE FLATS"

(property advocates in Bangalore, property lawyers in Bangalore)

The Completion Certificate and Occupancy Certificate from the Planning authority are essential for any construction as per the provision of law.  These certificates evidence that the Commencement and Completion of the building are as per the approved plan and in compliance of Locals laws. Every body heard about the word Commencement Certificate and Occupancy Certificate.’  But practically, most of the persons who are the owners of the buildings have not at all seen how the Commencement Certificate and Completion Certificate will be.  The Commencement certificate is one of the most essential documents for the Apartment Construction.  Only a few builders who are developing the mega project are obtaining Commencement and Completion Certificates.  Generally, for small Apartment owners, getting completion certificate is not possible because of the deviation and violation in the building construction. Some of the Financial institutions and MNCs tenants are insisting on the Commencement Certificate and the Completion Certificate from the owners of the building.

COMMENCEMENTCERTIFICATE:

After the approval of the building plan, the owner shall give notice to the authority of the intention to start work on building site in writing. Further, the owner shall give notice to the authority on completion of foundation or footings before erection of walls on the foundation.   Within 15 days from the date of receipt of such notice, the Engineering wing/authority shall inspect the site to verify as to whether the foundation work for the building conforms to the sanction plan or not.  If the foundation work is according to the sanction plan, the authority will issue commencement certificate within the prescribed period from the date of the inspection.  In any case, the construction shall be proceeded according to the sanctioned plan as if the permission for the commencement of the work  is deemed to have been accorded.

Further, the authority will verify as to whether the building has been constructed in all respects as per the sanctioned plan of the building, complied with Building bye-laws, including other relevant permissions or clearances obtained from the other departments. If everything is in order, Engineering Department will issue the Commencement certificate.

OCCUPANCYCERTIFICATE:

Problems with respect to issuance of Occupancy Certificate arises on account of violation of Building laws, which is almost 95% of building in Bangalore facing the problem. Though common people have spent their hard earned money on the project with a dream of owning a house, they are unable to get the occupancy certificate because of the deviations in construction of the building. Whereas, the Builders having a good connection, escape through various loopholes in law and extended their saleable area.

DEVIATIONSAND VIOLATION:

Wherever any construction is in violation of the sanctioned plan, the Commissioner may, if he considers that the violation are minor viz., only when the violations is within 5% of (1) the minimum set back to be left around the building (2) the maximum plot coverage (3) permissible floor area ratio and maximum height of the building and that the demolition under the Act is not feasible without affecting the structural stability,  regularise such violations by issuing sanction of the modified plan with  a levy of suitable fee to be prescribed.  The Commissioner shall come to such conclusion only after recording detailed reasons for the same.  Violations under the provision shall not include the buildings which are constructed without obtaining any sanctioned plan whatsoever and also violation, which are made inspite of the same being specifically deleted or rejected in the sanctioned plan.

CONSEQUENCE OF DEVIATION:

In general, builders and occupants are not much bothering about the Commencement Certificate and Occupancy Certificate. It is advisable to insist for the Completion certificate from the builders. Only after the receipt of completion certificate, the title will be perfected. However, the officials are not bothering at the time construction and they would not issue the completion certificate after completion of the building. People in Bangalore in general are not bothering about the completion certificate.

However, certain cases of demolition of unauthorized floors,  deviations were happened very recently at Brigade Road Street and Richmond Street, in Bangalore.

Deviation is a vicious circle, which only the government can break.  Government must initiate immediate remedial action to stem the root.  The authorities shall not be very rigid in granting completion certificates. If the builder has deviated a little more than the allowed percentage, the authorities may impose the huge penalty and regularize the building.

For more info:

http://www.advocateselvakumar.com

Property Advocate Article Regarding "UNAUTHORISED DEVELOPMENTS"

(property advocates in Bangalore, property lawyers in Bangalore)

Unauthorized developments may be classified as unauthorized layouts, unauthorized buildings, and building deviations. Unauthorized developments take place when the demand for sites/houses is not fulfilled, unreasonable  planning regulations, complicated official procedures, high official  charges for approval, high unofficial expenditure, the greed of land owners / developers to make quick easy money, political interferences, long time taken for court decisions, etc.  All these problems are to betackled and promotional atmosphere is to be created. The land lords / developers/ officials who violate norms should be quickly prosecuted to make them aware that they are not allowed to go scot free if unauthorized developments are carried out. The general opinion is that in Mumbai  procedures are simple, less harassment, better control, and land owners/ developers follow procedures.

In Bangalore the position is bad due to rapid expansion of City, heavy demand,  and good returns on real estate investments. Two lakhs and odd applications received by BDA for sites in Arkavathi Layout proves the high demand for sites. The number ofencroachments in Arkavathi and High- Tech City schemes of BDA and 99% ofbuilding violations in 87 buildings of Koramangala are examples to prove thatthe situation in Bangalore is bad. Another attraction in Bangalore is higher F.A.R up to 2.50 whereas the maximum F.A.R in Mumbai City is 1.30. Inspite of higher F.A.R in Bangalore buildings come up with  additional floor area, additional floors, conversion of parking space, and conversion of open balconies. This is due to lack of enforcement by the civic agencies like B.D.A , B.M.P. and the municipalities.

Unauthorized layouts :

Unauthorized layouts are those layouts which are formed on  agricultural lands without conversion of the agricultural land for non –agricultural purpose under the Karnataka Land Revenue Act, or without layout approval from the Development Authority / Planning Authority. such layouts are formed in Green Belt. The sites in theselayouts are called revenue sites. Advertisements are made in the news papers about availability of D.C converted sites. These are sites in land converted by the Deputy Commissioner for non-agricultural purpose but the layout is formed without approval of Development Authority /Planning Authority. In some cases layout is approved but formed  completely changing the layout pattern. In some layouts parks and civic amenities are converted in to sites. There are layouts where the road widths are reduced and sital area increased.

The general public are not aware of the procedures for formation of layouts and hence purchase the revenue sites. The revenue sites developers show the ignorant buyers conversion order, katha , and tax paid receipts issued illegally by village panchayats and municipalities.

As the authorities and Government were not serious in controlling      unauthorized  layouts, many unauthorized layouts were formed with th e hope that sites in such layouts will get regularized by collecting meagre amount as betterment charges which is about Rs.100/- per sq mtr. After collecting, the City corporation and the city municipalities spend the amount for their general expenditure. Improvement works are taken up after many years and people in such layouts suffer without proper roads, water supply, under ground drainage and civic amenities. BESCOM provides electrical connections even in unauthorized layouts, which is bad. BESCOM should not give electrical connections to unauthorized sites to discourage unauthorized layouts. Government may have to issue a strict circular to KPTCL  not to provide electrical connections to revenue sites unless NOC’s are issued by Development Authority/ Planning Authority.

Government’s ban on registration of sites without conversion or without approval of layout by development Authority / planning Authority w.e.f 06.05.2005 may discourage purchase of sites in revenue layouts and revenue layout formation. Karnataka Town and Country Planning Act was amended  to provide for prosecution of promoters for developments  made without  approval of the planning authority. This will have to be strictly followed to discourage unauthorized layouts / developments. It is to be made clear by Government that conversion orders are to be insisted by sub-registrars  in cases where survey numbers are mentioned in the property documents and not for old municipal sites like; Malleswaram, Basavangudi, Chamarajpet, Cantonment localities etc which were formed during British regime. These extensions were formed by the Bangalore City Municipality and the question of producing conversion orders does not arise.

         

Unauthorized buildings. :

Unauthorized buildings are those which are built without sanction of building plan from the municipal authority.  Buildings sanctioned illegally by municipalities and village panchayats in unauthorized layouts are also unauthorized as per interpretation of the courts. The Supreme Court in the Judgment on high-rise buildings case of Bangalore (M.D. Narayana Vs Bangalore City Corporation and others) held that the buildings sanctioned by the Bangalore City Corporation in violation of the Zoning Regulations of the Master Plan are illegal and the additional floors sanctioned may be demolished. It is held that it is the responsibility of the owners of buildings to obtain building sanction strictly according to Zoning Regulations / Building Byelaws. The owners of such buildings cannot say that as the building is sanctioned by the city corporation / municipality, the buildings are authorized and legal. 

Many people/ builders/ architects are not aware of this legal interpretation. Buyers of buildings/ flats may have to note this point. It is common to see sanction of buildings by the village panchayats even  in municipal areas. The erstwhile HAL Sanitary Board used to sanction buildings violating the regulations and byelaws without any scrutiny. Manipal Hospital on Airport Road is one such building sanctioned by the HAL Sanitary Board. Many people deliberately get such sanctions and build as there is no restriction on set backs or floor area etc in such sanctions. The village level officials are not punished for such illegal building sanctions. BDA has powers to demolish buildings sanctioned by the village panchayats. There is a Task Force in BDA  with police,  revenue and engineering officials to prevent all unauthorized layouts / buildings in the mMetropolitan Area of Bangalore. But nothing happens and thousands of unauthorized developments take place in Bangalore. Clearance of BDA in the form of Commencement Certificate is required under the Town Planning Act to see that developments are not violating approved land use, road pattern etc. This procedure which is followed in Hubli- Dharwad and other cities is not followed in Bangalore.

Building Deviations :

Violation of land use in buildings is very common. Unauthorized commercial buildings are built on roads with heavy traffic, main roads, approach roads to localities, road junctions etc. No action is taken by BDA, BMP, and the municipalities. Only when petition against such land use violations are filed in the High Court, action is taken on such buildings. we have recently come across violation of land use in 87 buildings in Koramangala surveyed as per directions of High Court. 99 % of the buildings here violated land use by converting residential sites/ buildings to commercial use. The High Court issued directions on 01.09.2005 to remove the buildings violating land use and remove the deviations made violating sanctioned plans. Such directions by the High Court in petitions by affected citizens and civic concious people may discourage such violations in future. BMP has Junior Engineers / Asst. Engineers,  Asst. Exe. Engineers in each MLA constituency, and Executive Engineers, Superintending Engineers, Chief Engineers, and Enginer – in- Chief.  What action they have taken when 99% of the surveyed buildings were put up in violation of land use and regulations. Are they helpless spectators? How many lakhs of buildings have come up in various wards of BMP.?, these are the questions to be answered by the City Corporation and BDA.

What action BDA Town Planning officials have taken  when they observed such violations during their inspections  in Koramangala.

When law abiding citizens request approvals on merit and  as per rule, will they get approvals easily without harassment? If agencies  do not take actions on land use and building violations ,the High Court may come to the rescue of law abiding citizens to enable planned development of the rapidly growing Bangalore City.

Apart from land use violations, the other violation made is reduction or not leaving  set backs, building more floor area by extending the building over the set backs ,or some times by building additional floors without sanction.

Parking space in basements of commercial buildings are converted denying the occupants parking facilities and increasing parking problem  in that area.  Conversion of parking spaces in basements are made even on important roads like; M.G. Road, Brigade Road, Commercial Street, St.Marks Road, Gandhi Nagar etc. Such complexes have come up in front of Corporation engineering offices also. The occupants of such complexes and other persons affected should file petitions in the High Court  similar to the Koramangala case. As otherwise, parking problem and traffic problems may increase making living in the City miserable. Already the traffic situation is so bad that it takes hours for employed people to reach their houses.

Another type of violation made is conversion of open balconies as additional floor area. Builders get more profits in such conversions.

Some press reports have given details of land use and other violations in the Country’s capital, Delhi. Times of India , New Delhi dated 28-09-2005 reported that seven residential colonies with 70% industries are being regularized. Three months time is given to them to form societies and submit layout plans for regularization. It is stated that shops and godowns  are treated as industry. This is wrong according to classification in Town Planning regulations. No manufacturing and service industry activity is involved in shops and godowns. These two may be allowed as permissible uses in industrial zone and not as industries as reported in the news paper.

It is also reported in that paper that 26 other colonies with similar violations have applied for regularization. It is stated that the Union Urban Development Ministry have decided to regularize these colonies. Urban Development Ministry which is expected to promote planned development has come down to the level of municipalities. The intention seems to be vote catching.

In another report of Times of India , New Delhi edition dated 28-09-2005, it is stated that in the posh Vasanth Vihar area rampant commercialization is observed. The Delhi High Court has directed the official of Municipal Corporation of Delhi to visit the area every day till the next hearing. The violator of the building should appear before the Municipal Magistrate every day. The Electricity Authority of Delhi was directed by the High Court not to give permanent connections to 47 buildings where Completion certificates are not produced. Demolition orders are passed in respect of 30 buildings in Vasanth Vihar area. The unoccupied portions of the buildings  are sealed and the occupants in the other portions directed to vacate to take up demolitions.

In Bangalore City also with large scaleviolations, such drastic actions are required to be taken in the interest of improving quality of life in the City.

For more info:http://www.advocateselvakumar.com

"COMMENCEMENT AND OCCUPANCY CERTIFICATES FOR THE FLATS"

(property advocates in Bangalore, property lawyers in Bangalore)

The Completion Certificate and Occupancy Certificate from the Planning authority are essential for any construction as per the provision of law.  These certificates evidence that the Commencement and Completion of the building are as per the approved plan and in compliance of Locals laws. Every body heard about the word Commencement Certificate and Occupancy Certificate.’  But practically, most of the persons who are the owners of the buildings have not at all seen how the Commencement Certificate and Completion Certificate will be.  The Commencement certificate is one of the most essential documents for the Apartment Construction.  Only a few builders who are developing the mega project are obtaining Commencement and Completion Certificates.  Generally, for small Apartment owners, getting completion certificate is not possible because of the deviation and violation in the building construction. Some of the Financial institutions and MNCs tenants are insisting on the Commencement Certificate and the Completion Certificate from the owners of the building.

COMMENCEMENTCERTIFICATE:

After the approval of the building plan, the owner shall give notice to the authority of the intention to start work on building site in writing. Further, the owner shall give notice to the authority on completion of foundation or footings before erection of walls on the foundation.   Within 15 days from the date of receipt of such notice, the Engineering wing/authority shall inspect the site to verify as to whether the foundation work for the building conforms to the sanction plan or not.  If the foundation work is according to the sanction plan, the authority will issue commencement certificate within the prescribed period from the date of the inspection.  In any case, the construction shall be proceeded according to the sanctioned plan as if the permission for the commencement of the work  is deemed to have been accorded.

Further, the authority will verify as to whether the building has been constructed in all respects as per the sanctioned plan of the building, complied with Building bye-laws, including other relevant permissions or clearances obtained from the other departments. If everything is in order, Engineering Department will issue the Commencement certificate.

OCCUPANCYCERTIFICATE:

Problems with respect to issuance of Occupancy Certificate arises on account of violation of Building laws, which is almost 95% of building in Bangalore facing the problem. Though common people have spent their hard earned money on the project with a dream of owning a house, they are unable to get the occupancy certificate because of the deviations in construction of the building. Whereas, the Builders having a good connection, escape through  various loopholes in law and extended their saleable area.

DEVIATIONSAND VIOLATION:

Wherever any construction is in violation of the sanctioned plan, the Commissioner may, if he considers that the violation are minor viz., only when the violations is within 5% of (1) the minimum set back to be left around the building (2) the maximum plot coverage (3) permissible floor area ratio and maximum height of the building and that the demolition under the Act is not feasible without affecting the structural stability,  regularise such violations by issuing sanction of the modified plan with  a levy of suitable fee to be prescribed.  The Commissioner shall come to such conclusion only after recording detailed reasons for the same.  Violations under the provision shall not include the buildings which are constructed without obtaining any sanctioned plan whatsoever and also violation, which are made inspite of the same being specifically deleted or rejected in the sanctioned plan.

CONSEQUENCE OF DEVIATION:

In general, builders and occupants are not much bothering about the Commencement Certificate and Occupancy Certificate. It is advisable to insist for the Completion certificate from the builders. Only after the receipt of completion certificate, the title will be perfected. However, the officials are not bothering at the time construction and they would not issue the completion certificate after completion of the building. People in Bangalore in general are not bothering about the completion certificate.

However, certain cases of demolition of unauthorized floors,  deviations were happened very recently at Brigade Road Street and Richmond Street, in Bangalore.

Deviation is a vicious circle, which only the government can break.  Government must initiate immediate remedial action to stem the root.  The authorities shall not be very rigid in granting completion certificates. If the builder has deviated a little more than the allowed percentage, the authorities may impose the huge penalty and regularize the building.

For more info:

http://www.advocateselvakumar.com