Considering their proximity to fast-growing cities like Delhi and Chandigarh, development of new urban complexes in Haryana could have been anticipated decades ago. Proper laws to regulate such activity should have been formulated after careful deliberation. Unfortunately, not only were the rules drafted ambiguous and confusing but they are also subject to careless interpretation by the state’s officials, observes Lalit Mohan.

CONSIDERING their proximity to fast-growing cities like Delhi and Chandigarh, development of new urban complexes in Haryana could have been anticipated decades ago.Proper laws to regulate such activity should have been formulated after careful deliberation. Unfortunately,not only were the rules drafted ambiguous and confusing but they are also subject to careless interpretation by the state’s officials due to their lack of clarity.

Take, for example, the case of a private project in Gurgaon, one of the latest to come into the market. Clause 2 of the printed sale agreement says that the buyer has "fully satisfied himself about the interest and the title of the company (the developer) in the said land. There will be no more investigation or objection in this respect." Wouldn’t it be easier if the agreement said that the promoter of the colony claims to own the property in question and would be liable to civil and criminal action if what he said were false?

The next clause says that the buyer has seen all the plans, specifications and related documents and "agrees that the company may effect such variations, additions, alterations, deletions and modifications therein as it may, in its sole discretion deem appropriate" and that the buyer gives his consent to this provision. The purchaser has no say in the matter. He may have opted for a particular design, size or location and may get something entirely different , but he has to accept it.

The respective penalties for non-performance of the terms of the contract are brazenly unequal. If the buyer delays his instalments,he will have to pay a penalty that starts at 18 per cent and goes up to 24 per cent per year. In an extreme case the builder can even resume the property.

If the coloniser delays completion of the project, he generally pays no penalty. Even if he agrees to do so, it is never more than five per cent, no matter how generous the offer may seem.

Clause 9 of the agreement says that the residents will pay whatever charges or security is demanded by the coloniser for running the maintenance services. Again, the buyers have no say, whichever the colony. Some property sellers even impose a condition that the residents will not approach the courts for justice in case they feel aggrieved in any manner. And no account is ever given of the income earned from the money collected as ‘security’.

The DTCP should, if it was alert enough, have questioned all these conditions.

A very vital provision of the 1975 law is section 3 (3) a (iii) which states that the developer is responsible for "the maintenance and upkeep of all roads, open spaces, public parks and pubic health services for a period of five years from the date of issue of the completion certificate." Almost all sale agreements that the residents have to sign say that the promoter can fix charges of the upkeep according to his whims and fancies and the buyers just have to accept his cost calculation, if he condescends to submit it at all.

If the DTCP had a different interpretation of this provision, it chose to keep its opinion a closely guarded secret for several years. But suddenly, on May 15, 1999, the department came out with a notice in a Delhi newspaper, which, quoting the law, said that the upkeep of the plotted colonies and in group housing schemes was to be done gratis by the builder and that "All allottees in privately licensed colonies are intimated through this notice that no extension fee (for permission to construct) and maintenance charges are payable to the coloniser and any collection made by them in the past is unauthorised."

Probably, the notice was published to pre-empt any action by the courts for neglect of this important duty. After all, nothing had been said about this matter for two decades. Nevertheless, the announcement came as a bombshell to the colonisers as much as it brought relief to the property buyers. Three of the leading builders of Gurgaon. — DLF, Unitech and Ansals — challenged it through a writ petition in the Punjab and Haryana High Court, where the matter still stands.

The developers’ principal arguments are: that the agreement between the buyers and sellers is a contract in which the DTCP cannot interfere; that they are also providing services other than those mentioned in the Act; and that though they accept their responsibility for maintenance, nowhere does the law says that this has to be done free of cost. The last of these contentions points out a glaring instance of careless legal drafting. If the law had stated clearly whether this service was to be free of cost or not, and had laid down a mechanism for arriving at the charges, if any, much of the litigation and recrimination over this issue would have been avoided.

Meanwhile, the residents’ associations also joined in the battle in the court as an affected party. They affirm the contents of the government’s notice and say that the builders cannot step outside the terms of their license. The builders too, undeterred by the court case, continue to impose the same conditions in projects announced subsequently.

Then, just two months after the first notice a ‘clarification’ appeared in the same newspaper. Referring to the earlier advertisement , it stated that "in case of group housing, the liability of colonisers for maintenance of services within the group housing complex is confined to underground public health services for which no charges are payable by the allottees. However for the upkeep and maintenance of common areas and provision of other services/facilities in the group housing complex, the charges are payable by the residents to the agency who is carrying out such maintenance."

In other words, according to this nugget of department's wisdom, while the people living in colonies where plots have been carved out should get all services free of cost, those living in what are now commonly known as condominium, cannot.

While the Court will decide what Section 3 (3) a (iii) of the Act means, the DTCP seems unaware that the law applies equally to group housing schemes in the state.

In fact, not once, but twice, the law and the legal agreements signed by this department, stipulate that the responsibility of the promoters of a condominium is identical to that of the developers of plotted colonies.

First, the licence to build these settlements has been given under rule 11 of the Haryana Development and Regulation of Urban Areas Act, which states exactly what Section 3 (3) a (iii) of the Act does. This very clause is reproduced a second time in the license agreements of the developers.

In fact, in their petition against the DTCP’s original notice, even the builders have not claimed any exemption for the group housing colonies on the ground that the law is different in their case.

The law relating to development of residential property in Haryana is not stringent enough to force the builders to complete their project in the stipulated time. So far not one private colony in Gurgaon has got a ‘completion certificate’. The builders have a vested interest in keeping control over ‘common areas and facilities’ and the other lucrative avenues in each colony. If nothing, some of the administrative costs of the existing or an adjacent project can be loaded on to the one in which people are already living and making them pay for it through ‘maintenance’. There are instances galore of this happening.

Even more galling is the fact that while commercial complexes come up and are completed in record time, residential projects linger on at a snail's pace. In Gurgaon, a private builder started work on condominium years ago and the deadline for completion keeps getting extended. But commercial plazas started much later and are already functional, or about to be so. The principal reason for this is that while large companies who buy office space are able to force developers to agree their conditions, individuals who purchase apartments are not strong enough individually to impose any such terms.

Apart from using the builder-government nexus, some developers resort to a very clever stratagem to avoid the completion deadline. The moment they get close to it they buy a small piece of land close by, attach it to the colony and start developing it from scratch. The countdown then starts afresh.

The government also seems to have no clue about what it intends to do after these projects are ‘completed’. The administration of the new colonies is supposed to be handed over to a civic authority. But no one knows which body will run these areas. Will it be HUDA Or, the municipality? Or, some new department? Possibly the reason why the government is not pressing developers to complete their projects is that it itself is totally clueless about what is to be done after the builders depart.

In 1983 a law was enacted to regulate the development of self-contained group housing complexes (condominiums). It also laid down the manner in which they were to be handed over to the flat owners for subsequent administration. This legislation is known as the Haryana Apartment Ownership Act. For the builders HAOA is what its acronym sounds like, a ‘hawooa’. Once it is enforced they will lose control over common facilities in such condominiums, such as schools, shops, parking areas, clubs and other revenue yielding assets. So, despite seemingly strong letters from the government, asking them to implement this law, developers in Gurgaon have been treating it with disdain.

And the government can do little about it because HAOA has its own weaknesses. It seems the law was drafted without much thinking after lifting portions from similar legislation in other states.

The builders have been able to avoid its application so far because they have not got their ‘completion certificates’ only after which the other steps follow. The next step requires them to file a complicated ‘declaration’ giving details of the properties, but it does not say clearly what would happen if they don’t.

Assuming they do it, next comes the execution of conveyance deeds of individual dwellings of the buyers. Here again the government is totally confused. A large number of flats in Gurgaon have already been registered in the names of the buyers under the normal law for immovable properties. This is obviously an incorrect procedure because it contravenes HAOA, under which what has to be registered is not only a person’s flat or house, but also his interest in the common areas of the complex as well. The idea is that the entire complex should belong to its residents.

There is another way of looking at this issue. In the case of self-constructed houses conveyance duty is paid only on the value of the land. Why, then, should apartment dwellers pay duty on the element of construction in the value of the flat? This is an issue that should have been settled when the Apartment Act was enacted because without it, it is incomplete. In several states in India a much lower fee is charged for registration for group housing property. This is an issue that should have been settled when the Apartment Act was enacted because without it, it is incomplete.

The government made a tacit admission of its error in reply to a query from the PHD Chamber of Commerce and Industry, in August 1998, asking whether those who had already paid stamp duty (on the sale price of the apartment) would be asked to pay it again under the Act. In the reply the DTCP stated: "Conveyance deeds already executed cannot be treated as deed of apartment." And that a formal request to treat this as such be made after the Act is implemented. This again is an untenable position because what will be registered under HAOA will be more than just the apartment a person owns. And, of course, the government needs to be asked, if these deeds were not to be recognised, why were they accepted at all? Were they unaware of the correct legal position?

HAOA states that the entire property has to be submitted to its provisions. ‘Property’ includes not only the land on which the buildings stand, but also ‘all easements, rights and appurtenances’. This is further clarified in the rules to include ‘roads, public health, electrification and recreational facilities’. And yet, clause 4 (a) of the sale agreement for the recently launched estate in Gurgaon says that the buyer will not have ‘any right, title...in any land, buildings, common areas, facilities and amenities falling outside the land beneath the said building’. Did the DTCP check this agreement before giving his approval?

After the complex has been transferred to the owners more complications are in store if it is to be run according to the provisions of this law. Section 9 of the rules framed under this Act says that the residents will elect their representatives and voting rights in this election will be proportionate to value of the respective units. But how is the value to be calculated? The law is silent on this point. Is it the market value? Is it the original sale price? How many different voting rights can each complex have? How will it function with such complicated voting or share apportionment?

The PHD Chamber suggested that voting rights be determined on the basis of the square foot area of each dwelling. The government’s reply was that the suggestion is "under consideration of the department".

This ‘consideration’ has been on for over a year now. Apart from issuing contradictory notices about group housing schemes, the DTCP has not proceeded much further in the matter.

Perhaps time has come for the Government to confer with all concerned parties and take a stock of all existing laws and rules on the subject, evaluate their implementation and change them wherever necessary. With experience gained (at the expense of property buyers), the law-makers and those who enforce them would both be a little wiser.