Welfare or unfair?

Nov 04, 2014 08:53 PM IST

Welfare societies registered after DDA’s land pooling policy announcement could be illegally raising funds for housing projects

Sanjeev Sen, executive in a multinational company, recently invested Rs. 1 lakh in a welfare society formed two years ago to raise money for buying land under the Delhi Development Authority’s yet-to-be-notified land pooling policy. He also had to pay a fee for membership of the society, which according to him was set up to invite members, pool their money and buy agricultural land in zones identified for land pooling in the Master Plan of Delhi (MPD) 2021.

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HT Image

An office-bearer of the society who requested that his and the society’s names be withheld, said, “We have bought 12 acres of land and are waiting for DDA draft regulation policy to be notified. Once it happens, we will give our land to DDA under the land pooling policy. After completion of formalities we will get our construction plan approved and start work on the apartments. We are now only collecting the cost of the land from the members. Once we start construction, demand letters will be sent to members as per the various stages of construction.”

Interestingly, the society has been registered under Society Registration Act 1860, which is an Act for “the registration of literary, scientific and charitable societies. Hundreds of such welfare societies were registered after 2007 when MPD 2021 was notified, laying down land pooling policy norms and earmarking five zones in the Capital – J, K (I&II), L, N and p (I&II).

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All about the policy

Agriculture land of villages adjoining Najafgarh, Dwarka, Karnal highway, Burari etc are to be developed for residential purpose under the land pooling scheme. Landowners in these areas will transfer their land to DDA, which will retain 52% land for developing civic facilities such as roads etc and return the remaining 48% to the landowners in case they own land from two hectares to 20 hectares. For those with 20 hectares and above, DDA with retain 40% land and return 60% to the landowners. To compensate landowners for loss of land, DDA will award them higher floor area ratio (FAR), which will allow them to construct more apartments in projects on their land and sell the same for a profit. Land at present in the aforementioned areas is owned by farmers and developers. Of late, welfare societies have started buying the properties from farmers in anticipation of the policy being implemented.The challenge is that till now DDA has only prepared the draft regulation of the policy and it is yet to be notified. Real estate experts say it is too early to say which sector of a particular zone will come under the policy as DDA will not consider areas not conforming to the terms and conditions of the policy.

Can people be duped?

Legal experts, realtors, urban development experts and revenue officials are of the view that when a policy is under review, setting up a welfare society and collecting money for it is illegal.“Earlier, people used to come together to form a co-operative group housing society (CGHS) and apply to DDA for land at concessional prices to build apartments for its members. However, since 1990, registration of CGHS is on hold in Delhi and people have started forming welfare societies under the Society Registration Act for the same purpose. This is illegal in my view because such welfare societies are basically NGOs which, instead of doing working for the welfare of the society, are indulging in economic activities,” says a real estate developer in Dwarka.Jasbir Mallik, a Supreme Court lawyer, agrees. “First of all, when the draft regulation of the land pooling policy is not final, any fundraising activity under the said policy by any group, society or developer is illegal. Secondly, welfare societies cannot encroach upon the functions of CGHS under the garb of welfare activities. Law enforcing agencies should initiate appropriate action before innocent people become victims of fraud.” Senior DDA officials say such activities can lead to too many disputes and frauds. “These welfare societies can easily run away with the homebuyers’ money. They are promising the moon but in reality investors may end up getting nothing. All are promising expected construction years as 2017 and 2018 but no one can say for sure when the policy will take final shape and be implemented,” says a legal official from DDA. Some welfare societies have now converted to multi-state cooperative societies to legalise their activities.

Developers, too, selling dreams

Besides welfare societies, some real estate companies have also launched their projects in the aforementioned zones, collecting 25% of the proposed cost of the flat as booking amount. These developers are promising 2 BHK in the range of Rs. 40 to Rs. 60 lakh. Deepak Gupta, executive director, Kamp Developer, says they have launched the first phase of a project in L Zone in Dwarka and sold 60% of the apartments at the rate of Rs. 4500 per sq ft. “You have to pay 10% of the booking amount and 15% after 90 days of the booking. Out of 485 flats, we have already sold 285 flats for which people have already paid 25%. Nothing is available below the seventh or eighth floors. Homebuyers don’t need to worry as everything is legal,” he adds.

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    Jeevan Prakash Sharma is assistant editor, Special Assignment. He has spent nearly 20 years in journalism with focus on education, real estate, crime and legal . He specialises in RTI-based information and open source data.

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