You might end up being a victim of fraud if you invest in a property in Delhi's land pooling zone

Check that advertisement for that beautiful apartment being sold for a great price, and that too in the Capital. Do find out more about the zone it is located in and then check the Delhi Master Plan 2021. If your builder tells you the project is in the land pooling zone, and that you can make a good profit from it, understand that you might end up being a victim of fraud. If one goes by the recent public notices of Delhi Development Authority (DDA), such offers are illegal and homebuyers are advised to stay away from them.

A builder recently announced the launch of a project in L-Zone, Dwarka. Newspaper advertisements of the projects also offered a buyback policy with 25% interest in two years. L-Zone falls in the land pooling zone, but DDA has just prepared the draft regulation of the land pooling policy and it is yet to be notified – no developer can as of now own land in this zone.
A number of public notices have been issued by DDA, warning people to stay away from “any illegal offer of registration of plots/flats under the land pooling policy”.

“The general public is hereby cautioned that for any sector within a zone (specific area) to qualify under land pooling policy, minimum 60% land needs to be made available by the developers. Besides, the final plot shall be carved out either within the sector or nearby in the concerned zone in which the application for participation in the land pooling has been made. The final plot allotted to the developer entity may not constitute part of the original plot. Therefore, the claim of coverage of a specific area under the scheme or availability of land in a specific location by developers cannot be made at this stage. The general public is, therefore, warned not to get tempted by such attractive offers/schemes for housing under land pooling policy,” says the DDA notice.

Dozens of developers, however, are putting up stalls to sell projects. Several welfare societies have also come up, inviting potential buyers to invest in land. HT Estates, on October 18, 2014, had reported how hundreds of welfare societies had been registered after 2007 when the Delhi Master Plan (MPD 2021) had been notified, laying down land pooling policy norms and earmarking five zones in the Capital – J, K (I&II), L, N and p (I&II).

Though the Urban Development Ministry has given its nod to operational guidelines for the land pooling policy, several hurdles still remain in its implementation. The most difficult hurdle at the moment seems to be the conversion of 89 revenue villages into urban villages. The next hurdle will be identifying and demarcating 20,000 hectares for development, which will be done by the land and building department of the Delhi government. Only when these two notifications are in place will DDA be in a position to invite applications from developers for handover of their land with it.

Says Sidharth Luthra, a senior criminal lawyer and former additional solicitor general of India, “The practice, adopted by developers, is what is known as a pre-launch. Typically, a builder starts marketing the flats that he will build in the future even before the plans are approved by the municipal authorities or other plan-sanctioning authority. The builder does not execute any agreement with the buyer for the simple reason that there is no flat he can sell. Usually, non-binding documents such as ‘expression of interest’ or ‘memorandum of understanding’ are made by the builder, which offer little or no protection to the buyer in the event of any dispute with the builder.”

So can action be taken against such pre-launches in Delhi? Real estate and legal experts are of the view that such advertisements and sale are illegal and preventive action must be taken by DDA.

Delhi Police on its part cannot do anything until it gets a complaint from an aggrieved party. According to DCP (west Delhi), Pushpendra Kumar, “Delhi Police can’t take any preventive action in such cases. We can act only when an aggrieved person will lodge a complaint with us.”

However, Balvinder Kumar, former vice chairman, DDA, is of the view that DDA is in a position to take legal action against such builders. “This amounts to fraud. DDA has advertised time and again and cautioned people not to invest money in these projects but people are still doing that. I think DDA must take preventive measures. It is high time DDA takes legal recourse to address the problem.”

Pradeep Mishra, CMD, Rudrabhishek Enterprises Pvt Ltd, a town planning and architectural consultancy firm, advises buyers to be careful. “Unfortunately, despite repeated public notices, people are driven by greed to make money by investing in any real estate projects which promise them huge returns.”