AWHO Consumer Rights
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Topic: AWHO Consumer Rights

AWHO

CONSUMER RIGHTS

AWHO: A Tribute

• We are grateful to the people who concieved AWHO and all those who brought all the successes it achieved in fulfilling its mission over the years and it deserves the praise of all its stakeholders.
• It is in the interests of the stake holders that the AWHO is doing a good job of holding its costs down to the minimum and even distributes the surpluses at the end of each project to its customers.
• It is in the interest of the stakeholders that AWHO become a truly customer caring organisation and not break the laws of the land with regard to customer protection.

1. TO PROMOTE AND SUPPORT CONSUMER PROTECTION AND SUITABLY SENSITISE AWHO AND ITS STAFF
2. TO ENCOURAGE STRICT REGULATION AND STANDARDS ON THE CONSUMER PROTECTION IN AWHO IN ALL THE ACTIVIES AND TRANSACTIONS.
3. TO ENCOURAGE AWHO VOLUNTARILY TO AMEND THE TERMS AND CONDITIONS OF ITS BUSINESS TO REFLECT THE CONSUMER PROTECTION LAWS, OBJECTIVES AND PRINCIPLES AND TRULY ACHIEVE THE "WELFARE" STATUS OF THE ORGANISATION CURRENTLY CARRIED IN THE NAME OF THE ORGANISATION.

STRATEGY

1. Intensify efforts to prevent practices which are damaging to the economic interests of consumers through ensuring that AWHO in the provision of goods and services adhere to established laws and mandatory standards. The seed of litigation is sown in the process of decision-making. Therefore, at the stage of decision making itself, the decision makers have got to be on the right side of law and use law as an instrument of policy making. Only that can ensure low litigation and thus wasted effort and money to enable the non-profit organisation like AWHO to provide its services to its valued customers - serving and retired army personnel.
   
2. Encourage effort to monitor adverse practices, strengthen or maintain, as the case may be, measures relating to the control of restrictive and other abusive business practices which may be harmful to consumers, including means for the enforcement of such measures.
3. Protect consumers from such contractual abuses as one-sided standard contracts involving exclusion of essential consumer rights in contracts as these not sustainable/maintainable in law as it exists to day.
4. Intensify efforts to make AWHO institute measures enabling consumers to obtain redress through AWHO's legal and/or administrative mechanisms to enable consumers to obtain redress through formal or informal procedures that are expeditious, fair, inexpensive and accessible.
5. Encourage AWHO to resolve consumer disputes in a fair, expeditious and informal manner, and to establish voluntary mechanisms, including advisory services and informal complaints procedures, which can provide assistance to consumers, information on available redress and other dispute-resolving procedures available to consumers within the organisation before seeking redressal through external legal mechanisms.

Index

   1. Interest burden  inequity
   2. No complaints on quality/specification adherence
   3. Future Management of Colonies
   4. No sale/transfer with out permission
   5. Absolute power to refuse sale
   6. Absolute power to cancel allotment
   7. Power to charge seller and buyer Rs 10,000 or such amount decided by the MD
   8. Arbitrationin Delhi only
   9. Absolute power to decide the arbitrator even if he is NOT independant and no power to challenge the same
  10. Legal proceedings in Delhi only.
  11. Organisations liability at any stage : only to refund money with interest 5% less processing charges
  12. MD has final authority to accept/reject the application and his decision shall be conclusive and final.
  13. MD has the final word on interpretation of the Rules  and his decision is binding and not open to appeal/representation.
  14. The board of management/ executive Committee has the right to alter, add or delete any rules and it shall be binding
  15. The general liabilities of a Promoter-Builder are conveniently or perhaps deliberately avoided inthe brochure.
  16. Rights of a purchaser/ Allottee What must a purchaser ascertain and/or fix before purchasing a flat from the builder?
  17. Allottees right to inspect
  18. Challenge for AWHO to be truly "welfare" oriented




Clause 43(a)Registration fee from the annual registration scheme will carry simple interest @5%p.a The interest will be admissible from FIRST of the month  following the receipt for application upto END of the month preceding the issue of 'Booking Letter'

Comments:
Not paying interest as is available from the banks on a daily basis is an unfair trade practise and liable to be manipulated to the advantage of the organisation by setting dates of calling  for applications and booking letter dates to suitably escape the interest liability. Banks and financial institutions give interest on a daily rests basis and the rule is exploitative of the consumer.
Ref Para 41, Interest on Delayed Payments on instalments when due is chargeable from the consumer at 15.5%/10% for every day of delay. Unfairly tilted in favor of the organisation.The right to seek redressal against unfair trade practices or unscrupulous exploitation of consumer undermines the the principles ensrined in the Consumer Protection Act 1986. Worse still, it undercuts the claim that AWHO is a  "welfare" orgaisation concerned withthe wefare of the consumers..

Clause 70.The dwelling uits will be offered on "as is where is' basis, subject to certification by the PM and Consultant Architect.
The organisation will not entertain any request for addition/alteration or any complaint what so ever regarding the design and structural work, quality of materialused , workmanship or any other defects.

Comments:

This is violative of the existing statutes (Consumer Protection Act)

Products and services by builder are covered under the Consumer Protection Act. A consumer can file a complaint in case the builder has given you deficient services regarding the following:

    * Delivered a poor quality construction.
    * Delivered a house that does not comply with the specifications agreed upon.

Not entertaining any complaint is tantamount to not being heard. The consumer Protection Act 1986 ensrines the right to be heard and to be assured that the Consumers' interest will get due consideration. Any violation of this  is violation of existing  law.

- Compensation for ineffective supervision

The Tamil Nadu State Consumer Disputes Redressal Commission has awarded a compensation of Rs 7,86,853 to 28 allottees in a case involving the Tamil Nadu Housing Board. The allottees complained that there were several deficiencies in the construction that need to be rectified. The commission directed the board to initially pay the compensation and then recover from those involved in the project.


Chapter VIII Future Management and Maintenance of Project/Colonies
Rights and duties of the organisation after 1 year of the completion of dwelling units are not spelt out and left to the guessing of the consumer. Duties and liabilities of  Welfare Maintenance Society and the allottees are clealy spelt out.

Comments:

AWHO seems to have an identity crisis- whether they are a builder/promoter or some thing more than this. If  they are some thing more than this, what are  their rights, duties and liabilities viz a viz that of the co-op society and the individual allottee  and under what statutes are these governed  are not clearly stated. This is against the spirit of  Consumer Protection Act and the other relevent statutes. In the absence such definition, assuming certain powers seems to be arbitrary and not maintainable under law.

The MD is made out to be a benevolent dictator and no one can appeal against the dictator.The "benevolent dictator" will generally not invoke his power to be a dictator since  you are assured that he is more benevolent than a dictator  and have nothing to fear.
To be under the dictatorshipof the organisation for life (because even after the allottment of the property and and take over, one has to live life under the authority of a "builder" is repugnant to the concept of  the rights of the people to participate in the creation of all local governments -- whether labeled, classified or defined as "public" or "private" -- and reserve certain rights to themselves as inalienable, shall not be abridged. No governments may be created by private businesses, or individuals, prior to the arrival of THE PEOPLE that will be governed by these governments. The legislature shall make no law that permits a corporation to govern a community of citizens so as to restrict their fundamental liberties.

This issue of conveyance of the land by the builder to the society is quite a gray area.
The reason for this deliberate failure is that the builder still remains the owner of the property. To add to this, whenever any additional Floor Space Index (FSI) is granted the builder gets right to use it and make money. As a result of which these societies have only possessory rights and not the ownership over the land.

A promoter under section 11 of the Maharashtra Ownership of Flats Act, 1963 is under a statutory duty to convey all the interest in the land and buildings to the society within four months from the date of formation of society."  Under section 13(1) of the said Act if the builder or the promoter fails to do the same on conviction he shall be liable on conviction for imprisonment for a term which may extend to three years or with fine, or with both.

But flat holders or a society hardly take this step. The reason could be ignorance or the time consuming court procedures or the influential status of the builder. An amendment to the statute is badly needed as unscrupulous builders took advantage of this loophole in many ways. Such a move of amendment has been under consideration for more than 6 years.

The amendment bill  proposes to insert the provisions related to the automatic conveyance in case the builder fails to do so and imposes more grave sanctions on the builder who fails to do so without any reasonable excuse.

The promoter is imposed with a liability to state the date by which the conveyance deed is to be executed. If it is brought to the notice of the Authority appointed by the Government that the Promoter has failed to execute the conveyance deed by the stipulated time, the Authority shall give show-cause notice to the promoter and after giving hearing to him, if satisfied may extend such date to such period as deemed fit.

If the promoter fails to execute the conveyance deed of property in favour of the Society or Association of the flat owners as the case may be within such period as sanctioned by the competent authority, the Authority shall record that fact in writing and after completing all the requirements legally necessary for executing conveyance deed shall issue certificate of title, free of all encumbrance to the Society or Association. Such certificate shall be deemed and treated as conveyance deed executed in favour of the Society or Association irrespective of any provision of any law for time being in force.

The Authority is vested with the power to Black list the name of the promoter who fails or avoids executing the conveyance deed in favour of the Society or Association within the stipulated period. The name so black listed shall be communicated to the Government and he will be barred from undertaking construction of blocks or flats henceforth.

The bill also proposes to increase the term of imprisonment from three years to ten years and extend the fine to five lakh rupees if the builder is convicted for failure to give conveyance to the Society or Association under section 13(1) of the Act.

There are many advantages to conveyance. Some of these are mentioned below:

"           Acquiring marketable title;

"           Retaining additional F.S.I.;,

"           Loan can be raised by creating mortgage;

"           Permission for reconstruction can be taken by the society;

"           Construct additional floors by TDR.

 
These advantages are possible only if the conveyance is done in favour of the society. The proposed amendment to the Act is absolutely necessary as it endow the society with a stronger weapon against the malpractices of the builders.

Clause 80 No sale/transfer/assigning of a dwelling unit to a third party shall be effected by an allottee.. with out prior permission in writing of the Organisation

Clause 81: .. The Organisation reserve the right in its absolute discretion to refuse permission to sell the dwelling unit.

Clause 82: .. the Organisation reserves the right in absolute discretion to cancel the allotment of such dwelling unit to the original allottee and to take over posession of the dwelling unit.

Clause 83.. Power to charge Rs 10000/= from the seller and the buyer as transfer fee.
Clause 84: No allotteeshall mortgage/ pawn the dwelling unit for the purpose of securing any loan at any stage, except with the permission of the organisation.


Comments:

 Refer to comments above.
These are powers which are absolute, arbitrary and not sanctioned by any law of the land. These are sweeping powers which are questionable under the existing statutes dealing with right  to property and consumer protection and the fact that no one has questioned it so far does not make it any more legal. This violates the ownership rights of property enshrined in the statutes.

Using a contract, form or any other document related to a consumer transaction which contains a confessed judgment clause that waives the consumer's right to assert a legal defense to an action is defective under law.
Even when adequate notice of the terms and conditions in a document have been given, the party imposing the cnditions may not be able to rely on them if he has committed a breach of contract which can be desribed as "fundamental."
Exemption clauses are construed strictly, particularly where they are so widely drawn as to be unreasonable and doubtful if any, are not resolved in favour of the stronger party.
Another mode of protection is to exclude the unreasonable terms from the contract. A term is unreasonable, if it defeat the very purpose of the contract or if it were repugnant to the public policy.
Again, services rendered under a contract which exempt the supplier from liability and a third party is injured  by the use of them, the supplier is liable to him, not withstanding that he has purchased his exemption from the other party to the contract.
"standard form contract" or the "contracted adhesion" is employed to denote the type of contract of which the conditions are fixed by one of the parties in advance and open to acceptance by any one. The most unfortunate socio-economic aspect of the of this development is that this contract has been forged by the mighty dealers, suppliers and even public or government undertakings and so called " welfare organisations" as an instrument of exploitation and oppression of the weak and the poor consumer. These contracts are attended by so many evils, that legislative and judicial intervention has become sine qua non to do justice in the cause of the servient party, which in most cases is the consumer.
The terms and conditions always lean favourably towards the imposing party. The servient party-- the consumer is generally hustled and compelled by circumstancess to get into such standard form contracts as other wise he will be deprived of all necessary amenities. He has to submit to imposition of standard form contracts, which even control the place of suing, penalty if a condition is violated . His voliton, or desire or intention is of no account.
Such standard form of contract some time contain an "exemption clause" which often provides that the imposing party will not be liable  in virtually any circumstances whatsoever. The rights enjoyed by Consumer Protection Act  in addition to other Acts that protect the citizens or general public for the protection of the consumer ( like IPC 1980, CPC 1908, MRTP Act 1969, Code of Criminal Procedure 1973BIS Act 1986, consumer Protection under the law of torts etc.) can not be wished away by an exemption clause in the aggreement. Fundamental principle is that the producers liability is partly contractual in origin, it can not be excluded by agreement.  This prohibits any exclusion  or limitation of, liability by contractor notice, emphasising that wherever the warranty, theories used to justify its development is essentially tort based.


Clause 89 Place of arbitration Delhi only irrespective of the location of the property.
Clause 90 Arbitrator  will not be objected even if his independance is doubtful

Comments:

CPC 1908 elaborately defines  where ( first and foremost, where the property is located)  the suit is to be insituted. Clause 89  violates and abridges this right ensrined in the statutes.

Claus 90 Violates the existing Statutes Arbitration and Concilliation Act 1986 Civil Procedure Code,
Grounds for challenge.-

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if-

    (a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

    (b) he does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.




Clause 95. Legal proceedings shall be instituted in delhi only regardless of the location of the property.
Comments:


Clause 95 violates the  letter and spirit of the Consumer Protection Act  and CPC 1908
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION,   NEW DELHI order dated   11th   April,  2002. JUSTICE D.P. WADHWA, J.(PRESIDENT) "To help  and assist a consumer   and to achieve the objects of the Act, Section 11 of the Act was amended.   This  Section relates to  the jurisdiction of the District Forum.  Now  a complaint could be filed against the opposite party  not only at the place where  he actually or voluntarily reside or personally works for  gain  but also where he carries on business or has branch office.  The words "carries  on business or has a branch office" were added by the amending Act of 1993....  Jurisdiction of a District Forum is exclusively covered  by Section 11 of the Act.  For this we do not have to refer any provisions of the Code of Civil Procedure.     Any provision  of the agreement which oust the jurisdiction of a District Forum   even from a place where the opposite  party has a branch office  cannot  be held to be  valid or binding."


Clause 99. Organisation's only liability at any stage is to refund the deposit with interest as per rules (ie. 5% as per clause  43)  less 2% handling charges of Registration  Amount. As no mention of stage is stated, these powers are available to the MD at any stage before actual taking posession of the property.

Comments:
The MD is made out to be a benevolent dictator and no one can appeal against the dictator.The "benevolent dictator" will generally not invoke his power to be a dictator, but  you are assured that he is more benevolent than a dictator  and have nothing to fear.
As per existing case laws of  NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI, order dated the    31st  August,  2001 PER JUSTICE D.P. WADHWA, PRESIDENT, the interest payable for  delay in allottment is given below along with their comment :
"We are of view  that award of interest @ 18% per annum is quite equitable as it will take  into consideration   the escalation of cost of  construction as well.  If the  stories of woes of the common man are to be  scripted   by the one who shouts from the house top  of  his  love for the common man,  then in the  instant case  the only factor  begging question is  the  truth.  Contradiction is perhaps  inherent in the system like  this.   This may be a window of opportunity to   introduce an element  of propriety on the part of Urban Development Authorities  while    dealing  with common man."
They do not talk of total rejection of allottment  as it is not practiced by any Development authority.

How much interest can be claimed for delay in delivery?

If there is delay in delivery of apartments on time, how much compensation can be sought? In most cases, the defaulters are government-run organizations. In a situation where different state commissions had awarded varying rates of interest for customers who desired refunds, the National Consumer Disputes Redressal Commission has now settled the issue once and for all. The commission held that interest at 18 per cent per annum "is quite reasonable and equitable as it will take into consideration the escalation of cost of construction as well." This ruling will be binding on all the consumer courts throughout the country.


Clause 100. MD has finalauthority to accept/reject the application and his decision shall be conclusive and final.

Clause  101. MD has thefinal word on interpretation of the Rules  and his decision is binding and not open to appeal/representation.

Clause  102 The board ofmanagement/ executive Committee has the right to alter, add or delete any rules and it shall be binding

Comments:

The MD is made out to be a benevolent dictator and no one can appeal against the dictator.The "benevolent dictator" will generally not invoke his power to be a dictator, but  you are assured that he is more benevolent than a dictator  and have nothing to fear.

One of the foundations and finest achievements of our country's form of governance is a system of rights of persons that are enforced dispassionately and equally for all persons. These rights cannot be signed away by individuals or denied to them arbitrarily by those in power. The most basic are those codified in the Constitution and in law. These broadly accepted rights are extended and formalized within organizations of all types. There is no place in our society where certain fundamental rights do not apply - in a corporation, a prison, a street corner, the rashtrapathi Bhavan , or a residential community association.

Each unit may be dealt with by the owner in the same manner as is permitted by law for any other parcel of real property. Specific rights to use your unit include these:

Maximum privacy within your unit. The association may enter your home only to maintain or replace a common element or to make emergency repairs necessary to prevent damage to common elements or to other units;
    To live in your home free of conditions that materially interfere with your peace, comfort or health;
    To bring action for relief against others for a violation that affects your occupancy;
    To decorate your unit;
    To alter or improve your unit (subject to restrictions);
    To mortgage your unit;
    To sell or transfer your unit;
    To sublet or rent your unit (subject to anti-discrimination laws and the established rules of the association);
    To use the limited common elements assigned to your unit (subject to restrictions).

The State shall guarantee, to THE PEOPLE, local governments of the democratic republic form, and that they shall be confined to the rule of law. These regimes shall be based on rights. The State shall guarantee the protection of individual rights that no majority of even the co-operatives shall be able to take away. The legislative, executive, and judiciary powers shall be segregated into different departments and a system of checks and balances shall be infused into the structure, that are sufficient to ensure that no branch can become stronger than the others.

The State shall guarantee the supremacy of the interests of THE PEOPLE that live or will live in housing developments, over the interests of those that plan, develop, build or sell services to them.(If as a home owner, I can not elect the  the board of management/ executive Committee of the organisation (AWHO), then that organisation has no right to make laws that govern my life and enjoyment of the property. It should vanish from the scene once the property is made and home owners take charge the governance in a democratic way. Any thing more that this is defective in law and hence not enforceable.

A basic principle is to attempt to solve problems rather than punish alleged offenders or win a dispute. This would begin with reasonable informal processes before any formal procedures are invoked. The formal procedures include:

A separation of powers so there is justice free from political interference; Mediation/ADR must be used to resolve complaints and disputes before resort to litigation;
Resolution of alleged rule violations and disputes may not be delegated to a Managing Director.
The association will not undertake to resolve alleged criminal actions.
Due Process: The rule enforcement and dispute resolution process must be based on due process. With the sole exception of regular assessment collections, an association must afford each of its members due process before any disciplinary action is taken. Due process requires: The procedures for enforcing rules and settling disputes must be approved and made known; the rules and penalties must be approved and published prior to any enforcement; equal enforcement of rules; written notice of the specific complaint; presumption of innocence; a hearing in a fair tribunal before an impartial and qualified referee, with the opportunity to see evidence and confront accusers; opportunity to appeal to an impartial forum; no unreasonable penalties.

There must be approved and published Election Policies and Procedures detailing all aspects of elections, including nominating or election committee, nominating procedure, campaigning, notice of election, rules for absentee and proxy ballots, conduct of the election, and vote counting.

The election procedures must have commonly accepted means to prevent irregularities and the perception that irregularities could occur, such as a level playing field for all candidates and a neutral party to conduct the elections.

Fundamental Governing  Rights/Principles

The State shall guarantee, to THE PEOPLE, local governments of the democratic republic form, and that they shall be confined to the rule of law. These regimes shall be based on rights. The State shall guarantee the protection of individual rights that no majority shall be able to take away. The legislative, executive, and judiciary powers shall be segregated into different departments and a system of checks and balances shall be infused into the structure, that are sufficient to ensure that no branch can become stronger than the others

The right of the people to participate in the creation of all local governments -- whether labeled, classified or defined as "public" or "private" -- and reserve certain rights to themselves as inalienable, shall not be abridged. No governments may be created by private businesses, or individuals, prior to the arrival of THE PEOPLE that will be governed by these governments.

The legislature shall make no law that permits a corporation or Organisation albeit named "welfare"  to govern a community of citizens so as to restrict their fundamental liberties.
The legislature shall make no law that permits a person to be a judge in his or her own cause, nor a body of people to be both judges and parties at the same time
The powers not delegated to homeowner associations by law, nor prohibited by it to the people, are reserved to the people.

The right of the people to be secure in their homes, properties, reasonable lifestyles, privacy, and protective insulation, against unreasonable intrusion; to freedom from a private government's telling them how to live their lives; to enjoy their properties; and to the assurance of a peaceful retreat from the demands of the outer world; shall not be violated.
Neither the State, nor any local government, shall make or enforce any law which shall abridge the privileges or immunities of citizens, including, but not limited to, the privileges or immunities enumerated herein; nor shall any local government deprive any person of life, liberty, property, or the pursuit of happiness, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

In community associations, it falls ultimately to homeowners themselves to define and affirm the rights, protect them, and see that they are enforced. Other groups with interests that may diverge from those of unit owners, such as managing agents and professionals in the housing industry, are actively pursuing their particular interests in the operation of RWAs through their professional associations, through lobbying legislators, and through the courts.

We believe deeply in these individual rights, in the Constitution and laws that protect their rights, and in the importance of these rights to their welfare. Rights need to be tended to and asserted or they will be violated, eroded, or cease to exist. They must be constantly reaffirmed in ceremonies, in daily practice, and when necessary, in the courts.






The general liabilities of a Promoter-Builder are conveniently or perhaps deliberately avoided inthe brochure.
Comments:

THE LIABILITIES OF A PROMOTER-BUILDER

The general liabilities of a Promoter are stated in Section 3 of the Maharashtra Ownership of Flats Act, 1963. According to this section, a Promoter who intends to construct or constructs a block of building of flats, all or some of which are to be taken or are taken on ownership basis, shall in all transactions with persons intending to take or taking one or more of such flats, be liable to do the following:

    * Make full and true disclosure of the nature of his title to the land on which the flats are constructed, or are to be constructed. Such title to the land should be duly certified by an Attorney-at-Law, or by an Advocate of not less than 3 years standing. It should be duly entered in the property card or extract of Village Forms or any other relevant revenue record.
    * Make full and true disclosure of all encumbrances on such land, including any right, title, interest or claim of any party in or over such land
    * Allow for inspection of the plans and specifications of the building, built or to be built on the land on seven day's notice or demand. Such plans and specifications should have been approved by the local authority as is required to be done under any law for the time being in force.

    * Disclose the nature of fixtures, fittings and amenities, including the provisions for one or more lifts, provided or to be provided.

    * If the promoter himself is the builder, disclose on reasonable notice or demand, the prescribed particulars as respects the design and the materials to be used in the construction of the building. If the promoter himself is not the builder, disclose, on such notice of demand, all agreements (and where there is no written agreement, details of all agreements) entered into by him with the architects and contractors, regarding the design, materials and construction of the building

    * Specify in writing, the date by which the possession of the flat is to be handed over. It shall be his duty to hand over such possession accordingly.

    * Prepare and maintain a list of flats with their numbers already taken or agreed to be taken, and the names and addresses of the parties, and the price charged or agreed to be charged, and the terms and conditions, if any, on which the flats are taken or agreed to be taken.
    * State in writing, the precise nature of the organization of persons to be constituted and to which title is to be passed, and the terms and conditions, governing such organizations of persons, who have taken or are to take the flats.

    * Not to allow persons to enter into possession until a completion certificate is duly given by the local authority, in case such certificate is required to be given under any law. No person shall take possession of a flat until such completion certificate has been duly given by the local authority.

    * Make a full and true disclosure of all outgoings, including ground rent, if any, municipal or other local taxes, income taxes, water charges and electricity charges, revenue, assessment, interest on any mortgage or other encumbrances, if any.

    * Make a full and true disclosure of such other information and documents in such manner, as may be prescribed and give on demand true copies of such of the documents referred here as may be prescribed at a reasonable charge.

    * Display or keep all the documents, plans or specifications or copies, referred above at the site and permit inspection of these documents to persons intending to take or taking one or more flats.
    * When the flats are advertised for sale, disclose, inter alia, in the advertisement, the following particulars, namely:

         1. The extent of the carpet area of the flat including the area of the balconies which should be shown separatel
         2. The price of the flat, including the proportionate price of the common areas and facilities, which should be shown to be paid by the purchaser of the flat and the intervals at which the installments may be paid
         3. The nature, extent and description of the common areas and facilities
         4. The nature, extend and description of limited common areas and facilities if any.

    *

      To maintain a separate account in any bank of sums, taken by him as advance or deposit from persons intending to take or, who have taken flats, including any sums, taken towards the share capital for the formation of a co-operative society or a company, or towards the outgoings (including ground rent, if any, municipal or other local taxes, taxes on income, interest on any mortgage or other encumbrances if any). He shall hold the said money for the purposes for which it was given and, shall disburse the money for those purposes and shall, on demand in writing by an officer, appointed by general or special order by the State Government for the purpose, make full and true disclosure of all transactions in respect of that account.
    * A promoter shall, while he is in possession, and where he collects from persons, who have taken over flats or, are to take over flats, sums for the payment of outgoings even thereafter, pay all outgoings (including ground rent, municipal or other local taxes, taxes on income, water charges, electricity charges, revenue assessment, interest on any mortgage or other encumbrances, if any), until he transfers the property to the persons, taking over the flats, or to the organization of any such persons. If he fails to pay before transfer to the purchase, all or any of the outgoings collected by him from purchasers or intending purchased, the promoter continues to be liable for the outgoings to pay these outgoings to the authority even after the property in the flat is transferred.

These are the mandatory minimums a Promoter/builder  is obligated under the  law. A welfare organisation like AWHO should  go far beyond these to serve the community they are supposed to be serving. If they do not even meet the minimum obligations of law, how are they different from the land sharks who have come up in the building industry?
Oneof the many ways they could do this ( for illustration only) is to guarentee outright purchase of the flat in case of foreclosure and use this guarentee to collectively bargain  to reduce the  the interest burden by a few hundread basis points from the lenders. One could think of many such innovative ways of reducing the financial burden of the community in a truly welfare nature. A brain storming of all possible stake holders  of what is possible in this nature of welfare measures might be challenge to the welfare insticts of AWHO.



Rights of a purchaser/ Allottee
What must a purchaser ascertain and/or fix before purchasing a flat from the builder? This is not mentioned any where in the brochure.

Comments:

Before purchasing a flat the purchaser must have rights to ascertain and / or fix the following:-

    * The Land under construction is free hold, lease hold or is not affected by the provisions of Urban Land Ceiling and Regulations Act, 1976 (ULC Act) i.e. such permission required for the ULC Act have been obtained.

    * If the owner and the builder of the land under construction are different persons, i.e. the builder may have obtained development rights from the owner. In such a case, the purchaser should make the owner a confirming party to the agreement for sale so as to bind the owner with all the terms and conditions of the builder.

    * Total price consideration which should include the proportionate price for the common areas and facilities.

    * Schedule of payment, i.e. when and how much to pay in installments against the total consideration.

    * Date of possession
    * Carpet area of the flat
    * Detailed plan
    * Detailed specification  of construction, materials and fixtures.

    * The precise nature of the organisation to be constituted of the persons who have taken or are to take the flats, i.e. cooperative society, condominium or a company.

    * The nature, extent and description of the common areas and facilities and of limited common areas, if any.

    * Perusal of the following documents:
         1. Title certificate by an advocate of the land under construction stating that the builder owner has a clear title free from encumbrances and is marketable.
         2. Property card or 7 x 12 extracts or any other relevant revenue record showing the nature of the title of the promoter to the subject land.
         3. Approved plans and commencement certificate issued by the concerned local authority.
         4. All relevant orders necessary for the development and construction of the land e.g. if the land is affected by the U L C Act, permission is required to be obtained to develop it under section 20, 21 or 22 of the said Act.


Allottees right to inspect
Comments:

It is necessary to have clearly stated rights to inspect/check the following documents pertaining to the project where one intends purchasing the flat:

*Development agreement with the land-owner if the developer is not the owner of the property, and the Power of Attorney executed by the land-owner in favour of their developer.

*Approved building plans.

*Commencement certificate

*Completion/Occupation certificate.

*The builder enters into the Development Agreement with the land-owner. It contains details regarding the terms and conditions on which the landowner has permitted development of his property. This is where the land-owner engages a third party (that is, the developer) to develop and build on their plot of land. This agreement is generally accompanied by a Power of Attorney in favour of the developer.

*Approved building plans need to be checked necessarily. The plans must be approved by the Municipal Corporation/Town Planning authority or other concerned authorities such as CIDCO, MHADA, HUDCO, Gram Panchayat, and so on, as applicable depending on the project's location.

*Commencement certificate is given by the Municipal Corporation permitting the developer to begin construction. This is done once the plans have beenapproved.

*Completion/occupation certificate is given by the concerned authorities to the developer once the said building is complete and fit for occupation.

IN case of a building yet to be constructed, the agreement has to contain particulars on the liability of the promoter to construct it according to the plans and specifications approved by the local authority.

Other particulars the agreement should contain are possession date, price to be paid by the purchaser and the intervals at which the instalments for the full payment are to be made, specifying the stage of construction, the precise nature of the body of the occupants/buyers, details of the common areas and facilities specifying the percentage of undivided interest in the common areas, and facilities pertaining to the apartment agreed to be sold, a statement of the use for which the apartment is intended.

Copies of the title certificate issued (as specified earlier) and a copy of the approved plans and specification, a list of fixtures and amenities, including provisions for lifts to be provided for the flat, should be attached to the agreement. A promoter, while he is in possession, and where he collects from persons who have taken over flats or are to take over flats, sums for payment of outgoings even thereafter, has to pay all outgoings until he transfers the property.

The out goings would include ground rent, municipal and other local taxes, taxes on income, water charges, electricity charges, revenue assessment and interest on any mortgage or other encumbrances, if any. One should also ensure that the apartment's area has been mentioned in the agreement.

It is also mandatory for the developer/promoter to convey the land in favour of the society/association of flat owners/condominium/company within four months of the project's completion.
In the sale agreement, there should be a declaration/representation by the promoter/seller that he has not encumbered the property in any manner whatsoever and entered into any other agreement to sell/lease/license with any other party. It needs to be specified whether the property is vacant or in possession of any other party other than the seller.

Challenge

1. Here lies the challenge to make the AWHO  truely welfare in nature. If  this challenge is not taken up, welfare is just name sake and AWHO is not only breaking the statutes of the land  to harm the community it is supposed to serve but it is no different from any other land sharks found in our big cities!
2. A complete overall change in tone and tenor of the Brochure is needed to make it a truly "welfare" document championing the cause of the consumer it is supposed to serve. Currently, it is  a document drafted by the over enthusiastic lawyer mandated to protect the organisations financial interests by treating its consumers as shabbily as possible even by breaking all possible laws that is supposed to protect them.
3. AWHO needs to be educated in Consumer Protection Rights  and Customer Care. Any budget allocation for this will be insufficient to rejuvenate the organisation's outlook towards the community it is created to serve.

Helpful links

http://www.un.org/esa/sustdev/sdissues/consumption/english.pdf:  United Nations Guidelines for Consumer Protection
http://www.fmcalcs.com/tools-tcc/fanniemae/calculator  True Cost Calculator &  True Cost Rate, which is the total cost of a mortgage loan -- including all costs and fees -- expressed as a percentage rate per year. Also compare two mortages.
http://www.inspectionconcepts.com/new_construction.htm
http://www.choosetosave.org/tools/fincalcs.htm
http://www.inspectamerica.com/Home_Inspectors_Advice/First_Time_Home_Buyer/first_time_home_buyer.html
http://www.inspectamerica.com/Home_Inspectors_Advice/Home_Inspection_Quick_Tour/home_inspection_quick_tour.html
http://www.inspectamerica.com/Home_Inspectors_Advice/House_Inspection_Top_Ten_List/house_inspection_top_ten_list.html
http://www.inspectamerica.com/Home_Inspection_Services/Prepare_Your_Home_For_Sale/prepare_your_home_for_sale.html
http://www1.iinvestor.com/scripts/IIH021C1.asp?sectionid=10&categoryid=49&articleid=3889
http://www.sifyrealestate.com/miscdisplay.php?mid=41

Society Charges vs Capital Fund
This Response to the ever increasing demand of the Resident Housing Society may be educative for You:


xxxxxxxxxxxxx xxxxxxxxxxxxxxxx
New Delhi
Feb 2005
No: XXX/AWHO/01

To,
xxxxxxxxxxxxxxxxxx,
Secretary, Reghunath Vihar Army Welfare Society
Sector 14, Khargar, Navi Mumbay 410210

DUE DILIGENCE UNDER APPROPRIATE STATUTES

Please refer to your No: RVAWS/Society/xxx dated xx Jan 2005

Preamble:
2. I, xxxxxxxxx, s/o xxxxxxx currently residing at xxxxxxxxx, New Delhi 1100xx. and owner of the flat no: xxxxxx at Raghunath Vihar would like to bring the following to your attention for immediate remedial measures appropriate under the relevant statutes.
Sequence of events
3. The following is the sequence of events:
March 2003: Paid Rs 10000/= to the "Promoter" AWHO towards " Society Charges"
27 March 2003: User Committee formed; Society charges demanded for Rs 6000/= 29 August 2004 Management Committee called AGB Meeting.
28 September 2004: Management Committee raised a demand for payment of Society charges & threatened in writing that access to the flat for workmen will be denied in case of non-payment of of the Society charges
11 Nov 2004 Demanded Rs 1000/= for Nov 2004 and Rs 15000/= for Aug to Oct 2004 + Rs 300/= Penalty rate of interest.
13 Dec 2004 Rs 22225/= demanded Rs 6000/= adjusted for the previous period.
12 Jan 2004 Rs 16630/= demanded with out any explanation for the variations in amount in different demands

Spirit of the Relevant Statutes:
4. At the outset, I would like to state categorically that I am fully prepared to meet my obligation under the statutes ( S 12 of Maharashtra Ownership Flats (Regulation Of The Promotion Of Construction, Sale, Management And Transfer)Act, 1963 Maharashtra Act No. XLV Of 1963 ( MOFA) in respect of the above property in the co-operative society or company of persons taking the flats is to be constituted, co-operate in the formation of such society or company as the case may be.

5. The very purpose of the Society so formed is mandated to guard the interests of the members as given in the relevant statutes.

Criminal Offences Committed:

6. Instead of seeking co-operation for the formation of the Society in a civilized way, xxxxxxxx, Secretary of Society and Promoter (AWHO) seem to be committing the following offences:

1) Criminal Intimidation under IPC S 503 Threatens, in writing, with injury to property ( that workers will be blocked entry to my property) with intent to cause alarm to me to do any act which I am not legally bound to do as the means of avoiding the execution of such threat. The offence is punishable with imprisonment of either description which may extend to two years. (IPC 506).
2) Extortion (IPC 383) Intentionally puts any person in fear of any injury, in writing, and demands amounts unreasonable and not with in the relevant statutes and asks to cough up the money or else .......The offence is punishable with imprisonment of either description which may extend to three years or with fine or with both.. (IPC 384).
3) Criminal Breach of Trust (MOFA 1963 S 13 (2)) Any promoter who commits criminal breach of trust of any amount advanced or deposited with him for the purposes mentioned in section 5 ( appropriate money collected for "Society Charges" Rs 10000) for a purpose other than Society Charges viz Corpus Fund, shall, on conviction, be punished with imprisonment for a term which may extend to five years, or with fine, or with both.

Remedial/Corrective Measures:

7. It may be pure ignorance of the concerned that these offences are committed and hence I am prepared to overlook these if appropriate remedial/corrective measures are taken:

1) Apologise for offences committed stating that the offences were committed unintentionally and out of ignorance of the provisions of law and NOT out of malafide.
2) Reverse the mis-appropriation of funds "Society Charges" from Corpus Fund for which I had not consented nor do I have any knowledge of to the appropriate head "Society Charges" with out any further delay.


8. If these are done, I am prepared to forgive and forget rather than fulfill my duty under CrPC Section S 39 under which I am obligated to report the criminal offences to appropriate authority and set in motion Criminal Procedure Code.

My Anxiety to Comply with Laws:

9. I am anxious to meet my obligation to fully co-operate in the formation and management of the Society and pay all legitimate dues in regard to Society charges at rates and for periods as per appropriate by-laws of the Society so formed. In order to facilitate me to fulfill my obligation in the statutes,
viz.

S 12. (1) Every person who has executed an agreement to take a flat shall pay at the proper time and place the price, his proportionate share of the municipal taxes, water and electricity charges, ground rent (if any) and other public charges in accordance with his agreement with the promoter; and where a co-operative society or company of persons taking the flats is to be constituted, co-operate in the formation of such society or company as the case may be.

the following actions as per statutes require to be complied with first before any more demands are made:

Actions Required as per Statutes:
10. The following actions are required as per the statutes.

1) Confirm due diligence on the part of the Promoter under MOFA

S 5. The promoter shall maintain a separate account in any bank of sums taken, by him, from persons intending to take or who have taken flats, as advance or deposit including any sums so taken towards the share capital for the formation of co-operative society or a company, or towards the outgoings (including ground rent, if any, municipal or other local taxes, taxes on income, water charges, electricity charges, revenue assessment, interest on any mortgage or other encumbrances if any); and he shall hold the said moneys for the purposes for which they were given and shall disburse the moneys for those purposes

S 10. [(1)] As soon as a minimum number of persons required to form a Co-operative society or a company have taken flats, the promoter shall within the prescribed period submit an application to the Registrar for registration of the organisation of persons who take the flats as a Co-operative society or, as the case may be, as a company; and the promoter shall join, in respect of the flats which have not been taken, in such application for membership of a co-operative society or as the case may be, of a company. Nothing in this section shall affect the right of the promoter to dispose of the remaining flats in accordance with the provisions of this Act.

S 12A. (1) No person, who is a promoter, or who is in-charge of management or connected with the management of a block or building of flats, whether as member of a managing committee, director, secretary or otherwise, or is responsible for the maintenance thereof (hereinafter in this section referred to as "the manager"), shall, without just and sufficient cause, either by himself or through any person, cut off, with hold, or in any manner curtail or reduce, any essential supply or service enjoyed by the person who has taken a flat (or by any person in occupation thereof through or under him) in respect of the flat taken or agreed to be taken by him.


2) State in writing, the precise nature of the organisation of persons to be constituted and to which title is to be passed, and the terms and conditions governing such organisation of persons who have taken or are to take the flats; (S 2(2) (h)

3) Make a full and true disclosure of all outgoings (including ground rent if any, municipal or other local taxes, taxes on income, water charges and electricity charges, revenue, assessment, interest on any mortgage or other encumbrances, if any); S 2(2) (j)

4) Promoter disclose ( S 2(2) (m)) inter alia the following particulars, namely:-

(i) the extent of the carpet area of the flat including the area of the balconies which should be shown separately;

(ii) the price of the flat including the proportionate price of the common areas and facilities which should be shown separately, to be paid by the purchaser of flat; and the intervals at which the instalments thereof may be paid;

(iii) the nature, extent and description of the common areas and facilities; and

(iv) the nature, extent and description of limited common ares and facilities if any.


5) Confirm due diligence that "the agreement (4. [(1)] ) has been registered under [the Registration Act, 1908 (hereinafter in this section referred to as " the Registration Act ")] '[and' such agreement shall be in the prescribed form.]. and the agreement shall contain inter alia the particulars as specified in clause (a); and to such agreement there shall be attached the copies of the documents specified in clause (b),--

(a) particulars,-

(i) if the building is to be constructed, the liability of the promoter to construct it according to the plans and specifications approved by the local authority where such approval is required under any law for the time being in force;

(ii) the date by which the possession of the flat is to be handed over to the purchaser;

(iii) the extent of the carpet area of the flat including the area of the balconies which should be shown separately;

(iv) the price of the flat including the proportionate price of the common areas and facilities which should be shown separately, to be paid by the purchaser of flat; and the intervals at which instalments thereof may be paid;

(v) the precise nature of the organization to be constituted of the persons who have taken or are to take the flats;

(vi) the nature, extent and description of limited common areas and facilities;

(vii) the nature, extent and description of limited common areas and facilities, if any;

(viii) percentage of undivided interests in the common areas and facilities appertaining to the flat agreed to be sold;

(ix) statement of the use of which the flat is intended and restriction of its use, if any;

(x) percentage of undivided interests in the limited common areas and facilities, if any, appertaining to the flat agreed to be sold;

(b) copies of documents, -

(i) the certificate by an Attorney-at-law or Advocate under clause (a) of sub-section (2) of section 3;

(ii) Property Card or extract of Village Forms VI or VII and XII or any other relevant revenue record showing the nature of the title of the promoter to the land on which the flats are constructed or are to be constructed;

(iii) the plans and specifications of the flat as approved by the concerned local authority.



6) Provide a complete set of duly approved (with details of such approval including dates and the process used for obtaining such approval) by-laws of the society to me in order to enable me to fully verify whether the charges and penalties imposed and the periods for which these charges made on me are as per these by-laws.

7) Rationalize the charges levied to me
(a) Adjust the payment made from July 2003 till date against these periods only and not for any previous periods.
(b) Adjust the "Society Charges" levied by the Promoter against the purpose for which it was charged.
(c) Adjust the charges for the periods for which the flat was not in occupation as per the bye-laws.
(d) The charges leviable to me for the period under objection be declared "disputed" till the same is resolved under the provisions of the statutes and by-laws of the society.

Some Important Statute Provisions:
11. It is further brought to your attention the following provisions of the appropriate statutes
S11. A promoter shall take all necessary steps to complete his title and convey to the organisation of persons, who take flats, which is registered either as a co-operative society or as a company as aforesaid, or to an association of flat takers (or apartment owners) his right, title and interest in the land and building, and execute all relevant documents therefore in accordance with the agreement executed under section 4 and if no period for the execution of the conveyance within the prescribed period and also deliver all documents of title relating to the property which may be in his possession or power.

S 13. (1) Any promoter who, without reasonable excuse, fails to comply with or contravenes, the provisions of section 3, 4, and 5 (save as provided in sub-section (2) of this section) 10 or 11 shall, on conviction, be punished with imprisonment for a term which may extend to three years or with fine, or with both.
(2) Any promoter who commits criminal breach of trust of any amount advanced or deposited with him for the purposes mentioned in section 5 shall, on conviction, be punished with imprisonment for a term which may extend to five years, or with fine, or with both.
(3) Any promoter who, without reasonable excuse, fails to comply with or, contravenes, any other provision of this Act of any rule made thereunder, shall, if no other penalty is expressly provided for the offence, be punished, on conviction, with imprisonment for a term which may extend to one year, or with fine which may extend to ten thousand rupees, or with both.

S14. (1) If the person committing an offence under this Act is a company, every person who at the time the offence was committed was incharge of and was responsible to the company for the conduct of business by the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that, nothing contained in this sub-section shall render any such person liable to such punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1) where an offence under this Act has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.....
(6) any manager who contravenes the provisions of sub-section (1) shall, on conviction, be punished with imprisonment for a term which may extend to three months, or with fine, or with both.
(7) The offence under sub-section (6) shall be cognizable, and shall not be triable by any Court inferior to that of a Metropolitan Magistrate, or a Judicial Magistrate of the First Class)

Conclusion:
12. I am looking forward to your first fulfilling your obligation to ensure statute compliance by the Promoter in the interest of the constituents of the society rather than involving in power games and threats of the society members to intimidate them and recover money under illegal heads under injury to the member or his property.
13. Any dues that are legally really due will be honored by me and payments made promptly as soon as the statutory obligations are met.
14. Please feel free to write to me for any clarifications you want in order to fulfill the due diligence process issues I have raised.

Yours Sincerely,


xxxxxxxxxxxx

Copy to:
Promoter: xxxxxxxxxx, Project Director, AWHO, Khargar, Navi Mumbai 410210

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