No clar­ity on land pool­ing pol­icy: have buy­ers been duped of 1000 crore?

With the ur­ban de­vel­op­ment fi­nal­is­ing re­alty reg­u­la­tory rules for Delhi, so­ci­eties reg­is­tered un­der land pool­ing might face prob­lems L N K- I K- II P- I P- II DELHI J

HT Estates - - FRONT PAGE - Van­dana Ram­nani

Sa­marth Daksh, 70 years, was lured by a hous­ing so­ci­ety to in­vest in three res­i­den­tial prop­er­ties two years ago in Delhi’s L Zone – which is part of the Delhi gov­ern­ment’s land pool­ing pol­icy (LPP). He made cash down pay­ments for three apart­ments in three multi-state co­op­er­a­tive so­ci­eties, which cost ₹ 12 lakh, ₹ 7.5 lakh and ₹ 5 lakh. As proof of the in­vest­ments, he was just given a kacha (tem­po­rary) bill by the so­ci­ety. In­ter­est­ingly enough, co­op­er­a­tive hous­ing so­ci­eties have not been reg­is­tered or al­lot­ted land by the Delhi gov­ern­ment af­ter 1992.

Daksh i s a wor­ried man to­day as the min­istry of ur­ban de­vel­op­ment has fi­nalised the Na­tional Cap­i­tal Ter­ri­tory of Delhi Real Es­tate (Reg­u­la­tion and De­vel­op­ment) ( Gen­eral) Rules, 2016, or RERA for the set­ting up of a real es­tate reg­u­la­tor. Once the rules are im­ple­mented, devel­op­ers have to fur­nish au­then­ti­cated copies of the ti­tle deed of a prop­erty re­flect­ing the ti­tle of the pro­moter to the land on which the project is to be de­vel­oped and show orig­i­nal sanc­tioned plans and lay­out plans. They also have to make disclosures of the to­tal amount of money col­lected from al­lot­tees.

Also, devel­op­ers who have ag­gre­gated land as part of the Delhi gov­ern­ment’s LPP have to re­turn a min­i­mum 60% of the land to the Delhi De­vel­op­ment Au­thor­ity (DDA) which will give them a plot for de­vel­op­ment – not nec­es­sar­ily in the same lo­ca­tion as the orig­i­nal plot they ac­quired. Hun­dreds of wel­fare so­ci­eties have been reg­is­tered af­ter 2007 when the Delhi Master Plan (MPD 2021) was no­ti­fied, lay­ing down LPP norms and ear­mark­ing five zones in the Cap­i­tal – J, K (I and II), L, N and P (I and II) for it. About 27,000 hectares are to be de­vel­oped un­der LPP out of which 5, 300 hectares are in zone L.

What this means is that no de­vel­oper can claim to own a spe­cific par­cel of land at this stage, es­pe­cially when DDA is still await­ing the Delhi gov­ern­ment’s de­ci­sion to de­clare 95 vil­lages as de­vel­op­ment ar­eas, 89 of them as ur­ban vil­lages. The state gov­ern­ment is yet to op­er­a­tionalise the land pool­ing mech­a­nism and in the ab­sence of such a di­rec­tion, there is no way in which devel­op­ers or hous­ing so­ci­eties can reg­is­ter their projects with the reg­u­la­tor. A Delhi gov­ern­ment spokesper­son says that it will take time to op­er­a­tionalise the pol­icy.

Daksh fears that the money he has paid for the three apart­ments ( real es­tate ex­perts es­ti­mate such deals to have cost gullible in­vestors any­thing around ₹ 1,000 crore) will never be re­turned.Also, RERA lays down guide­lines on how a model agree­ment should be en­tered into with home­buy­ers. How will that be done, when there are mostly kacha re­ceipts that buy­ers have and no proper agree­ments?

The ques­tion here is how will these so­ci­eties qual­ify as a ‘de­vel­oper’ un­der RERA rules when the LPP has not yet been op­er­a­tionalised? “So­ci­eties, in their ca­pac­ity as pro­mot­ers, will need to reg­is­ter un­der the RERA. Since non-reg­is­tra­tion (af­ter the setup of the reg­u­la­tor) is a pun­ish­able of­fence, so­ci­eties have to con­tinue to have to abide by this re­quire­ment. This is likely to cre­ate a tran­si­tional prob­lem,” says Yo­gesh Singh, part­ner with a le­gal firm, Tri­le­gal.

There­fore, any­one pro­mot­ing projects un­der LPP is com­mit­ting a fi­nan­cial fraud. “What em­pow­ers them to col­lect money and sell flats un­der the name of a so­ci­ety? Un­der the LPP, mere avail­abil­ity of land with a farmer does not make him a de­vel­oper,” says Ramesh Menon of Certes Re­alty. “Many land parcels shown to the con­sumers may or may not be in the same par­cel un­der the LPP and can be re­al­lot­ted within a 5 km ra­dius. A li­cense to build re­quires spec­i­fied land par­cel of con­verted res­i­den­tial land but cur­rently all land is for agri­cul­ture. Un­der the LPP, if the so­ci­eties or­de­vel­op­ers have over 20 hectare, they get 60% land back. If they have less than 20 hectares, they get 48% back. The min­i­mum land re­quired is five acre. A com­pany, say it’s called ABC Pri­vate Ltd, is only stak­ing claim to a par­cel but it ac­tu­ally has no land. It has only given mem­ber­ship of a so­ci­ety which may be de­vel­oped in the fu­ture but the cost of land has al­ready been re­cov­ered from the buy­ers,” he says.

Ex­perts es­ti­mate that the to­tal amount col­lected fraud­u­lently so far from home­buy­ers, go­ing by the ₹ 8 lakh to ₹ 15 lakh paid per apart­ment, could be ₹ 1,000 crore.

“This money has so far been col­lected in the name of pro­posed de­vel­op­ment,” they say, adding will this be re­turned to these buy­ers and a new model agree­ment signed be­tween the two en­ti­ties. Post RERA, the de­vel­oper en­tity first needs to qual­ify as a de­vel­oper and get a li­cense to qual­ify as a builder.

Ar­chi­tec­tural plans of the project have to be ap­proved be­fore it gets a li­cense to build.


Ex­perts es­ti­mate that the to­tal amount col­lected fraud­u­lently so far from home­buy­ers un­der land pool­ing is as much as 1,000 crore.

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