The CREDAI, Bangalore (Confederation of Real Estate Developers’ Association of India) site is accessible here. Listed amongst various links on it is one on "code of conduct". But, if you click on it, it just takes you in circles. And, having tried it quite a few times in the past, each time without success, I am now firmly of the opinion that CREDAI has deliberately de-linked it. For all that, even as recently as on 26th Aug, “He (Karnataka CM) appreciated the CREDAI initiatives to come up with its own code of conduct and its enforcement on all its members”, vide The Hindu report, accessible here.
The code of conduct had indeed been written up once, it was put up on the net, and that's how I managed to fish it out. It's accessible here (it was called 'code of ethics'). It is a fairly well-worded document, though quite a few things more could be covered. Apparently, somewhere along however, CREDAI decided to abandon it. The reason for the same can be gleamed from a reading of this report in Sulekha blog, some excerpts from which read as below:
CREDAI national president Lalit Kumar Jain said that the expulsions were owing to the builders' stiff resistance to sign the organisation's ethical code of conduct, mandatory for all the 8,600 members spread across 105 cities in 22 states. As on date, apart from Chennai and Karnataka, Nasik is the only other city where all members of CREDAI are signatories to the code. "Based on requests from other state chapters, their members have been given time until June 30 to sign the document," said Jain.
The revolt, however, has left a dent on the organisation's ongoing mission to create greater transparency in the housing industry as the expelled members are promoters of mega projects including three integrated townships and an IT SEZ in Chennai and its outskirts. Those expelled will not be able to participate in Fairpro, the annual property fair organised by CREDAI, which is a big crowd puller in the city.
- - - A senior executive in the DLF expressed similar concerns. "Even without signing the CREDAI code of conduct, we have been following best practices in the industry". However, Suresh Kumar Jain, MD of Vijay Shanthi, has issues with CREDAI on the clauses in the ethical code. "Our panel of lawyers objected to signing the code of conduct," he said, but refused to elaborate further.
- - - "A code of conduct for the builder community was first mooted by the Chennai chapter of CREDAI two years ago. It gained momentum last year when CREDAI national decided to implement it across the country," said T Chitty Babu, CREDAI secretary. Once a builder signs the code of conduct, the customers enjoy the right to drag him to the grievance redressal forum of CREDAI in case of disputes, he said.
As for DLF's following of best practices, the following comment, which appeared in the ToI, and which can be accessed here, says it all.
The Competition Commission of India (CCI), the free trade regulator, has imposed a penalty of Rs 630 crore on real estate major DLF for misusing its dominant position in the market by drafting one-sided agreements with flat buyers in Belaire housing complex in Gurgaon.
- - - According to the flat owners, DLF violated building restriction norms. Although it had approval to build 19 floors, it constructed 29 floors and cut down the super area, common area and other facilities. Flat buyers also said that DLF announced the project and entered into agreements without getting the required clearances from the authorities. In its order issued on Friday, CCI said the agreement with buyers is not just one-sided but draconian. It has found that the penalty provision in case of delay in project as per buyers’ agreement is discriminatory and favoured the builder.
Now, a significant section of the city's population lives in multi-storied apartment complexes, and their number is multiplying by the day. But, while construction quality is generally satisfactory in most cases, with a large number of them, however, there are all kinds of problems, mostly arising out of non-conformity with the codes, originally drawn up by CREDAI itself, even as they all claim to be members of CREDAI. So, is one then to understand that CREDAI chose to dump the codes in order to retain the membership of the biggies like DLF, who seem to be out there only to exploit the loose regulatory regime, but at the cost of the buyer.
The question that arises then is doesn't CREDAI have a responsibility towards the buyer?
Muralidhar Rao
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Absolutely relevant question
Great question Murali. Poor behaviour by builders is rampant in Bengaluru. If CREDAI claims to play a self regulatory role (as is evident from that code of ethics), the CREDai has along way to go to build CREDibility.
Of late, every Tom, Dick and Harry builder seems to have a "CREDAI" tagline in his advert. Is this not misleading to the public?
I can share my own story. Couple of years back, when we were having a sipute with our builder, I tried contacting CREDAI on their phone line, after seeing that (a) our builder was a CREDAI member and (b) What we were arguing about with the builder was a clear violation of the CREDAI code of ethics, not to mention our agreement of sale. The lady who picked the line was a bit flummoxed by my request and very straightforward. She said some along the lines of " Sir, this is an organization of builder. If you are calling from Dubai or some place like that and would like to buy an apartment, we can help you". I kid you not! She fianlly asked me to send an email, which I did, but nothing happened. We even wrote to our builder and cited this CREDAI code of ethics to spur them to act differently.
Shortly after that the CREDAI webpage changed and the code of ethics disappeared off the CREDAI (Karnataka/Bangalore) page Now they have a swanky page, but the story is all still the same. The link to the code is a circular one. it brings you back to the same page.
I personally have very low regard for CREDAI at this point in time.
diamond minefield
At the annual general body meeting (of Diamond District), members virtually came to blows with the developers. Residents alleged that despite numerous requests to the builders to register the flats and give sale deeds to individual owners, builders have told the court they haven’t sold flats to purchasers. “By claiming so, builders are clearly violating the condition on which land was given to them. Moreover, since we’re not being given the legal rights of ownership, we end up paying property tax to BBMP twice the rate charged to owners as we are considered tenants,” said Raja (President).
“We were misled to believe that apartments were being sold to us, but after paying about two-third the purchase price, we were told we would be shareholders in the company, not owners of flats. This was to avoid payment of stamp duty to the government,” said another resident Robin D’Cruz.
Ziaullah Sheriff, chairman, Century Galaxy Developers Ltd (CGDL), who was present at the meeting said the company has done everything according to law and never kept residents in the dark. “While taking money for the flats, buyers were informed they would be shareholders and not owners. The scheme is in order and developers have not changed it. Since there are a couple of issues like registration of apartments in name of shareholders, currently we’re discussing it legal experts. As for maintenance charges, we’ll sort it out.”
For the full report in the SToI, click here.
This is what results out of not registering under the KAOA. Perhaps, it could not be done in this case because, if I understand correctly, the builder didn't have ownership rights over the property itself, even to begin with. This fact was apparently hidden from the buyers, and, after they had paid over two-third of the purchase value, they were hood-winked into believing that the company share-holdership etc was quite the norm. The lacunae in the Acts also contributed to this, I expect, apart from perhaps the membership of CGDL in CREDAI. And now, they are all in all kinds of trouble.
So, it now appears that if a builder flaunts the CREDAI membership, you need to be doubly careful about him.
Diamond District Story
The article is interesting at several levels
I was surprised to see that Diamond District is registered as a company. Now KOFA (Karnataka Ownership Flats Act), section 10, the promoter (definition of promoter included builder, developer, promoter etc.) can form either a coop society, company or association under KAOA. So, stritly forming a company is not illegal.
BUT, note these following sections
3(h), Promoter will 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 organization of persons who have taken or are to take flats.
Did the promoters do that?
AND
4. Promoter to enter into agreement of sale before taking advance, and agreement to be registered. & the rules section 5 says that the agreement of sale will contain "the precise nature of the organization to be constituted..."
Now, if the flst takers say that they were unaware that a company was going to be formed, were all the above steps followed?
Finally section 10 and 11 of the act says that the promoter has to form the company as soon as a minimum number of persons required has taken flats and that the promoter has to convey his right, title and interest in the building and the land to the company within the agreed period, or if no period is agreed, within 4 months as per rules.
Finally, where the article says "Moreover, since we’re not being given the legal rights of ownership, we end up paying property tax to BBMP twice the rate charged to owners as we are considered tenants"...
If the law has been followed, then the owners are indeed the owners. They are considered "tenants" and shareholders of the company, but the definition of tenants is different here under the law and not how we understand it.
Now, I am not clear here where the registration fees is to be paid. most probably at the time of registration of agrement of sale?
More about Diamond District
The buildings have also developed cracks - more about the Diamond district story here, here & here.
The buyers should have verified full details & legal implications before entering into agreements. They seem to have gone along with the developer's ideas either without sufficient information or knowingly to escape registration fees & annual taxes, but after BBMP's raids, they have realized & now want ownership with individual khatas.
devil and scriptures
The high court on Thursday asked the Credai, the apex body of organized real estate developers / builders across the country, to file an affidavit on the regulatory measures visà-vis construction in and around Bangalore.
“You must do your business and at the same time citizens must also have a peaceful life. Think over it. Discuss what you can do about it and file a better affidavit,” the division bench headed by Chief Justice Vikramajit Sen observed while adjourning the hearing to next week.
- - - The bench left it to the association to come up with acceptable, self-regulatory practices.
For the full report in the ToI, click here.
An organisation that dumped the 'code of conduct', that was there on its web-site earlier, is being asked to come up with "acceptable", self-regulatory practices. Can this organisation be expected to make it acceptable to the buyers? In which case, shouldn't they be asked to put out an "acceptable (to the buyer)" 'code of conduct out' on their web-site, first?
Diamond District - property tax etc.
Thanks for the links Naveen. This is getting even more interesting. It says that Diamond District has not paid property tax since there is a single Khatha. if you have a company, the compnay is liable to pay property tax and collect from their shareholders, right? This definitely point to poor due dilligence by the residents as well.
Of course, we do not ereally know all the details, so this is all conjecture by us.
Secondly, the Bangalore mirror article among the links in Naveen's post says -> To tackle the problem of flat-owners being seen as share-holders, common in Bangalore’s apartments and housing co-operative societies, the state government brought a bill in 2001 barring the transfer of shares by the housing cooperative societies/apartments to its buyers, instead of giving actual ownership.
Anybody have any idea what this bill is? KOFA anyway requires the agreement of sale to be registered. Why not simply put a registration fee on the agreement of sale? There are so many other solutions...Many times I feel our government itslef complicates rules without understanding the laws on the books.
relevant response
Response from Mr N S Mukunda, President, CAF, to my post on the subject on OneBengaluru google-group:
When every prominent member of this "august body" is responsible for the rampant encroachments of urban land and for the wanton destruction of lakes and other water bodies, is it not the height of naivete on our part to expect self regulation on their part. It is obvious why they are demanding that they be allowed to self regulate. It is because they want to continue with their wanton looting of common urban spaces. It is high time that the government brings in the legislation to regulate the activity of this sector.
hear, hear !
“We have had enough of this charges that builders breed corruption,” said CREDAI national President Mr Lalit Kumar Jain disclosing that he had conducted a survey among the developer community on saying flatly “No” to corruption. Many members positively reacted and some said: “Together, we shall”.
- - - He recalled that there was a lot of skepticism when he embarked on “Mission Transparency” for the developer community and the government 18 months ago. But today, the mission has been well accepted, judging from the fact that a majority of developers across the country have accepted the CREDAI code of conduct for themselves and the various state and city units are setting up consumer grievance cells to proactively settle disputes out of court.
For the full report in Accommodation Times, ckick here.
This is the National President talking. So, I went back to the CREDAI, Bengaluru, site to check if the 'code of conduct' has since been made accessible. Unfortunately, no. Should we then believe that the Karnataka chapter, along-with the likes of DLF (of the recent Vadra deals notoriety), are happy the way the things are, and are not quite in sync with the National President's way of thinking?
Real Estate Business by Private, Public Enter prises!
Murali,
The CREDAI's recent change of heart is testimony to the fact, whether private or public, when human's greatest vices 'Greed' comes in, it all becomes black. This take the form of 2G's, DLF's, Iron Ore Loot, BDA/DDA largesse to politicians and their Kith and kins.
It is said and proved in more than one occasion that 'Real Estate' has become the greatest avenue for all the murky dealings. It seems everybody is keen to wash their hands in this pool.
Coming to the Private-Public debate, on the question of providing housing to people, only people who have benefited is the upper middle class and elites of our society. The lower middle class who worked hard 24/7, paid their dues, played by rule, who aspired for a roof over their head and their family which they can call their own, left the world without having owning a one. My late father is one such soul.
I am still to find a Private Builder who has earmarked any dwelling for Economically Weaker Sections? Let me know if any builder has built any such dwellings - be it Prestige, Tatas etc. Even laws doesn't require them to do that.
BDA, barring few sites, flats for EWS a bulk of the beneficiary is for upper echelons of the society. If one takes a round of all the BDA layouts it is apparent who benefited and who didn't.
Once again if left to their own conscience, there is hardly in any difference in loot/corruption by private or public. Because ultimately it is the humans that occupy those spaces and he is prone to be corrupt.
A honest person will remain honest, no matter where is put. But they are handfull and very few.
Situation could only be mitigated by laws and enforcement, but law has to ensure that everybody plays by same rule and everybody pays their fare share. Who will bell the cat?
Barring Turkey, there isn't an example of a country who has won the battle over corruption. They have only progressed in volume of corruption but not decrease it.
Mango men in a banana republic
Self regulation in India must be made to work, currently it does not work because there is too much selfishness & backstabbing going around as a culture. "Why should I do as I dont directly benefit from it" shows up in every aspect of our society, from standing/driving in line to making sustainable choices. If we need to progress, respect for common laws & common good has to be thrust into every persons psyche.
Click to down load is not working
Code of Conduct
Code of Conduct is a document of principles that binds all CREDAI Bengaluru members. It is the most important founding stone of the association and has been included in the proposed Real Estate Regulatory Act. This document lists the guidelines and a mandatory set of laws that all members have to implement and abide by.
The aim of this Code of Conduct for Developers, Promoters and Builders is to maintain the honour and dignity of Developers, Promoters and Builders in general, to secure the spirit of friendly co-operation between the Developers, Promoters and Builders and their customers in the promotion of highest standard of promotion, development and building activities and to establish transparency, and fair dealing between the developers, promoters and builders with their customers; and to establish a spirit of brotherhood within the Associations of Developers, Promoters and Builders to try and ensure that Developers, Promoters and Builders discharge their responsibilities to the community in general.
To view the complete Code of Conduct document, click to download.
"Aam Admi" = Mango man acording to Robert Vadra. Click here for the DNA report.
Shoddy construction
...the project faces a string of obstacles including shoddy construction, corruption, poor sanitation and an on-site tomb.
"India's industry standards of construction quality for commercial office space have not yet reached international standards, much less GS standards," the report said
Source
Not just Buildings, the shoddy construction even in basic infrastructure like roads is there for all to see. Many of us including me tout capitalism & private enterprise as the way to go, but does any of the defenses in the article inspire any confidence in their ability to lead us to the next level? They only admit we cant even catch up to China, are we not humans with brain like them? GS is also a private concern they are not govt or martian aliens. Instead of trying to adopt better standards the so called leaders of the industry can only dismiss it?
Can CREDAI actually do something about construction standards or just live in denial & take advantage of sloppy standards.
standards
Interesting story IDS. From the tone, there is a certain amount of American black and whiteness in the story. Nevertheless, they are mostly right. CREDAI has to get involved in upgradind construction standards and other practices in India. Unfortunately, today real estate is a combination of land grab + black money and political management + the insane bribes that get paid at every stage. I was naive and had no idea of the extent of things until recently. The last year has been a revelation.
If a developer spends most time and energy dealing with this shit, I would argue that (a) Good guys will not get into this indistry (b) Final goal will just be profiteering.
Though buildings built today looks fancy with various fancy materials used to make crap look good such as cladding and glass... finally the construction quality is poor, energy efficiency is extremely poor and all of us suffer as a consequence.
Standards ?
I think what is being attempted to be implied is largely corruption, red tape, pot-holed roads, open sewers, stray dogs /cattle & generally dirty conditions & the lack of ethics in the construction industry. Also, the tombstones within the site ear marked by Goldman Sachs. What happened in Delhi at CWG has been thrown in to argue about possibilities of shoddy construction.
Comparisons with downtown Manhattan & London's financial district seems a little far-fetched since it begs the question as to why they are re-locating at all if they are expecting identical standards at a fraction of the cost.
Whilst one would agree with the argument about poor professionalism within the construction industry, I think they have also developed some very fine projects - not all is as bad as they make it out to be.
undermining its own interest
For 15 years after Manmohan Singh pierced the heart of the socialist consensus, reforms had the endorsement of India's moral economy. Today, unfortunately, that is no longer so. Checking this regression is a responsibility of business (but not business alone). But controlling the backlash won't be possible unless the initiative to improve the ethical underpinnings of business comes from within India Inc. The alternative is a return of the control raj.
For the full blog by noted columnist, Swapan Dasgupta, in the SToI, click here.
Will CREDAI take note?
CREDAI's 'swatchatha' turn?
ATTEMPT to clear the mind block
INSIDE >
http://vswaminathan-swamilook.blogspot.in/2014/12/resources-corner-for-thinkers-only.html
For an Update on STP, the ongoing struggle of old apt. complexes with BWSSB, refer the recent Post http://bangalore.citizenmatters.in/articles/42
Tentatively observe (on a
Tentatively observe (on a selective basis):
1. Earlier version put up by CREDAI on its website was named and styled as, -
“CREDAI- Karnataka’s Code of Ethics & Conduct”
And one of the paragraphs incorporating the most significant aspect of all,- but adversely commented on, was that numbered 5.1 and concerned DoD - as long back as on October 8, 2009,-
@ Formation of Apartment Owners Association in Bangalore ...
Now, in the document commended to be a “fairly decent document”
(Ref. “....And, lo and behold, yes, it is active - check here. And, it's a fairly decent document too.”),
which is in form and substance, an inhouse “Resolution”, making for a simply verbose and hollow rhetoric, there is no mention, not even a whisper, on promoter’s obligation to execute a DoD.
Further, it does not cover all vital aspects of the most concern, in clear and specific terms, in such a manner as to safeguard the customers’ lawful rights and interests, as envisaged by / in terms of, the special law.
Many of its contents are clumsily worded- honest guess deliberately done so- to serve no real purpose from the view point of ‘customer’. For instance, look at the paragraph 3. B. to cover “Guarantee as to non-violation”.
In short, it makes for a psychological ploy.
> “Can we now hope that they will join us in our efforts to update the KAOA? I shall make a fresh approach.”
The feedback herein is intended to, and it is hoped, be useful in pursuing the indicated fresh approach.
2. Wrt DIAMOND MINEFIELD, -
“....they were hood-winked into believing that the company share-holdership etc was quite the norm. The lacunae in the Acts also contributed to this, I expect, apart from perhaps the membership of CGDL in CREDAI....”
As to what really is the concept of “company” as envisaged in KAOA, an attempted elucidation in the comments posted @ ·
itatonline.org » Shantikumar D Majithia vs. DCIT (ITAT ... and
ITAT Order in re. Shantikumar D Majithia vs. DCIT ... - TaxGuru.
ALSO
SC Judgment in Hill Properties case – Substance seems to ..
itatonline.org » Hill Properties Ltd vs. Union Bank (Supreme ...
may be looked into.
(To be contd., if so called for)
For an Update on STP, the ongoing struggle of old apt. complexes with BWSSB, refer the recent Post http://bangalore.citizenmatters.in/articles/42
"company" AS A 'concept' ,
growingly targeted for violent changes;
DOES IT NOT CALL FOR a halt and updating ?!
Not Unrelated HERE>
BS NEWS
Ajay Singh: Forty companies, a dispute and some defaults
<> IMPROMPTU: The narrated episode makes for ,-to rhyme with 'tale of two cities' or 'one man company' a novel idea given a legal shape under the new company law – a tell-tale of one man with many ('RELATED', a modern day concept that has increasingly come to be regarded as the proverbial red rag to a BULL (-as personified by the whole lot of so called regulators , or semi- or self-regulators, being SEBI CLB,RBI, ICAI) companies; and, with many fanciful names – ANY THOUGHTS to toe the line , especially from the expected-to-be-concerned government / its authoritative quarters AND/OR company law experts at large?
KEY NOTE
Rightly or wrongly, in the special state laws (of Maharashtra and Karnataka), 'company' has, in addition to the other two namely, 'co-op Society' and 'association', been specified as an entity, for the purcasers of flats/apartments to opt for, in order to having the 'co-owned'prooperty (land and buildings) finally conveyed. Be that as it may, going by wisdom gathered in hindsight,- refer the few decided court cases- the vehicle of 'company' , even in the few instances known to have been so opted for; has been gravely misconstrued, and misused; further, primarily with the ulterior motive of saving on stramp duty. With that in focus, the point of concern requiring to be looked into is, - should not the law be amended to derecognise, by deleting, 'company' for its purposes.
It is noteworthy, the 97th amendment to the Indian constitution, which makes the right to form cooperative societies a fundamental right under Article 19(1)(c) , as read and understood, speaks of the right to form “associations ...or cooperative societies”. That is, ‘company’ is not a form of entity recognised for the purpose.
For an Update on STP, the ongoing struggle of old apt. complexes with BWSSB, refer the recent Post http://bangalore.citizenmatters.in/articles/42
CCI's indictment
A Feedback (to share own thoughts)
Apropos
CCI's indictment
".....Noting that the sector lacks "MARKET PRESSURE" to prod the players to improve their services,..." – This observation is not to be simply, or simplistically, glossed over. If critically looked through, and mindfully reflected upon for a while, it will be realized that, it carries an important message. In a manner of explaining in short, bears on its sleeves the harsh fact of life that the buying community, particularly that section of it who buy a home for own use and enjoyment, - as opposed to investing ‘speculators’ (constituting a majority of / dominating the ‘MARKET’ ) with a view to primarily making easy /unearned ‘gains’ over a period wholly out of appreciation in market value, - have preferred, and chosen to continue so, mostly unwittingly, to remain ‘unaroused’ against all kinds of irregularities the ‘players’ have been recklessly indulging in, with no effective external checks and balances in place. In the process, no thought has been given, and no care taken to make a conscious note of , even the most fundamental concern of all, being that the bought property has a legally “marketable title”, in its absolute sense as envisaged by the law. To illustrate, “GPA Sales” is a glaring instance. That was a practice gone on for too long (to be precise, nearly six decades) until the apex court happened to sternly rule against its illegality. What is extremely disappointing is that even as of now the market sentiments (basic mentality of buyers) do not seem to have changed a wee bit for better.
Aside: Certain latest developments in the related field of, besides administration, adjudication, of property law call for a sharp focus. For a quick insight, may look up the brief analysis of two apex court judgments in the published article in, - (2014) 226 Taxman 143 (Mag). As made out therein, with the given scenario / obtaining state of affairs in the matter of compliance (disobedience/violation) of rules and regulations in statutes, the judicial approach has tended to be liberal; in that, judicial interpretation, instead of laying emphasis on the ‘letter and spirit ‘ of law as has been the convention for ages, has been lately veering round to common sense reasoning, founded on principles of natural justice. That is a clear indication of the change in direction; to know which way the wind blows.
KEY NOTE: In the selected observation of CCI (for comment), there is a misconception / fallacy; in that, firstly, as wrongly implied, what the players render, hence requiring to be improved, are not/ 'services' in any sense of it. The form/substance of transaction is one of sale/purchase of an immovable proprety; hence its attendant special characteristcs and legal inimplications are altogether of different kind. As such, the concerns of buyer ought to be differently viewed, for resolution suitably and appropriately.
May be contd.
For an Update on STP, the ongoing struggle of old apt. complexes with BWSSB, refer the recent Post http://bangalore.citizenmatters.in/articles/42
An Update
AT News
CCI Investigation into Unfair Practices in Realty Sector
COMMENT
“….Under the provisions of the Competition Act, 2002, …. CCI looks into cases of alleged anti-competitive practices/abuse of dominance including in realty sector.
This was stated by … Minister of Corporate Affairs … in the Rajya Sabha on 24th Feb 2015.”
Three aspects strutting out, in one’s perspective and well-founded conviction, which essentially and predominantly call for a conscious note of and serious follow-on action, more so expeditiously and on a war-footing, better early than any more late, by the empowered MCA, are these:
1. The investigation, in order to be taken to a fruitful/desired end, for the common good, must not be confined to/limited by the scope within the provisions of the special Act administered by the CCI; but must be extended to all related/connected matters. To be precise, the investigation ought to cover all kinds of ongoing “unfair practices”, prevailing for long in the realty sector, across the nation.
2. As a corollary, the initiative and follow-up steps, therefore, need to be taken independent of/ in addition to by CCI, by the concerned ministries as well; in particular, the directly concerned Ministry of Urban Development, both at the centre and in the states.
3. For obvious reasons, fully knowing that the players in the realty sector include other form of entities, e.g. registered and un-registered partnerships, not ‘corporate’ alone, those also require to be suitably roped in and effectively covered, within the sweep.
For an Update on STP, the ongoing struggle of old apt. complexes with BWSSB, refer the recent Post http://bangalore.citizenmatters.in/articles/42