August 2001 : Page No.

10

BANGALORE'S PROPERTY PROMOTER'S

Never Ending Woes
Promoters by their shrewd planning contribute sky scrapers with attractive
elevations to the city's face lift. Hence they are playing the leading role of building a
'Global city'. But the sad news is that the Government machineries are not equipped
to develop the city to take it to the status of a 'Global City'. The Government boasts
of providing quality infrastructure every time to a city. However the quality of the
infrastructure from the Government is such that a good road becomes a bad road
within a couple of months. In spite of such a situation promoters continue to play
their role even as the problems which they face is never ending. The promoters in
Bangalore too are no exception. Like promoters in other parts of the country the
apartment promoters in Bangalore too continue to face many difficulties.
It is very difficult for a promoter to acquire land with proper title. Most of the titles
pertaining to land, on which apartments are built, are not 100% perfect. Purchasing
land falling under the CMC and on the developing outskirts is risky as it may lead to
prolonged litigation or some authority may find that the land is suitable for acquisition for the purpose of laying roads, bridges etc. Once the final notification is
announced, it is next to impossible for the owner to get the same returns, if the
project fails on account of defective title. This apart, in a number of cases
Government department personnel themselves present fake records as authentic.
Then there are a maze of laws, rules and regulations, which the promoter has to
comply with for the construction of an apartment. Most of these laws are so
complicated that different courts interpret them differently. As a result there are
several contradictory judgments on the same point of law. The promoter tries to
comply with one law after the other but the chain is long enough to exasperate
anyone trying to get to the end of it. Government officials take advantage of the law,
which is in their favour, in taking decisions but often ignore the other provisions of
the law.
Construction on certain categories of land requires NOC of the Bangalore
Development Authority. Getting BDA permission is not an easy task. There is no
law that can force the BDA to give its decision within a time frame. You will have to
wait for how long nobody can tell you. Here's where money speaks. Open your
purse and take out currency notes, you will then see a miracle. Illegal becomes
legal. In expectation of this loosening of purse strings the BDA will not reject your
application straight away even if it is not in order. Rather, it will make you wait till
you open your purse.
The Government for developmental purposes may have notified for acquisition
certain types of land that were used for agriculture and other purposes. Even after a
lapse of 25 years, Government may not have taken possession of the lands as these
are in various stages of litigation. The owners of such lands are very happy to see a

buyer or a promoter just because of the fact that they get hundred times more
money from the purchaser than what the pittance government pays them by way of
of compensation.
Once the purchaser starts construction work on such lands, troubles start one by
one. He will have to walk through the corridors of various courts for decades, to set
right the damage and loss suffered by him. Whether he will succeed or not only time
will tell. In the end, wisdom dawns on him that the system does not encourage true
entrepreneurship.
Various statutory authorities want to enjoy power without the statutory
responsibilities that go with it. Usually they avoid taking statutory decisions and if
by chance they did and thereafter anything went wrong they would find a
scapegoat in the higher or lower echelons of the organizational hierarchy. While the
authorities are very prompt 'in collecting stamp duties, they do not take the legal
responsibility of ensuring that only properties with proper titles are registered.
Irrespective of the rules, the sub-registrars are always ready and willing to register
the property provided a deal is struck successfully, if not they will raise various
objections against registering the property.
According to certain rules, one cannot purchase the land granted by the government
to a person belonging to the schedule caste. If anyone purchases such a land, the
government may direct him to return it, but the chances of getting back the money
invested are remote.
Certain land laws are odd and very confusing. According to Karnataka Land
Revenue Act, only an agriculturist can purchase agricultural lands but his annual
income should be within two lakhs per year and he should be an agricultural labour.
Probably, this peculiar law is in force only in Karnataka and Kashmir. Kashmiris can
buy land anywhere in India, but people of Indian origin of other states cannot buy
land in Kashmir. While the government can acquire any land and form layout by
paying a nominal compensation to the landowners, promoters or developers or
individuals cannot do so because there is no provision in the law to make private
layouts even though they are ready to fulfill all the terms and conditions imposed by
the authorities. What is right for the government is not necessarily right for others.
Agricultural lands located at green belt area cannot be used for any building
construction. Conversion of the land use in green belt is not possible. However, they
are entitled to construct pump set room and small farmhouse.
Another peculiar rule is with respect to the "change of land use." A shopping
complex cannot be constructed on a land earmarked for residential purposes. An
industry cannot be set up on a land earmarked for commercial use. Lands around
Bangalore within a radius of twenty kilometers, have been declared as "Green Belt "
area on which no buildings can come up. Similarly, no construction is allowed other
than what is mentioned on lands earmarked. Likewise, an apartment block cannot

be constructed on a site allotted by the BDA. If the permission to change the use of
land is denied, then the project can never see the light of day.
Even if the promoter is able to cross over all the hurdles and manage to get a proper
land for construction, his problems do not end there. He has to collect various
documents to perfect the title deeds such as betterment charges, clubbing of khata,
etc. To regularize the property, the promoter has to put in great efforts at the
revenue department. Thereafter he has to get the plan sanctioned by the
engineering department. The plan has to move up from the Junior Engineer level
and after passing through various cadres of engineers it finally reaches the commissioner level. After the building plan is sanctioned, the promoter has to obtain the
'certificate of commencement' and finally 'completion certificate' from the concerned
authorities.
Getting the completion certificate from the Bangalore Mahanagara Palike is not an
easy task. One among a hundred flats can get the completion certificate. The work
cannot be completed unless and until the promoter parts with a huge amount of
'speed money'. 'No money - no certificate is the unwritten slogan. None of the
authorities will respond to your application within a fixed time frame if you do not
'take care' of them. In short, public administration has now come to mean public
harassment. Delay in getting clearance and approvals leads to escalation in the cost
of materials, wages and administrative overheads, which eats into the promoter's
wafer thin margin. Apart from the BDA and the BMP, there are several others the
promoter has to contend with. Various squads such as BDA squads, sales tax
squads, income tax squads, revenue squads, KTPCL vigilance and inspection
squads, prevention of unauthorized construction squads, swoop down on the
promoter to collect their periodic 'mamools.' Whether the promoter makes money or
not, these people definitely do. The Lok Ayukta has already nailed some, but many
are still at large fleecing the entrepreneur.
The promoter has to shell out nearly 25% to 40% of the project cost as bribes and
government fees. Then he has to earn something in the thin margin by way of profit.
As a result, there is bound to be deviation from the sanctioned plan, compromise on
standard construction, bad workmanship, poor finish and delay in completion of the
project. That some buildings come crashing down now and then will bear testimony
to these realities.
Then there are cases of missing files and bogus documents. Added to this are cases
of genuine documents executed on bogus stamp papers. A promoter with such
professional qualification as a Bachelors, Masters degree in architecture or civil
engineering learns that his learned knowledge is useless when it comes to getting
clearances, approvals from government officials.
They learn that the only way to get their work done depends on how successful they
are in warming the hands of the officials 'under the table.' Normally, promoters are
not in a position to invest the entire amount on their projects. It all depends on the

amounts they have been able to collect from customers. Some customers don't pay
promptly. Sometimes to make up the deficit, the promoters have to borrow funds at
high rates of interest. Promoters are forced to pay compensation by the consumer
forums to those customers for the delay in the project. On the delayed payments,
however, it is difficult for the promoters to collect interest as such rights can be
enforced in civil courts only which is a long drawn process. Of course, a few
unscrupulous promoters do make fast bucks by throwing ethics to winds.
Under the circumstances, only those few promoters, who have the capacity to hold
on to their apartments till they get high prices, can survive in this business. Those
promoters who desire to construct apartments and budget flats for middle class
citizens at reasonable prices are struggling hard to make both ends meet.
Unless attitudes change and the bribe culture is rooted out, it will be difficult for the
quality conscious and value-oriented promoters to survive in the market.
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