To Be Or Not To Be- Smart City Tag For New Town

The central government wants to give a second thought on whether New Town in Kolkata should receive a ‘Smart City’ tag or not, as there is no implementation of any central government flagship programmes by far, revealed the Union minister of housing and urban affairs, Hardeep Singh Puri.

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Yet, the government thinks that the entire pre-defined project must be stuck in the administrative dilemma of this area. The minister added that the government had given 2-years duration for sorting out the unsettled administrative issues. Having chosen for smart city mission, a city should necessarily appoint consultants, set-up special purpose vehicle (SPV), plan projects, and kick-start tendering for such projects. No such updates have been observed in New Town over past few years. Thus, the government should take-up action against the same.

Under the smart city mission, 100 smart cities to be developed across the country in which every city obtains a financial grant of Rs. 500 cr to start off projects such as wastewater treatment, solid waste management, street lights, slum up gradation, roads, and public transport etc.

“For implementing any big plan, infrastructural support and resources both hold an equivalent importance. Before Smart City mission, RERA must happen across the country in order to create a uniformity and regulation across the realty-scape. A fundamental legislative framework can only draw out the best trajectory for futuristic developments such as- Smart City Mission,” says Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

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How RERA Impacts The Lease Transactions?

Starting from its implementation, the Real Estate (Regulation and Development) Act, 2016 (RERA) has made the structural reform distinctive and transparent. Maharashtra was the first state to notify the Act in the presence a state regulatory authority. As of now, the state authority has acted on the errant buyers against complaints in bulk from the aggrieved home buyers and still it has been dealing with a number of complaints filed by numerous allottees against the builders and the agents of the state. Now the Appellate Tribunal is also operational in the state.
One of the most debatable subjects of the RERA provision is the definition of an “allottee”. RERA came into the picture to ensure accountability in real estate transactions. However, by the term “allottee” RERA points to a person to whom any real estate unit is sold not a person to whom the possession is given on rent/lease.

The Transfer of Property Act 1882 deals with renting/leasing properties where the term lease is defined as a right to enjoy an immovable property for a pre-determined time period in consideration of a price paid or agreed. In a property deal, where the developer executes a lease agreement with the allottee, the developer is addressed as a lessor, and the allottee is referred as the lessee. The price paid by the allottee to the promoter is known as the premium, and the money exchanged is referred as rent. Yet there are projects where the developers execute lease agreement/s in respect of a plot, apartment or building, with certain provisions which are one and the same to that of an agreement for sale for e.g. the date of handing over possession.

Now the million dollar question is will such transactions be ruminated by RERA guidelines, particularly when it comes to a long-term lease between the lessor and the lessee and the project is registered with MahaRERA?
The FAQ’s made available on the MahaRERA website answered this query where it stated that long-term leases will be considered under MahaRERA scope. Acting on an earlier complaint, the adjudicating officer of MahaRERA cited that lease transactions won’t attract RERA norms. However, the Appellate Tribunal in its first judgment dealt with this crucial issue and relying upon the provisions of law governing lease it ordered that lease transactions will be governed by the real estate Act as well and MahaRERA will hear such cases in the future.

The following verdict will mandate those project registrations under RERA and adhere to the guidelines of the Act. Now the allottees could seek justice to the Authority or the adjudicating officer to secure their rights as the case may be. Thus, developers have to draft the lease documents cautiously complying with the RERA norms in order to avoid the lawsuit.

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Active Participatory Role Of Homebuyers In Making Decisions About Insolvency Proceedings Of Real Estate Companies

Homebuyers might be considered as commensurate with the unsecured financial lenders at insolvency proceedings for real estate companies. With the implementation of this new rule, a bulk of the suffered homebuyers, left in the lurch for the compensation from real estate companies such as- Unitech, Jaypee Infratech, and Amrapali and reach a conclusive and of course a favorable speck.

A committee with the task allotted for reviewing the Insolvency and Bankruptcy Code (IBC) and under consideration by the government has made this suggestion, confirmed by a couple of senior officials tuned in with the buzz. With the resolution passed, the interest of all the stakeholders will be equally treated.
People who had invested in Amrapali and Jaypee Infratech projects are left in trouble after they failed to clear their dues. Apart from this, the ministry of corporate affairs has moved the bankruptcy court to ride herd on realtor Unitech.

In order to regulate recklessness of these companies, a 14-member law committee has been constituted to identify facts that “impact the efficiency of the corporate insolvency resolution and liquidation framework” and come up with recommendations to deal with them.
“A proposal is actively considered to give homebuyers a status of unsecured financial creditors,”-said one of the officials.

According to the official sources, the committee is likely to present its recommendation along with draft amendments to the IBC towards the end of this month. With the adoption of this recommendation, homebuyers will have a say in the insolvency proceedings and can be an active part of the committee of creditors. It will also empower them with the voting rights on the resolution plans.

The current IBC norms foster a waterfall financing-eight levels for the order of distribution of proceeds from the sale of liquidated assets among stakeholders. After the settlement of the resolution professionals and administrators, next come financial creditors and workmen’s dues, followed by unpaid dues of other employees except for the workmen. Then comes the unsecured financial creditors, followed by government dues and equity shareholders. Homebuyers are currently the last in the distribution list of the developers.

“The proposed amendment will provide homebuyers a higher spot in the IBC proceedings, as they will be one determinative voice in the resolution plan as well. Homebuyers will share the same base with the financial creditors,”-says, Mr. Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

As per the statistics, about 31,000 homebuyers of Jaypee Infratech and 41,000 of Amrapali’s Silicon City project have moved the Supreme Court and appealed that they should be treated in a class with financial creditors. To protect the interest of the homebuyers, the Supreme Court ordered the promoters of Jaypee Infratech not to sell personal assets and deposit Rs 2,000 crore with the court.

Similarly, Amparapali was ordered to submit a plan to deliver possessions. In the case of Unitech, 19,000 homebuyers have accused the company over fund diversion and appealed to the corporate affairs ministry and finally, the case is under National Company Tribunal Law under the Companies Act. The Supreme Court has stayed the move following an appeal by Unitech.

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