Issue of un-earned increase for transfer of a glat on GPAs name
Chandigarh Social Welfare Council ____________________________________________________
Office: # 194-C, Sector 51-A, Chandigarh Fax +(91)172-504-5151 Cell: +91-9888-255-128,+91-9888-255-128 ______________________________________________________________________________________________________________
Date 14th August, 2008.
General (Retd.) S.F.Rodrigues,
PVSM.VSM
Administrator, Union Territory,
Chandigarh.
Sub: Issue of “Unearned Profit” on allowing transfer of flats in cooperative H/B Societies by
Chandigarh Administration.
Please relate this to our Representation made to you on 24th April, 2008.
Your Excellency,
We have been representing the cause of the holders of General Power of Attorney (GPAs) in Group Housing Societies before the Chandigarh Administration and have been demanding that the regularization of these GPAs is in the best interest of the ethos of the city .But hear say is that that the Chandigarh Administration is insisting on implementation of the clause of “Unearned Profit” while formulating its policy for the transfer of flats in the group housing societies
In this connection administration’s reference seems to be to terms and conditions laid in the allotment letters issued by the administration at the time of allotment of land on chunk basis .This states “The allotment/sale shall be governed by the provisions of the Capital of Punjab (Development and Regulations )Act 1952 and the Chandigarh (Sale of Sites and Building ) Rules 1960”
In this connection, Chandigarh administration seems to rely on Rule 8-C of the Chandigarh (Sale of Sites and Building) Rules 1960 relates to charge of 1/3rd profit as assessed by the competent authority from the transferee and reads as follows:
“Notwithstanding anything contained in the letter of allotment/conveyance deed imposing ban on the transfer of site/building as the case may be ,or any right, title or interest thereon before the stipulated period ,the Estate Officer may grant permission to the transfer by way of sale, gift, mortgage oar otherwise of the site ,building or any right or interest therein ,after transferee has paid full price of the site/building and if in the opinion of the Estate officer special circumstances exist for the grant of such permission . This will be applicable to all categories of sites/buildings sold by allotment /hire purchase or on concessional rates.
In the case of transfer by way of sale/gift/mortgage or otherwise of the site or any right, title or interest therein, 1/3rd of the unearned increase in the value ie.the difference between the price paid and the market price value of the site /building at the time of permission of transfer shall be paid to the Government before registering such sale or transfer. The market value of the property for his purpose shall be assessed by the Estate Officer or such
other authority as may be prescribed by the Chief Administrator and the transferee shall be entitled to produce his evidence and of being heard:
Provided that 1/3rd of the unearned increase in the value will not be charged if a mortgage or charge of site/building is created with the previous consent in writing of the Estate Officer, in favour of the Central Government, State Governments, Chandigarh Administration, Life Insurance Corporation of India or any scheduled Bank for securing a loan to be advanced for constructing the building on the site.
Provided further that in the event of sale or foreclosure of the mortgage of charged property the Government shall be entitled to claim and recover 1/3rd of the unearned increase in the value of the plot as aforesaid and the amount of the Government share of the said unearned increase shall be first charge, having Priority over the said mortgage or charge”
The rule is dysfunctional in view of the following:
Bare reading of Rule 8-C may lead one to justify levy of the 1/3rd “Unearned Profit”.However, that the rule/clause containing the provisions of charge of “unearned profit “ is tantamount to reading the rule in isolation of the main rule 8 This rule is made applicable in the case when the conveyance deed is required to be executed in form formats as may be directed by the Estate officer, on fulfilling conditions laid in rule 4 and its sub rules and requires Registration of such sale/transfer..
A study of the rules contained in Chandigarh (Sale of Sites and Buildings) Rules 1960 donot at all deal with the transfer of “Dwelling Units” constructed by the Cooperative Group Housing Societies. These rules deal with the Sale of Sites/Buildings. In the case of cooperative group housing societies neither a site /land nor a building is under sale/transfer As such the application of these rules to cooperative group housing societies is misadventure on the part of the Chandigarh Administration.
Chandigarh Administration has made specific rules for the land allotted to cooperative group housing societies known as “ Chandigarh Allotment of Land to Cooperative House Building Societies Scheme 1991 ““Chandigarh Administration shall allot land on chunk basis to the Chandigarh Housing Board for its further allotment to the eligible Cooperative House Building Societies………..on Lease Hold Basis for 99 years for the construction of multistoried structures /dwelling units……(section 4 of the scheme 1991)”.Its rule takes care of structure allotted to an allottee which is called a “Dwelling Unit (DU) Dictionary meaning of” Dwelling a house or a place of residence. Scheme was evolved to provide affordable housing to the residents of the city.
Whereas the Chandigarh (Sale of Sites and Building) rules 1960 were enacted on “Buildings” for which land was allotted by way of allotment/auction/hire purchase primarily to individuals, partnerships or companies on lease for 99 years .Such people enjoyed ownership rights uninterruptedly These building could be put to any use residential, commercial etc. as per classification .When such sites/ buildings caused to be converted into free hold units, their sale did not attract the rule 8-C of Chandigarh (Sale of Sites and Buildings) Rules 1960. .
Group Housing Societies that had been allotted land for further distribution to its members in shape of plots to erect buildings only for residences... Till lease persisted, the rule under reference remained applicable. Once the plots and buildings erected thereon are/were converted into free hold, no unearned increase is charged from them by the Chandigarh administration. The onus on transferors and transferee is to pay the registration charges in the form of stamp duty to the revenue deptt .Such sales did not attract the rule 8-C of Chandigarh (Sale of Sites and Buildings) Rules 1960
Chandigarh Allotment of Land to Cooperative House Building Societies Scheme 1991.Under these rules “Chandigarh Administration shall allot land on chunk basis to the Chandigarh Housing Board for its further allotment to the eligible Cooperative House Building Societies………..on Lease Hold Basis for 99 years for the construction of multistoried structures /dwelling units……(section 4 of the scheme 1991)”.
The Chandigarh Lease Hold of Sites and Buildings Rules, 1973 seem to have been made applicable to Cooperative House Building Societies primarily to recover the Premium, Ground Rent jointly and severally from members and societies, power to resume the sites in case of default.
However subsequently vide an amendment to rules, cooperative housing societies were given an option to get land allotted on free hold basis which all societies availed in 2002. Further specific provisions under the rules have been enacted vesting complete powers with the Societies regarding transfer of dwelling units and substitution of its members,
The disfunctionality of the rules is evident that no where in the country free hold land has such riders as of “unearned increase.” Once the land is possessed on free hold rights, the ownership is absolute, unfailing and total.
The administration has submitted affidavits before the Hon’ble Punjab & Haryana High Court where in consensus arrived between the parties (Both respondents and defendants) in the matter CWP. 10691 of 2005 and CWP of 2006 both decided on 21.08.2006.The consensual transfer charges were agreed to be Rs. 50,000/-, Rs. 35000/- and Rs. 25000/- for category A, B and C respectively. It is pertinent to ask why administration did not inform the Hon’ble Court of its rule to charge 1/3rd amount as unearned profit and why it failed to put rule 8 on record of the suit.
Section 105 of the Punjab Cooperative Act, 1961 (as applicable to UT Chandigarh) also contains special provisions for regularization of occupancy rights who have acquired such a right through the instrument of the Power of attorney or agreement for sale. Punjab has been allowing transfer of attorney holders charging a very nominal fee and the transfer is affected at the level of the society and validated by the cooperative department of the state
Punjab is a cash strapped state. If the rule could hold ground, then Punjab would have resorted to its application to garner resources for its developmental programmes. While desiring the applicability of any policy matter, reference is made to similar rulings/provisions from Punjab and Haryana. It is pertinent to put on record that no clause of unearned profit exists in the rules /Act s of both the states. Had this been relevant, couldn’t Punjab and Haryana have collected 1000s crores of rupees as unearned profit
Delhi Administration, in a bid to regularize the GPAs, has amended the principal Act in respect of Cooperative societies and has substituted a new section for section 91vide their notification no. F-14(33) LA on 2.12.2006 and lays as under:
“91. A member of housing society who has sold his plot or flat on the power of attorney or agreement for sale or by sale deed ,shall cease to be a member of that society from the date of sale or plot or flat:
Provided that the purchaser having registered power of attorney or registered agreement for sale or registered sale deed as the case may be in respect of such plot or flat, may apply for membership by paying transfer fee of five hundred rupees and share money and admission fee as per the provision of the bye laws of the society and the committee shall grant membership to the applicant within thirty days after the submission of his application. Incase of refusal by the committee, the applicant may appeal to the Registrar within thirty days and the decision of the Registrar shall be final.
Provided further that no purchaser shall be entitled for more than one membership in a housing society.”
In the matter of litigations/complains regarding taking huge amounts in the name of transfer fee etc. ,the Chief Justice of Delhi High Court in 28 similar type of cases has passed a common order dated 29.01.2007, the operative part of which is reproduced as under
c
Based on this judgment, office of the Registrar Cooperative Societies Panchkula, Haryana, has passed an order vide endst. No. GA-I/4370-4443 dated 9.05.08 “it is clear from the judgment delivered by Delhi High Court that charging such kind of amounts from the members would be sufficient if it charges below Rs. 10,000/- in each case.”
“It is therefore, further ordered to stop this practice immediately and all cooperative souse building, group housing and maintenance societies etch. Shall not charge more than Rs. 10,000/- as transfer fee”
Even our ld. Registrar Cooperative Societies Shri R.K.Rao is on record stating that the fee on the transfer of the society flats should be Rs. 10,000/ for the first transfer. The opinion of the ld Ld. Registrar should be viewed with full consideration and merit.
Further the alottees have appointed the GPA holders as their nominees and the same are in the know of Registrar, Cooperative Societies Most of the GPAs had purchased flats in the GHSs when these were in the initial construction stages and the projects were financed by the amounts paid by the GPAs towards cost of land and the construction in a phased manner. This factor may also be viewed with sympathy while taking a decision on the issue of transfer of shares in favour the GPA holders.
It is an irony of fate that alottees despite having sold their flats on GPAs are still mingling in the affairs of the management of societies. Hefty amounts are paid to such alottees to vote for particular persons on the management board of societies paving way for corrupt practices. Administration on its part should have addressed to this malpractice by regularizing of the GPAs rather than be a party to promote it.
Prayer:
The contradictions and anomalies in the rules. need to be addressed on priority and the matter should be resolved in public friendly manner and a final decision based on natural justice be taken
Thousands (roughly 15000 Families) of GPA holders look to your wise decision and intervention in the matter.
We shall be grateful on being accorded an audience with you to further put/pursue our case in the public interest, of which Your Excellency is a Champion.
We remain, very truly yours,
S.S.Bhardwaj Satish C.Sharma
Co-Chairman General Secretary
Cell: 9878927777 Cell: 9888255128
.
.
Date 14th August, 2008.
General (Retd.) S.F.Rodrigues,
PVSM.VSM
Administrator, Union Territory,
Chandigarh.
Sub: Issue of “Unearned Profit” on allowing transfer of flats in cooperative H/B Societies by
Chandigarh Administration.
Please relate this to our Representation made to you on 24th April, 2008.
Your Excellency,
We have been representing the cause of the holders of General Power of Attorney (GPAs) in Group Housing Societies before the Chandigarh Administration and have been demanding that the regularization of these GPAs is in the best interest of the ethos of the city .But hear say is that that the Chandigarh Administration is insisting on implementation of the clause of “Unearned Profit” while formulating its policy for the transfer of flats in the group housing societies
In this connection administration’s reference seems to be to terms and conditions laid in the allotment letters issued by the administration at the time of allotment of land on chunk basis .This states “The allotment/sale shall be governed by the provisions of the Capital of Punjab (Development and Regulations )Act 1952 and the Chandigarh (Sale of Sites and Building ) Rules 1960”
In this connection, Chandigarh administration seems to rely on Rule 8-C of the Chandigarh (Sale of Sites and Building) Rules 1960 relates to charge of 1/3rd profit as assessed by the competent authority from the transferee and reads as follows:
“Notwithstanding anything contained in the letter of allotment/conveyance deed imposing ban on the transfer of site/building as the case may be ,or any right, title or interest thereon before the stipulated period ,the Estate Officer may grant permission to the transfer by way of sale, gift, mortgage oar otherwise of the site ,building or any right or interest therein ,after transferee has paid full price of the site/building and if in the opinion of the Estate officer special circumstances exist for the grant of such permission . This will be applicable to all categories of sites/buildings sold by allotment /hire purchase or on concessional rates.
In the case of transfer by way of sale/gift/mortgage or otherwise of the site or any right, title or interest therein, 1/3rd of the unearned increase in the value ie.the difference between the price paid and the market price value of the site /building at the time of permission of transfer shall be paid to the Government before registering such sale or transfer. The market value of the property for his purpose shall be assessed by the Estate Officer or such
other authority as may be prescribed by the Chief Administrator and the transferee shall be entitled to produce his evidence and of being heard:
Provided that 1/3rd of the unearned increase in the value will not be charged if a mortgage or charge of site/building is created with the previous consent in writing of the Estate Officer, in favour of the Central Government, State Governments, Chandigarh Administration, Life Insurance Corporation of India or any scheduled Bank for securing a loan to be advanced for constructing the building on the site.
Provided further that in the event of sale or foreclosure of the mortgage of charged property the Government shall be entitled to claim and recover 1/3rd of the unearned increase in the value of the plot as aforesaid and the amount of the Government share of the said unearned increase shall be first charge, having Priority over the said mortgage or charge”
The rule is dysfunctional in view of the following:
Bare reading of Rule 8-C may lead one to justify levy of the 1/3rd “Unearned Profit”.However, that the rule/clause containing the provisions of charge of “unearned profit “ is tantamount to reading the rule in isolation of the main rule 8 This rule is made applicable in the case when the conveyance deed is required to be executed in form formats as may be directed by the Estate officer, on fulfilling conditions laid in rule 4 and its sub rules and requires Registration of such sale/transfer..
A study of the rules contained in Chandigarh (Sale of Sites and Buildings) Rules 1960 donot at all deal with the transfer of “Dwelling Units” constructed by the Cooperative Group Housing Societies. These rules deal with the Sale of Sites/Buildings. In the case of cooperative group housing societies neither a site /land nor a building is under sale/transfer As such the application of these rules to cooperative group housing societies is misadventure on the part of the Chandigarh Administration.
Chandigarh Administration has made specific rules for the land allotted to cooperative group housing societies known as “ Chandigarh Allotment of Land to Cooperative House Building Societies Scheme 1991 ““Chandigarh Administration shall allot land on chunk basis to the Chandigarh Housing Board for its further allotment to the eligible Cooperative House Building Societies………..on Lease Hold Basis for 99 years for the construction of multistoried structures /dwelling units……(section 4 of the scheme 1991)”.Its rule takes care of structure allotted to an allottee which is called a “Dwelling Unit (DU) Dictionary meaning of” Dwelling a house or a place of residence. Scheme was evolved to provide affordable housing to the residents of the city.
Whereas the Chandigarh (Sale of Sites and Building) rules 1960 were enacted on “Buildings” for which land was allotted by way of allotment/auction/hire purchase primarily to individuals, partnerships or companies on lease for 99 years .Such people enjoyed ownership rights uninterruptedly These building could be put to any use residential, commercial etc. as per classification .When such sites/ buildings caused to be converted into free hold units, their sale did not attract the rule 8-C of Chandigarh (Sale of Sites and Buildings) Rules 1960. .
Group Housing Societies that had been allotted land for further distribution to its members in shape of plots to erect buildings only for residences... Till lease persisted, the rule under reference remained applicable. Once the plots and buildings erected thereon are/were converted into free hold, no unearned increase is charged from them by the Chandigarh administration. The onus on transferors and transferee is to pay the registration charges in the form of stamp duty to the revenue deptt .Such sales did not attract the rule 8-C of Chandigarh (Sale of Sites and Buildings) Rules 1960
Chandigarh Allotment of Land to Cooperative House Building Societies Scheme 1991.Under these rules “Chandigarh Administration shall allot land on chunk basis to the Chandigarh Housing Board for its further allotment to the eligible Cooperative House Building Societies………..on Lease Hold Basis for 99 years for the construction of multistoried structures /dwelling units……(section 4 of the scheme 1991)”.
The Chandigarh Lease Hold of Sites and Buildings Rules, 1973 seem to have been made applicable to Cooperative House Building Societies primarily to recover the Premium, Ground Rent jointly and severally from members and societies, power to resume the sites in case of default.
However subsequently vide an amendment to rules, cooperative housing societies were given an option to get land allotted on free hold basis which all societies availed in 2002. Further specific provisions under the rules have been enacted vesting complete powers with the Societies regarding transfer of dwelling units and substitution of its members,
The disfunctionality of the rules is evident that no where in the country free hold land has such riders as of “unearned increase.” Once the land is possessed on free hold rights, the ownership is absolute, unfailing and total.
The administration has submitted affidavits before the Hon’ble Punjab & Haryana High Court where in consensus arrived between the parties (Both respondents and defendants) in the matter CWP. 10691 of 2005 and CWP of 2006 both decided on 21.08.2006.The consensual transfer charges were agreed to be Rs. 50,000/-, Rs. 35000/- and Rs. 25000/- for category A, B and C respectively. It is pertinent to ask why administration did not inform the Hon’ble Court of its rule to charge 1/3rd amount as unearned profit and why it failed to put rule 8 on record of the suit.
Section 105 of the Punjab Cooperative Act, 1961 (as applicable to UT Chandigarh) also contains special provisions for regularization of occupancy rights who have acquired such a right through the instrument of the Power of attorney or agreement for sale. Punjab has been allowing transfer of attorney holders charging a very nominal fee and the transfer is affected at the level of the society and validated by the cooperative department of the state
Punjab is a cash strapped state. If the rule could hold ground, then Punjab would have resorted to its application to garner resources for its developmental programmes. While desiring the applicability of any policy matter, reference is made to similar rulings/provisions from Punjab and Haryana. It is pertinent to put on record that no clause of unearned profit exists in the rules /Act s of both the states. Had this been relevant, couldn’t Punjab and Haryana have collected 1000s crores of rupees as unearned profit
Delhi Administration, in a bid to regularize the GPAs, has amended the principal Act in respect of Cooperative societies and has substituted a new section for section 91vide their notification no. F-14(33) LA on 2.12.2006 and lays as under:
“91. A member of housing society who has sold his plot or flat on the power of attorney or agreement for sale or by sale deed ,shall cease to be a member of that society from the date of sale or plot or flat:
Provided that the purchaser having registered power of attorney or registered agreement for sale or registered sale deed as the case may be in respect of such plot or flat, may apply for membership by paying transfer fee of five hundred rupees and share money and admission fee as per the provision of the bye laws of the society and the committee shall grant membership to the applicant within thirty days after the submission of his application. Incase of refusal by the committee, the applicant may appeal to the Registrar within thirty days and the decision of the Registrar shall be final.
Provided further that no purchaser shall be entitled for more than one membership in a housing society.”
In the matter of litigations/complains regarding taking huge amounts in the name of transfer fee etc. ,the Chief Justice of Delhi High Court in 28 similar type of cases has passed a common order dated 29.01.2007, the operative part of which is reproduced as under
c
Based on this judgment, office of the Registrar Cooperative Societies Panchkula, Haryana, has passed an order vide endst. No. GA-I/4370-4443 dated 9.05.08 “it is clear from the judgment delivered by Delhi High Court that charging such kind of amounts from the members would be sufficient if it charges below Rs. 10,000/- in each case.”
“It is therefore, further ordered to stop this practice immediately and all cooperative souse building, group housing and maintenance societies etch. Shall not charge more than Rs. 10,000/- as transfer fee”
Even our ld. Registrar Cooperative Societies Shri R.K.Rao is on record stating that the fee on the transfer of the society flats should be Rs. 10,000/ for the first transfer. The opinion of the ld Ld. Registrar should be viewed with full consideration and merit.
Further the alottees have appointed the GPA holders as their nominees and the same are in the know of Registrar, Cooperative Societies Most of the GPAs had purchased flats in the GHSs when these were in the initial construction stages and the projects were financed by the amounts paid by the GPAs towards cost of land and the construction in a phased manner. This factor may also be viewed with sympathy while taking a decision on the issue of transfer of shares in favour the GPA holders.
It is an irony of fate that alottees despite having sold their flats on GPAs are still mingling in the affairs of the management of societies. Hefty amounts are paid to such alottees to vote for particular persons on the management board of societies paving way for corrupt practices. Administration on its part should have addressed to this malpractice by regularizing of the GPAs rather than be a party to promote it.
Prayer:
The contradictions and anomalies in the rules. need to be addressed on priority and the matter should be resolved in public friendly manner and a final decision based on natural justice be taken
Thousands (roughly 15000 Families) of GPA holders look to your wise decision and intervention in the matter.
We shall be grateful on being accorded an audience with you to further put/pursue our case in the public interest, of which Your Excellency is a Champion.
We remain, very truly yours,
S.S.Bhardwaj Satish C.Sharma
Co-Chairman General Secretary
Cell: 9878927777 Cell: 9888255128
.
.
.
.
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