Friday, 20 November 2015

Redevelopment: Lies, Damned Lies and Minutes of Meetings

20th November, 2015, Mumbai: In most cooperative societies, minutes of general body meetings have some half-truths and omissions, but Mulund’s Shree Gurukrupa Nagar Cooperative Housing Society shows how minutes drafted with blatant lies can easily escape detection by the general body! The draft minutes of a crucial SGM held on 24th May 2014, authored by Shree Gurukrupa Nagar Secretary Sanjay Jadhav and Chairman Anil Shah, pass off their illegal decisions favouring builders as general body decisions.

WHAT REALLY HAPPENED

At the SGM held on 24th May 2014, the society members followed the recommendations of PMC Atul Mehta and signed a consent selecting Siresukan Realty and Bharat Jain alias Talesara as the builder for their redevelopment. Accordingly, the managing committee issued a Letter Of Intent (LOI) in favour of Bharat  Jain / Talesara, partner, Siresukan Realty. See the following documents:






WHAT THE MINUTES CLAIMS

The minutes circulated three days later tells four blatant lies:

1)      It claims that the draft minutes of 24th May 2014 were passed by a resolution at the meeting held on 24th May 2014. In other words, the draft minutes circulated on 27th May were passed three days earlier! This is not a mistake, it is deliberate, because the office-bearers avoid placing the minutes before the general body on any later date!

2)      It claims that PMC recommended “Concrete Siresukan Realty LLP” at the meeting. False! PMC recommended Siresukan Realty, which is supposedly a partnership firm of the brothers Bharat Jain and Mukesh Jain, and not Concrete Siresukan Realty LLP, which is wholly owned by Anuj Desai and Nilesh Dalal.

3)      It claims that members consented to Concrete Siresukan Realty LLP. False! They signed a consent in favour of Bharat Jain and Siresukan Realty, and not Concrete Siresukan Realty LLP.

4)      It claims that managing committee issued a Letter Of Intent (LOI) in favour of Concrete Siresukan Realty LLP. False! LOI was issued to Bharat Jain and Siresukan Realty.

The general body meeting held on 24th May 2014 endowed the development rights on Bharat Sukanraj Jain alias Talesara, an estate agent posing as a builder. Within three days, Talesara sold the development rights to Anuj Desai and Nilesh Dalal of Concrete Group of builders, in return for nine percent of the profits, and they went on to form Concrete Siresukan Realty LLP two months later! The office-bearers of Shree Gurukrupa Nagar are clearly part of this deal.

The only hitch is that seven out of the 72 members of Shree Gurukrupa Nagar, who are conscious of their rights, refuse to be bought and sold like cattle.



WHY REDEVELOPMENT DEALS ARE BIASED AGAINST FLAT-OWNERS

When cooperative housing societies go for redevelopment, the society’s elected office-bearers become pro-builders and anti-members. Flat-owners get a sinking feeling when the chairman, secretary and treasurer start arguing on the side of builders, ignoring their responsibility to represent the society member’s interest. Shree Gurukrupa Nagar Cooperative Housing Society is a shining example. This video shows Secretary Sanjay Jadhav flatly refusing to negotiate with the builder to raise his offer-price for purchase of any flat from Rs 14,000/- per square foot to the prevailing market price of Rs 20,000/- per sq. ft. When the member, Amisha Gandhi, points out that she recently sold a flat to her brother-in-law at Rs 20,000/- per sq. ft., he responds by saying, “It is your personal matter”.

Any member who dares to ask pointed questions at a meeting is told to keep quiet. He is shouted at and ridiculed by the office-bearers and builders seated on the dais, plus their stooges in the general body! It is an unequal fight. See this video here Amisha Gandhi stands alone as she is hounded at a Special General Meeting. This meeting was supposedly convened for showing builders’ documents for answering queries raised by her group in writing!

The majority of the society’s members, like Mahatma Gandhi’s three monkeys, follow a policy of “See no evil, hear no evil and speak no evil”; they believe that their ignorance is bliss, and that there is no need to read any documents before signing on them. Like herds of cattle being led to a slaughterhouse, they continue to believe that there is safety in numbers. Amazing? Yes, amazing, but such herd-mentality is the norm in cooperative housing societies. And that is why redevelopment deals generally tilt in favour of builders, and against the interests of flat-owners.

ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao

Previous press releases on related topics:









Friday, 13 November 2015

Steps to improve the working of Collegium System

To
The Secretary
Department of Justice, Govt of India
New Delhi.

Suggestions to improve the working of Collegium System for appointing/elevating High Court and Supreme Court judges

Dear Sir,
Thank you for soliciting public opinion on this important issue. Appointment and elevation of judges of the higher judiciary is indeed the key to ensuring efficient and unbiased administration of justice for citizens of India.
My humble suggestions are as below:

Transparency
1)    Judges desirous of being selected, elevated or transferred should be required to formally apply to the collegium, clearly stating their own eligibility for such selection or elevation.
2)    Individual members of the collegium may propose or support eligible candidates for selection, elevation, transfer to a different High Court etc., but this should be done in writing to the chief of that collegium (Chief Justice) and their recommendations etc. must be placed on record.
3)    The chief of the collegium may also propose eligible candidates, but to prevent him from abusing his pre-eminent position, candidates proposed by him must be independently scrutinized by other collegium judges, and their opinions (whether favourable or adverse) must be placed on record.
4)    The proposed candidates should be shortlisted by the collegium secretariat based on independently verifiable factors such as rate of case-disposal, length of tenure in the present and previous positions, complaints, etc.
5)    The income and assets of High Court and Supreme Court judges and their close relatives should be regularly appraised by the Comptroller and Accountant General (CAG) to ensure that (a) true accounts are being rendered and (b) asset growth is within the bounds of official income sources. Judges about whom CAG raises red flags must not be considered eligible for any elevation until CAG’s questions are satisfactorily answered, and the investigation is complete.
6)    Judges about whom CAG raises red flags must be transferred at the earliest to another High Court in order to break any existing nexus, and to facilitate independent investigations, unhindered by the influential position of the judge.
7)    Judges found to be lobbying, engaging in backroom-politics and/or trading favours with influential persons (including senior counsels, judges, ministers, bureaucrats, party leaders, business magnates, etc.) for procuring preferential treatment from the collegium must be sent a stern warning letter by the chief of the collegium for the first offence, disqualified from applying to the collegium for three years in case of a second offence, and permanently debarred from elevations in case of a third offence.
8)    All elevations and selections must be made by an independently verifiable process, minimizing the scope for subjective elements of favouritism, nepotism, political appointments, etc.
9)    Any collegium judge who shows tendencies of over-ruling or short-circuiting the due process must be debarred from further participation in the collegium.
10) All meetings of the collegiums should be video-recorded with good audio quality. Decisions of the collegium must reflect scrupulous following of due-process and best practices.
11) All the above-mentioned documents and audio-recordings of the collegiums and candidates must be available to citizens from the Collegium Secretariat under Right To Information Act. Ideally, such documents should be routinely uploaded on the website of the respective High Court or Supreme Court, and available through a simple net-search.

Collegium Secretariat
1)    Collegium Secretariat should be a single centralized organization headquartered in New Delhi, with offices in every High Court. Secretariat in each state should be headed by a team of senior bureaucrats who are suitably insulated from pulls and pressures by judges, lawyers, ministers, etc. It must support the Collegium in its decision-making with all the background-data of candidates, as well as objective comparison and analysis of the data along various parameters.
2)    Secretariat must maintain eligibility records of each and every judge of the higher judiciary, as well as judges, senior advocates and others who apply for judgeship in the higher judiciary. It must independently scrutinize each and every candidate and his/her background, and maintain records of his progress. It must also give ratings to these candidates based on case-disposal rates, number of cases where their judgments have been reversed by higher forum on appeal, and other such parameters.
3)    Secretariat must be well-staffed, well equipped, well-funded and suitably empowered to maintain scrupulous records of the proceedings of the collegium, as well as eligibility of each and every judge in the system, as well as senior advocates etc. who have declared themselves desirous of being considered as candidates for judgeship.

Eligibility criteria
1)    Short-term elevations to the position of chief justice of various High Courts, just for the sake of rendering the candidate eligible for elevation to the Supreme Court, must be expressly forbidden.
2)    Suitable criteria must be proposed by the Supreme Court Collegium, made into an enactment after passing through the houses of Parliament, and scrupulously implemented by the Collegium Secretariat and Ministry of Justice. Making the criteria a law would serve as a way to prevent “moving goal-posts” for favouring some candidates.

Complaints
1)    Suitable rules and formats may be evolved for receiving complaints against individual judges, and integrating it into the eligibility criteria.
2)    Suitable laws may also be made to prevent frivolous complaints against judges by parties with vested interest, but also to facilitate the independent investigation of complaints if found to have substance.

Sir, I trust these suggestions and recommendations will be considered and acted upon with due seriousness, to make the Collegium system conducive to the administration of justice for all citizens of India. If necessary, I will be available to depose before a parliamentary committee of the rationale behind these suggestions.

Yours sincerely,


Krishna H Rao

Thursday, 5 November 2015

How PMCs undervalue redevelopment projects & generate black money

Figures manipulated to show Rs 110 cr. profits as Rs 12 cr. only

5th November, 2015, Mumbai: Builders usually underplay the monetary value of their redevelopment projects so that they can offer tiny amounts as bank guarantees, and so that they can evade income-tax and earn pots of money in cash. Mulund’s Shree Gurukrupa Nagar Cooperative Housing Society seems to be a live example. Project Management Consultant Atul Mehta wrote in his project report ( http://tinyurl.com/Atul-Mehta-PMC-report1 ) that the builders, Concrete Siresukan Realty LLP, would earn a profit of only Rs 12.14 crore after building over one lakh square feet!

If the PMC’s report is to be believed, the three LLP partners -- namely Anuj Desai, Nilesh Dalal and Bharat Talesara -- would together earn the market price of 8 to 12 flats after slogging for a couple of years to get all the necessary building permissions, and then another 2-3 years constructing over 160 flats totaling one lakh square feet, and then handing over new flats to 72 original society members, and finally marketing the remaining 80 or 90 flats to recover the money that they invested. Only after the last 8 to 12 flats are sold, the builders will finally make their profits! Poor fellows.

But don’t you find this a bit hard to believe? Take a re-look at the figures.

Firstly, the PMC’s feasibility report says that only 60,077 sq. ft. can be sold by the builders. But the builders’ Partnership Agreement, an internal document, states that the total area is 1,07,772 sq. ft. of which 67,000 sq. ft is available for sale i.e. 11.5 per cent more saleable area. This makes it much more profitable!

Secondly, the sale price as mentioned as Rs 14,000/- per sq. ft. in the Partnership Agreement and also in the PMC’s feasibility report, is a half-truth. The other part of the truth is revealed by page 33 of Shree Gurukrupa Nagar’s Development Agreement which says that if society members wish to buy more space, then the price is Rs 24,300/- per sq. ft. The Agreement also says that if the society members want less space than their entitlement, the builders will buy their space @ Rs 14,000/- per sq. ft. So, the real minimum sale price of the Sale Component cannot be Rs 14,000/-, it is at least Rs 24,300/- per sq. ft. Another big jump in profits!

In fact, the real profits appear to be nine times higher than the PMC’s estimate!

Real Profit Calculation

What is the Cost of a redevelopment project? It is the total of the costs of its Rehabilitiation Component and its Saleable Component:

A. COST = Rs 55.89 crore (18.37 plus 37.52 cr)
1.      Cost of Rehab component = Rs 18.37 crore (17.50 crore plus 87.5 lakhs) Explanation: Stamp duty of Rs 87.5 lakhs was paid on the project @ 5 percent calculated on the consideration to be paid to society members. The consideration amount was adjudicated at Rs 17.5 cr, based on all the considerations given (or to be given) to the flat owners by the builders in cash or kind, and/or Ready-reckoner rates of the land. Rs 17.5 cr may be considered as the total cost price of the rehabilitation-component to Concrete Siresukan Realty LLP, including construction cost, corpus fund, rent and brokerage for alternative accommodation, shifting charges, and other incidentals. (Please note that we have made allowance for a couple of crore rupees more than the PMC’s estimate.)
2.      Cost of Sale component = Rs 37.52 crore (27.11 plus 10.41 cr) Explanation: Construction cost @ Rs 4000/- per sq. ft. as mentioned in the Partnership Agreement, on 67,772 square feet is Rs 27.11 cr. This includes architects’ and other professional fees and incidental costs. To this amount, we add the cost of buying TDR i.e. Rs 10.41 crore as per the feasibility report.  (Please note, we are assuming all cost-related figures on the higher side, i.e. 67,772 sq. feet, and not just 67,000 sq feet, and Rs 4000/- per sq. ft., and not just Rs 3000/-. In short, we are estimating costs on the higher side.)

B. REVENUE FROM SALES = Rs 165.31 crore (93.80 plus 69.01 plus 2.5 cr) 

1.      Cheque Rs 93.80 cr: The official sale price is Rs 14,000/- per sq. ft., and so the total amount realized by cheque after selling 67,000 sq. ft. will be Rs 93.80 cr.

2.      Cash Rs 69.01 cr: Page 33 of the DevelopmentAgreement says that if society members wish to buy more than their entitlement, then they may do so at Rs 24,300/- per sq. ft. Moreover, the Development Agreement says that if the society members can sell their space to the builder @ Rs 14,000/- per sq. ft. So the real sale price is Rs 24,300/- per sq. ft. The difference between the two rates (24,300 minus 14,000) would generally be recovered in cash from new flat buyers. The amount realized in cash after selling 67,000 sq. ft. will be Rs 69.01 cr.

3.      Cash Rs 2.5 cr from sale of parking  areas.  The illegal activity of selling 50 parking spaces @ Rs 5 lakh apiece is mentioned in PMC’s feasibility report. It will be a source of cash income of at least Rs 2.5 crore. Parking spaces are unofficially sold against cash payments. Such sale is totally illegal, as parking spaces are part of the society’s common amenities, as clarified by Supreme Court in 2010.


C. TOTAL PROFIT Rs 109.42 cr. (165.31 minus 55.89 cr)

Profit is revenue minus cost i.e. Rs 165.31 cr minus Rs 55.89 cr. This amount consists of Rs 40.41 crore received by cheque, which will be shown in the books of account as PROFIT-BEFORE-TAX, and Rs 71.51 crore in cash, which will be in “Number-two books”.

Rs 71.51 crore cash available for bribery

Two officials of Maharashtra Govt's Cooperation Department T-Ward Mumbai – Mr BK Yelhare and Mr Milind Soble – were instrumental in giving the crucial 79A Certificate to Concrete Siresukan Realty LLP on 20 June 2014, when it did not even exist, and was not even eligible to open a bank account or write an official letter, let alone bag a 100-crore-rupees contract! The LLP firm came into existence only on 14 July 2014, when it received its certificate of incorporation. How could seasoned government officials award an eligibility certificate to a non-existent firm without first checking the documents of the firm? How could a government department enable a Concrete Siresukan Realty LLP to execute a contract for demolishing and rebuilding the houses of 72 families, when that firm did not even exist on paper?

Concrete Siresukan Realty LLP (belonging to Concrete Group) had not participated in the tender of Shree Gurukrupa Nagar CHS. Nor had it written a single letter to the society. Then how could it be deemed to have been selected by the society? Neither Mr Yelhare nor Mr Soble took the trouble to examine any papers before giving their green signal for the deal.

Also, the housing society’s office-bearers -- Chairman Mr Anil P Shah, Secretary Mr Sanjay N Jadhav and Treasurer Mr Nehal G Gala – accepted Rs 1.53 crore as the bank guarantee. Is it out of sympathy for the builders’ financial hardships and implicit trust in the builders’ integrity? Or are the office-bearers confident of being able to construct 72 new flats with only Rs 1.53 cr, in case the builders fail to do so?

The smell of bribery lingers in the air like a bad stink.

ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao
9821588114

To read previous press releases on this Concrete Group Redevelopment Project, go to: