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Builders walk over MHADA's affordable housing dreams

After redeveloping cessed buildings in posh localities, 12 builders sold 500 of MHADA's flats, revenue from which was intended for building low-cost houses 

The dream of an average Mumbaikar to be able to own a house in the city has been rudely interrupted with another fraud. A group of prominent builders involved in redeveloping old buildings have defrauded the Maharashtra Housing and Development Authority (MHADA) by selling off its share of flats, constructed in posh localities, in the open market.

The authority intended to auction these flats and divert the revenue to build affordable houses for the common man, it said.


Nonformulaic: As per rules, MHADA has a 2:1 FSI sharing arrangement
with builders for space left in redeveloped buildings after the rehab and
saleable components. pic for representation


Over the last couple of years, 12 builders reconstructed 33 cessed buildings in South Mumbai, most of which were in C and D Wards - Kalbadevi, Nana chowk, Mahajanwadi, while some were spread across Parel, Mahim, and Dadar.

As per the rules (see box), after builders reconstruct flats for tenants (rehab component) and keep some for themselves (saleable component), they have to divide the remaining floor-space index (FSI) in a ratio of 2:1. They are allowed to keep one part of this space, while the other two parts are supposed to be handed over to the authority. In other words, of the remaining flats, builders have to give MHADA two flats for every one that they keep.

But in this case, nothing of the sort happened.

According to sources, MHADA should have received nearly 500 premium flats under the rule, but the builders allegedly traded them at market prices without any intimation to the authority. When Satish Gavai, vice-president, MHADA came to know of the deviation, he wrote to Police Commissioner Arup Patnaik, following which the Mumbai police's Economic Offences Wing (EOW) registered several FIRs against the builders at various police stations. The case is now under investigation.

"This is MHADA's property that these builders have gone ahead and sold illegally. They have cheated the authority, and have broken the law. Now they will have to answer the police, as we have initiated action against them. The police has already started their investigations," said Gavai.

'Will auction'
However, the authority still plans to auction these flats and haul in a few hundred crores, said officials, citing that the existing rates in the posh areas are roughly Rs 20,000 per sq ft. "We will see to it that we get these high-end flats back and auction them, so we can use the revenue for our affordable housing schemes," said Gavai.

Both MHADA and the police refused to share the names of the alleged violators. However, Gavai did say that they are prominent builders from the city.

"We are investigating the matter and have got some documents related to it. The buildings were constructed in the last two or three years. A letter sent by MHADA vice-chairman to the police commissioner gave us the leads on the case," said Rajvardhan, additional commissioner of police, EOW.

Minister speaks
Sachin Ahir, state housing minister, confirmed the news. "We have initiated legal action against these builders as they have cheated us, and we are determined to get our share back," he said, adding, "Now, many of these 12 builders have come to us, saying that they will give us land on the same premises or in the vicinity. However, there are a few who haven't said anything. We have decided to take this case to its logical conclusion."

Space sharing
In the island city, there are more than 17,000 dilapidated buildings built before 1960, called cessed properties as they pay a cess to MHADA for repair and maintenance. They are redeveloped under Section 33 (7) of Development Control Regulations, according to which MHADA gives the redeveloper an FSI of 3.

The builder first constructs the rehab property and hands over the flats to occupants.

As an incentive, he is allowed to keep 50 per cent of this as saleable component so he may recover construction costs and make a certain profit.

The rest of the FSI is divided between MHADA and the builder in a ratio of 2:1.

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