In our country we do not have a qualified consumer movement supported by thorough research conducted by voluntary research organisations to recommend the avenues for investment in property.
The recent boom in real estate prices throughout the country has given a new dimension to the investment in real estate. The investment in real estate have shifted from need based to profit oriented. This change in philosophy has made even middle class to purchase flats, house and vacant land with an intention to reap huge profit. The developments during the last five years have given around 200 per cent to 400 per cent returns in investments made in real estate.
But in our country unfortunately we do not have a comprehensive legislation covering the activities of the builders and property developers so that they can be booked soon after detecting a fault. The legal system in our country is so over-burdened and expensive that the property investors are ready to forego their money than to approach a court of law for justice. Unscrupulous builders, property developers and estate agents have taken the full advantage of the loopholes in the system and have become rich and famous overnight. The passing of the Consumer Protection Act and the establishment of special dispute settlement machinery is the biggest milestone in the history of independent India. The number of cases registered before various district and State commissions have multiplied manifold. After the introduction of an amendment in the Act in 1993, it has provided an opportunity for the common man to seek redress against the builders as well as Government authorities if they failed to keep their promises made at the time of collecting the deposit. In our country we do not have a qualified consumer movement supported by thorough research conducted by voluntary research organisations recommend the avenues for investment in property.
Consequently, the common educated man has become aware of his rights. However, much remains to be done. The real need of the hour is a Ralph Nadar who can educate the masses and lead them in their struggle for their rights. The consumer should not hesitate to move the appropriate forum whenever he is being deceived. His timely action will only strengthen the consumer movement. A small step in the direction of promoting an organisation to infuse discipline among the various players of the industry was taken by the voluntary organisation, Common Cause, under the leadership of H D Shourie. The organisation recommended the establishment of National Real Estate Development Council, a society whose main job is to supervise various activities pertaining to real estate development.
Another method to evaluate the performances of various builders is by allotting ratings to them. An independent organisation in the lines of Credit rating Information Services of India Limited (CRISIL) has come into existence to allot ratings to the builders. The basic question is whether these ratings improve the performance of a builder. To put it in other words, how is a common man going to be benefited by these ratings, since he is mainly concerned house within his financial reach. Unlike financial instruments, building construction ratings allotted to a particular construction company may not be applicable to a different project. Thus selecting a builder on the basic of rating may create problems. Hence the need of the hour is a competent supervising authority with a certain amount of executive and quasi-judicial powers.
The activities of supervising authority should cover all areas relating to real estate development, i.e., right from acquiring the land till completion, the authorities should help the private builders in obtaining licensees for various local authority to cut unnecessary delays in completion of the project. The Central Government should appoint similar authorities in all state capital and other big centers. The proposed authority should keep all the details of the existing projects including the details of the individual purchases and the amount deposited by them. Coming to the new project, the Government should make it compulsory for the property developers to register the details of the project with the proposed authority. All financial transaction should be processed through the authority so that the developers may not misuse the investor'smoney. The proposed authority should also be empowered to visit the project sites at regular intervals monitor the implementation of the construction schedule submitted by the builders and should submit his report to the Ministry for Urban Development. He should also be empowered to extend the deadline for completion of the project, as a one-time measure.
If any builder fails to complete the project within the specified period even after the extension of the deadline, then the project should be offered to other builders on ?as is where is? condition, so that the investor may not sustain any injury. Such builders should also be blacklisted. It is very difficult to control the activities of various builders in the absence of legislative support and strong political will to implement the legislation literally.
(The writer is a recipient of National Award on Consumer Protection and can be contacted at [email protected])