Lawfully yours: By Retd Justice K Chandru

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Retd Justice K Chandru
Retd Justice K Chandru

CHENNAI: RERA legislation does not go beyond unofficial monetary transactions

A builder of repute is promoting two apartments, side by side. He quotes a guideline value (GLV) of Rs 6,785 per sqft as against a flat value of Rs 8,850 in property A but quotes Rs 6,000 per sqft in property B. On enquiry, it is informed the higher GLV is necessitated as it is bought from Mr X by outright purchase by 50-50 cash-cheque transaction to adjust for stamp duty. As the GLV for property B is lesser, he is requesting 50-50 cash-cheque payment for property A. Is cash payment permissible by law?

Also, in the property A transaction, originally there was a POA from Mr X to his father. Mr X, an NRI, now changed his stand and appointed the promoter as POA, which will be adjudicated this week, as per the promoter’s agent. Is this legally correct as the promoter is acting as de facto owner and POA at the same time?

It is felt Mr X’s legal heirs may raise issues claiming (i) unregistered agreement is not valid in a court of law (ii) sale is done without their knowledge

— Name withheld on request

In the real estate world, anything is possible. The new RERA legislation only regulates the transaction between promoter, builder and buyer. It does not go beyond the unofficial monetary transactions between the promoter and buyer.

Many flat buyers are also willing to pay in cash since they believe undervaluation helps them save on stamp duty, and later property tax. At the time of purchase one always go by the dictates of the promoter and no one refuses since they are in the urge to buy a dream.

As regards transactions by cash it is strictly illegal. Once there is a second POA in favour of the promoter there is no illegality. The legal heirs have no say and if the POA is executed and consideration is received it cannot be revoked.

CMWSSB Act enables Metro Water to charge both fixed water tax and water bill

Metro Water collects Rs 80 per month and 3.5 per cent on the annual rental value — as arrived at by the Greater Chennai Corporation — of the property towards water and water/sewerage half-yearly tax. In the case of apartments comprising multiple flats with only one connection, it still collects Rs 80 per month towards water charges per flat. While the collection of water/sewerage half-yearly tax per flat is justifiable considering the discharge of sewage by flats, how can it justify the collection of monthly water charges from each flat when only one connection is provided to the entire complex? It should either collect according to the quantum supplied by installing meters or a single charge from the apartment association. Please clarify.

— VS Jayaraman, Motilal Street, Chennai  

The questions raised by you have been agitated before the court and answered. Metro Water after its formation in 1978 does not have any separate power of taxation. It is calculated based on house tax levied by the Corporation. The CMWSSB Act enables them to charge both fixed water tax and water charges. Since a flat owner is assessed to house tax, he is a separate consumer and will be treated for all purposes separately. If your argument is accepted then a condominium having 1,000 flats will also pay a single water tax. That will be ridiculous.

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