When gullible small investors lose the plot

September 15, 2016 12:00 am | Updated November 01, 2016 06:40 pm IST - CHENNAI:

Taken in by claims of ‘panchayat approval’, many people are stuck with plots in unapproved layouts

When V. Ravikumar wanted to buy a piece of land in the temple town of Kancheepuram, his native place, he found a ‘panchayat-approved’ housing plot being offered at Rs. 4.50 lakh. He has so far paid nearly Rs. 3 lakh in instalments.

Then came the shocker. He cannot register the plot in his name as the Madras High Court has banned registration of sites unless they form part of a layout approved by top planning bodies such as the Chennai Metropolitan Development Corporation and the Directorate of Town and Country Planning.

“Since the High Court order last Friday, there is confusion among layout promoters, property buyers, and even staff in the sub-registrar office who have no idea about the specific provision,” Mr. Ravikumar said.

There are many more like him across the State. Promoters who have sold ‘panchayat-approved’ plots are now asking their clients to rush to the sub-registrar offices to have their property registered as soon as possible. Most of them may not succeed, and are likely to be greeted by the sort of notice that many suburban sub-registrar offices now display prominently.

“The High Court has prohibited the registration of unapproved plots, flats, and buildings. Therefore, it is notified that documents will be accepted for registration only if approval from CMDA or DTCP is available,” says the notice.

Several thousands of families have purchased such ‘panchayat-approved’ plots. The term itself is wrong in the first place as panchayats are not authorised to approve layouts. For most buyers, it is investment they believed that could be redeemed in some future moment of need. There seems to be no escape now with their property turning into a ‘zero-return’ asset.

Officials are tight-lipped about the larger implications about the ban on registration –which has been welcomed by town planning activists and those worried about rampant illegal conversion of wetlands and farmlands into housing plots by developers who managed to get some panchayats to ‘approve’ them and then parcel them off as plots to unsuspecting buyers.

Organised players in the construction industry, urban planners, and activists are of the opinion that the court has finally put an end to the ‘land re-use classification’ racket, but some others feel that it is a body blow to lower income groups for whom small housing plots help them out during distress.

Suresh Krishn, president, Confederation of Real Estate Developers Association of India, Chennai, said the order was a timely one in preventing further misuse of rules to get approval for housing layouts when there was no possibility. The rule would prevent further exploitation of gullible people, especially the poor. “People have to be cautious from now before buying property,” he said.

“The High Court has finally put an end to the rampant misuse of agricultural land.

“Had conversion of agriculture land as housing plots continued, Tamil Nadu would have had to go to the neighbouring States with a begging bowl for food,” said G.Shyam Sundar, advocate. He pointed out that the Conversion of Paddy Land and Wetland Act, 2008 in neighbouring Kerala ensured the protection of agriculture land.

“It is a fantastic order. In the guise of land use change, a big fraud has been going on,” said M.G. Devasahayam, former administrator of Chandigarh Capital Project.

However, a village panchayat president in St. Thomas Mount Panchayat Union in the city’s southern suburb, said the development would hit the poor very hard and it would result in harassment of people who own small plots.

There is no doubt that registrations, and therefore, revenue from stamp duty and registration charges, will see a drastic fall.

Both the government and the realty sector have been jolted by the High Court order. They can no more turn a blind eye to the menace of unapproved plots.

There seems to be no escape for buyers as their property has turned into a ‘zero-return’ asset

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