Date- 4th February, 2012 Shri Prithviraj Chavan Honble Chief Minister State of Maharashtra Mumbai

SUB- SUGGESTIONS FOR CHANGES IN CLUSTER REDEVELOPMENT POLICY UNDER DCR 33(9) (OF MUMBAI) CHIRA BAZAAR CLUSTER REDEVELOPMENT IN C WARD OF MUMBAIREMAKING OF MUMBAI FEDERATION NGO OR A BUILDER? MISLEADING CLAIMS BY NGO/DEVELOPER- NEED TO PROTECT RESIDENTS Dear Sir, We welcome the decision of the Government of Maharashtra to reject the Chira Bazaar Cluster Redevelopment proposal made to the Government by Lok Housing Ltd. and associate companies including an NGO Remaking of Mumbai Federation, although the same was cleared by the High Power Committee (HPC) in haste and without the applicant having complied with various prerequisite conditions. The Government has rightly and in time rejected the proposal as there were serious lacunas in the proposal which were surprisingly over looked by the HPC. However, the very fact that the application in spite of the short-comings sailed past the HPC stage itself throws up many questions and we think that the entire Cluster Redevelopment Policy under DCR 33(9) needs a complete and detailed overlook and proper tightening so that similar attempts by unscrupulous builders under the garb of an NGO or otherwise does not take place. In the circumstances we would like to suggest changes in the Cluster Redevelopment policy under DCR 33(9) as under keeping in mind the facts that have come to light in the said rejected proposal. GOVT ROLE TO PROTECT THOUSANDS OF TENANTS 1) No developer should be allowed to make false and misleading claims about tenants consents or Govt/HPC clearance or sanctions. In the instant case, Government/HPC ought to have issued a clarification that no sanction had been given to the Chira Bazaar Cluster project. Strict action ought to be initiated against the developers for misrepresentation and false claims. There should be thorough inquiry into the antecedents of Lok group and associate companies including Remaking of Mumbai Federation, their modus operandi and nefarious designs. The relevant facts are set out herein below. 2) Obtaining mandatory consents of tenants/occupants in legal format should not be diluted. In the instant case, the so called consents tom-tomed by the promoters/developers merely represent some occupants/tenants expressing support for the concept of the cluster approach of development. The stage and the question of

consents from occupants/tenants will come only when the final detailed plans/ lay outs/ individual agreements, etc., are prepared and presented to the concerned persons. The so called consents are not consents at all as required under the law/rules.

3) HPC should set evaluation norms before considering cluster proposals. The evaluation norms should include past demonstrated performance in large projects, financial capacity/capital adequacy commensurate with scale of project, etc. It would be impossible for large number of tenants of several buildings to evaluate financials of the project and capacity of developer to execute such large projects. A single building developed under DCR 33(7) is easier to tackle by tenants.

4) The GoM or its agencies should undertake entire planning, identify the clusters for redevelopment and involve MHADA and BMC to fix the rehab component (to prevent inflating tenancies by way bogus tenancies, claiming more areas than actual, claiming FSI in lieu of lofts, etc.), infrastructure & services needed (FSI involved would be as high as 4 to 6 depending on rehab) and total free sale FSI available (which will prevent FSI scams and create level playing field for developers) and thereafter invite bids from reputed builders on basis of certain criteria like past demonstrated performance in large projects, financial capacity/capital adequacy commensurate with scale of project, etc.

5) Thereafter, a transparent bidding/auction process should be introduced. Land is a public resource so a part of the profit from redevelopment should come to the State.

6) In the instant case, the cluster is 30 acres and FSI calculated at 5.06. Comprehensive studies need to be conducted on infrastructure and services.

7) In the instant case, MHADA share is measly 9% i.e. 19,500 sq mts and the developer would be allowed massive free sale of 2,12,046 sq mts.

8) There should be continuing monitoring of Cluster projects by MHADA and BMC.

9) The Developers should tie up finance up front before commencing any work.

10) No transfer of development work / responsibility as we all as tenants consents to another developer should be permitted.

11) In the instant case, how was the proposal processed at all by the HPC of MCGM as the developers are not the owners of lands/buildings and they had not obtained

consents from the lessors i.e. BMC/Collector, owners/lessees and the tenants? They could not even obtain certified copies of PR cards as most owners have not paid collectors taxes/dues up to date, which is totally false.

The instant case of ROMF/Lok Housing is nothing but sophisticated land grab, with the builder masquerading as an NGO. We request you to initiate investigation in to this entire proposal. The relevant facts are set out herein below.

THE GENESIS AND FACTS 1) Mr Lalit Gandhi (since deceased) of Lok Housing Ltd set-up an NGO called Remaking of Mumbai Federation (with several dignitaries like Narayan Murthy, Justice P N Bhagwati (Retd), etc., and experts as members of its Committees) with the aim of promoting cluster redevelopment of cessed buildings in South Mumbai. "First meeting for inception of Federation of over 50 Associations was held on 4th April, 2007". The federation is registered as a society.

HDFC Chairman Mr.Deepak Parekh and former MC D M Sukhtankar, Narinder Nayar of Bombay First, Citispace's name were mentioned initially without their consent. It was later withdrawn after they protested. This was reported in Mumbai Mirror 2 years ago.)

2) The NGO did the ground work for about 3 years of approaching tenants, landlords and-authorities. The WEBSITE OF THE NGO says Remaking of Mumbai Federation is working round the clock since the past three years to bring about urban renewal in C ward. RoMF already has consent of more than 70% tenants for its pilot project in C ward. The pilot project is 30 acres in size bounded by Dadi Seth Agyari Lane in North, Dr. MB Velkar Street in South, Kalbadevi Road in East and J.S.S Marg in West. We will now submit a redevelopment plan for this area, wait for the LOI and then start the process of getting the consent of all the landlords." The office of Remaking of Mumbai Federation is located at Municipal C Ward. This NGO of eminent persons and numerous Associations also called for diluting CRZ for redevelopment of cessed buildings. In one full page advt. by ROMF, an environmentalist (with his nice photo) calls for dilution of CRZ! It also lobbied to dilute the mandatory tenants consents required under DCR 33(9). All communications are posted on the Website. ROMF created brand equity due to the collective strength, dignitaries, advertisements and meetings. 3) Extract from LOK HOUSING AND CONSTRUCTIONS Ltd- Directors Report 2010. "Remaking of Mumbai Housing Infrastructure & Finance Ltd." (ROMHIF) submits proposal for Chira Bazaar Cluster redevelopment in C Ward of Mumbai. The High Powered Committee clears Chira Bazaar Cluster redevelopment proposal of ROMHIF to redevelop around 30 acres of land (362 buildings and over 8000 tenements)."

"The proposal for demolishing of old and dilapidated structures and construction of high rise buildings is under consideration with Government of Maharashtra. In this direction, Remaking of Mumbai Housing Infrastructure & Finance Ltd.(ROMHIF) has submitted its proposal to redevelop around 30 acres of land (362 buildings and over 8000 tenements) in the KalbadeviChira Bazar area in C Ward of Mumbai. It proposes to demolish these old and dilapidated buildings and in their place construct high rise structure in the ear-marked plots." "Lok Housing Ltd. has 49% stake in the shareholding of Remaking of Mumbai Development Ltd. (ROMD) which is the holding Company for ROMHIF". a) Registered Addresses of both ROMD and ROMHIF is at Lok Bhavan, Andheri East, Mumbaib) Paid up capital of ROMD and ROMHIF is Rs 40,00,000/- and Rs 500,00,000/- respectively. (Source Registrar of Companies website). 4) Quote from ROMF website--"Each landlord will be handed over a debenture which will give him a free accommodation as per government rules and another convertible debenture which will convert into equity of the Remaking of Mumbai Federations commercial arm Remaking of Mumbai Housing Ltd." (ROMH). A letter from ROMHIF signed by Lalit Gandhi in 2009 to BMC says that ROMHIF is the commercial arm of ROMF. The purported consent letters of tenants also states that ROMHIF is the commercial arm of ROMF. 5) DNA dated 7th July 2011- "A high-power committee of the state government has cleared the 30-acre Chira Bazaar cluster redevelopment project, which will rehabilitate more than 8,000 commercial and residential houses. The Rs10,000-crore project will be executed by Unity Realty and Remaking of Mumbai Housing Infrastructure and Finance Ltd (Lok Group)." "Out of the 8,374 tenements, the promoters have got consent of 6,092 (73.9%)". Committee chairman Subodh Kumar has asked the promoters of Chira Bazaar to carry out a few minor modifications. Other newspapers carried similar stories.

Some points to be considered and queries to be answeredWITH REFERENCE TO HPC AND MEDIA RELEASES 1) Announcements were made in the press in July- 2011 that HPC of the State Government has cleared the proposal. Letter from HPC of MCGM to UD, GoM dated 20-07-2011 states that proposal is submitted before State Govt for further consideration and orders and sanction/approvals. LOI will be issued by MCGM on basis of such approval. Thus, such false and misleading announcements are deliberately made to give legitimacy to the proposal and force tenants to accept the proposal. How was the proposal processed at all by the HPC of MCGM as the developers are not the owners of lands/buildings and they have not obtained consents from the lessors i.e. BMC/Collector, owners/lessees and the tenants? 2) As per HPC letter, Owners consent has not been obtained and P R Cards are obtained from internet website! 3) As per HPC letter, 73.90% consents of tenants/occupants have been obtained which is not on stamp paper in irrevocable and non transferable form. Specimen consents of only one building attached. A summary statement of consents of all buildings attached. The Developers have agreed to submit the same. As per rules, HPC of MCGM should have rejected the proposal without valid consents.

4) Announcements of 73.90% consents of tenants/occupants are trumpeted in the press. As per information, these so called consents were obtained in public meetings of ROMF after impressive power-point presentations and house to house survey and in favour of ROMHIF before the modified DCR 33(9) policy. A perusal of summary statement of consents and survey in a few buildings shows that these consents were more in the nature of letters of support for the concept of the cluster approach of development which was publicized in the media and the area. They were impressed by the galaxy of names of several dignitaries and experts mentioned as members of ROMF Committees. The tenants were and are not at all aware of the concrete redevelopment plans or plans put up before the authorities when the purported consent letters of tenants were handed over. It is totally false to state that the consents are in unequivocal terms and clarifies that it is given willfully and knowingly benefits of the proposed scheme as stated in letter from HPC of MCGM to UD, GoM. 5) In any event they have not received consents of tenants/occupants in a legally binding format. Since tenants' consent has not been obtained, the matter has serious implications as claims are misleading. The confidence of tenants as well financiers depends on it. The valuation of real estate companies depend on it in view of such large project touted as Rs 10,000 crore project. The valuation of cessed property without tenants consent is distress sale. Valuation increases dramatically with tenants consent. Agreement dated 7th Jan. 2011 between ROMHIF and Unity Realty and Developers Ltd Salient Features 1) ROMHIF has submitted the proposal for cluster redevelopment of 30 acres of land in Girgaum, Mumbai and obtained consents of tenants/occupants. 2) The URDL project shall be minimum 5 acres and ROMHIF project shall also be minimum 5 acres. a) SPV -1 i.e. ROMUD shall execute URDL project- 95% of the capital with URDL and 5% Sweat Equity with ROMHIF. b) SPV-2 to be incorporated to execute ROMHIF project- 95 % of the capital by ROMHIF and 5% Sweat Equity with URDL. 3) Due to any reason redevelopment under DCR 33(9) is not possible, DCR 33(7) can be undertaken. 4) The residual land of 20 acres vested with SPV 3 with equal shares of 50% with both parties. SPV 3 shall sell off or dispose of the residual land and /or interest therein by charging entry premium not less than Rs 2 crores per acre from third party developer. 5) The Registered office of SPV 1 shall be shifted from ROMF address. 6) ROMHIF has handed over all data pertaining to the URDL project viz details of buildings, tenants lists, plans, etc to URDL. 7) ROMHIF has received an amount of Rs 10 crores for their efforts to create grounds for development potential under DCR 33(10) for the UDRL project. 8) URDL shall pay a total consideration of Rs 10 crores to ROMHIF for their efforts to create grounds for development potential under DCR 33(10) for the UDRL project. Rs 5 crores has been paid by UDRL to Lok Housing as the nominee of ROMHIF. The balance Rs 5 crores shall be paid to ROMHIF on achieving certain milestones.

Comments on the Agreement 1) The ROMF website states- In the last one and half years RoMF has carried out a comprehensive building survey in C & part of D wards. Today we are in a situation where one can come and find out the details of their buildings in detail which they may

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not find from MHADA. If the NGO ROMF did the ground work for 3 years round the clock, then why ROMHIF and Lok Housing are paid Rs 10 cr? If ROMHIF has the purported consents collected by NGO ROMF, then can ROMHIF sell interests in the project to URDL and third party developers? The tenants of Chira Bazaar have no knowledge of third party developers. Have tenants who have given purported consents aware that ROMUD has now submitted the proposal? Are tenants aware of financial capacity of ROMHIF or UDRL/ ROMUD or unknown third party developers? ROMF website has no reference to ROMHIF and Lok Housing and Constructions Ltd. If cluster is the vision and avowed object of the NGO then why option of development under DCR 33(7) or sell off or dispose of the residual land (in parcels of 5 acres) and /or interest therein by charging entry premium not less than Rs 2 crore per acre from third party developer. Why is this agreement on Rs 100/- stamp paper? Why requisite stamp duty of 5% of value of immovable properties/land/development rights is not paid on this Agreement which is in the nature of Development agreement? The authorities i.e., MC, UD Secretary and CMs office ought have been vigilant as the files were put up before them. The aforesaid agreement is signed by Darshan Gandhi as director of ROMHIF, who is also Chairman of NGO ROMF as well as Lok Housing, witnessed by NGO ROMF Secretary Mayank Gandhi, the then director of Lok Housing and Naina Shah, director of Lok Housing. As per HPC letter, ROMHIF submitted original proposal. Subsequent to the agreement between ROMHIF and Unity Realty and Developers Ltd (URDL), both have requested that REMAKING OF MUMBAI UNITY DEVELOPERS PRIVATE LIMITED (ROMUD) shall be the developers. Its paid up capital is Rs 1,00,000/- as per Registrar of Companies website.

WITH REFERENCE TO THE NGO 1) Is there such a precedent in our country? Can we say that the NGO was only a front of the developer? Who was funding the NGO and Why and What are the implications? 2) What is the relation between ROMF AND ROMHIF, ROMD and Lok Housing? But then where is ROMF 's commercial arm ROMH as mentioned on website? 3) Since Lok Housing Ltd (as per Directors Report) has 49% stake in the holding company ROMD for ROMHIF, which entities/persons have balance 51% stake? 4) Who owns Remaking of Mumbai brand equity which is due to long list of eminent persons, dignitaries and numerous Associations? Does ROMF have share in profits? 5) Why do names of all companies start with Remaking of Mumbai? 6) Who got the purported tenants consent in whatever form? ROMF website and Lok Housing Directors Report, 2010 are contradictory. The valuation of cessed property without tenants consent is distress sale. Valuation increases dramatically with tenants consent. 7) Both Lok and ROMF are claiming they submitted proposal. 8) Is Narayan Murthy of INFOSYS and other dignitaries aware of this modus operandi? 9) Why did not the NGO ROMF involve Tata Housing, Godrej and L & T? On what basis ROMUD, UDRL AND ROMHIF selected by ROMF? 10) Why were some associations like Tenants Association of India and Slum Rehabilitation Society suddenly formed? A letter was sent to ROMF by Federation of Tenants Association on 17th Nov., 2011 requesting them to furnish the relevant details such as names, addresses, net-worth, track record, etc., of the promoters of the said companies i.e. ROMUD and ROMHIF as also the paid-up capital of the

above companies and the promoters respective shareholdings in the companies. No reply is received from ROMF till date. This proves beyond doubt that there was no transparency in the entire proposal at all and government intervention is urgently required to protect the interests of thousands of tenants/occupants. Yours truly, FOR JANHIT MANCH

Utsal Karani Hon. Secretary (M-9324991030) CC- For information and necessary actionMr T C Benjamin, Principal Secretary, Urban Development Dept., State of Maharashtra Mr Subodh Kumar, Municipal Commissioner, Greater Mumbai