Building standstill

Construction work on the proposed ownership building at Godrej Baug has come to a halt. No activity has been reported at the site.

"We have completed the construction of nine storeys, for which, we have Bombay Municipal Corporation (BMC) permission,” noted Bombay Parsi Punchayet (BPP) chairman Dinshaw Mehta in a letter dated May 5, 2011 in reply to a query from Parsiana. "The work is now temporarily stopped pending further commencement certificate and shall commence on receipt of appropriate permission from BMC. As regards query about ownership flats, we will inform you after we receive Charity Commissioner’s permission.”

The building has been mired in controversy almost from its inception with the Alert Zoroastrians Association (AZA) and others questioning the legality and morality of building flats for the affluent on BPP land. The BPP justifies the ownership sale on the grounds that the monies recovered through open bidding would enrich the trust’s coffers and enable them to build housing for the economically weaker sections of the community. The AZA counters that funds raised from sale of ownership flats in the past have not been utilized for constructing homes for the lower and middle classes.

Former BPP trustee Noshir Dad­rawala had also raised the issue in a letter dated October 5, 2010 and an e-mail dated November 26 addressed to Mehta, "Our trust deed does not empower us, the trustees to undertake the project of constructing an ownership building at Godrej Baug” as envisioned by the BPP. "The sale of ownership flats is not in fulfillment of the objects of our trust but a fund raising measure…

"I may point out that due to the recent amendment to the Income Tax Act 1961 such a development on the Godrej Baug property and sale of flats for crores of rupees on ownership basis may result in withdrawal of the exemption u/s 11, 12 and 13 of the Income Tax Act for our trust. This would result in the entire income of our trust, including revenue and corpus donations, being fully taxed. This may result in the trust being called upon to pay wealth tax on all its properties including the extensive Doongerwadi lands.

Ownership building site at Godrej Baug

"The Maharashtra Ownership Flats Act (MOFA) requires that whenever the flats are constructed and sold on ownership basis, the entire right, title and interest of the promoter — i.e. our trust in this case — needs to be conveyed to the society or the condominium or the limited company formed by the flat purchasers. In the case of Godrej Baug, the flats will be constructed by our trust and sold on ownership basis and MOFA requires that the land on which the building stands is conveyed to the society/condominium/limited company. We cannot grant only a lease of the land as suggested by you. In case of redevelopment of various old baugs the same provisions will apply in regard to the free sale component.

"You are aware of the consequences of violations under MOFA, one of them being prosecution. You are aware of the legal implications of conveying the land vis-à-vis leasing the land, as in the case of conveyance, it will be very difficult to enforce the Parsi only covenant. This is a very serious issue and the board needs to give a serious thought to this dilemma. We cannot simply brush aside these issues by abrupt remarks, curt replies and making unwarranted allegations against one or other trustee.”

In his e-mail Dadrawala referred to a report in The Times of India (TOI) dated November 24, 2010 in which the builder of the 45-storey Shreepati Arcade at Nana Chowk was directed by the City Civil Court judge M. R. Deshpande "to execute a conveyance in favor of the society, including the building and portion of the land within two months failing which the plaintiff (members) shall be entitled to get the same done through the process of the court.”

The report noted that a clause whereby the developer wanted to give the land to the society on a 999-year lease instead of conveying it was "illegal, void and not binding.” The developer R. C. Chaturvedi has filed an appeal in the Bombay High Court (BHC), notes the TOI.

In a letter dated October 12, 2009 addressed to the trustees, Jehangir Mistry, a partner of Mulla and Mulla and Craigie Blunt and Caroe who are the BPP’s solicitors, had however noted that in their opinion "Section 11 should not come in the way of your choosing to give land on lease to a society or company ultimately to be formed by the flat purchasers or in the enforcement of a Parsi only covenant… However, the provisions of the lease and the rules and regulations of the head lessor, namely, the BMC or any other authority would have to be considered while entering into an agreement with the flat purchaser.

"The Punchayet may also consider another alternative to proceeding under MOFA. It is open for the Punchayet to construct buildings and give flats therein on lease as it has done in the past. The Punchayet may enter into a long term lease of such flats and take a premium upfront with a nominal rent to be paid during the term of the lease. Doing so would keep such a development out of the ambit of MOFA and also enable the Punchayet to more directly and effectively enforce their Parsi only covenants while all along retaining the ownership of the buildings constructed.”