In redevelopment deals, Mumbai residents sweat over fears of managing committee-builder nexus

In a housing society in Khar, residents were shocked when they learnt managing committee members enjoyed an all-expense paid holiday in Bangkok, courtesy a builder.

The son of a society chairman in the eastern suburbs, who owned a small software firm, got projects worth Rs 6.5 crore, while the daughter, a doctor, managed to get a top post in a hospital.

The secretary of another society, who owned a small printing press, got a huge contract to print the annual reports of a construction firm.

In a Vile Parle society, a woman member has filed a case in the consumer court against the managing committee for allotting her a flat on a lower floor instead of a higher floor, which she claimed she was to get.

In Mumbai's real estate industry, redevelopment has become the most lucrative market not just for developers hunting for prime properties. A lesser-known secret is the role of the all-powerful managing committees (MCs) of housing societies; these are a small group of people who initiate redevelopment, meet developers and finally convince society members to select the best.

TOI spoke to a cross-section of people in the redevelopment market, including builders, advocates, housing society members, architects, and activists, about the crucial role played by MCs and the influence they wield among competitive developers.

Advocate K K Ramani, who has many housing societies as his clients during redevelopment, said the MC has a lot to contribute and its members devote their time and effort. "Someone has to make a decision, good or bad. It is a thankless job. They cannot satisfy everyone,'' he said.

Ramani believes residents are more aware of their rights and keep MCs on their toes, but people in the know told TOI underhand benefits for MC members continue from builders and are of varied nature.

Ramani said the MCs he deals with are dedicated people and do not short-change other members. "It used to happen two decades ago when society members left everything to the MC to decide during redevelopment. Now, members are more aware of their rights,'' he added.

However, people in the know told TOI underhand benefits for MC members continue. "Their chosen builder will give them preferential treatment like better amenities, more area than they are entitled to at a discounted price, or free interiors of the new flat. Or it could be giving a MC member his redeveloped flat on a higher, sea-facing side,'' they said.

A developer, who spoke to TOI on the condition that his identity not be revealed, said his experience with MCs was that "25% are genuine while 75% have vested interests''. "Someone from the MC wants more area, others may demand money on the side,'' he said.

This developer also claimed several "project management consultants" (PMCs) appointed by MCs to help societies in the redevelopment process, have become "glorified brokers" and are "super corrupt". "They knock out money from developers for selecting them for redevelopment,'' he said.

Another developer with a slew of redevelopment projects in the prime Bandra-Khar belt, said some PMCs and MCs "rig tenders" so that the project goes to a selected builder.

"These syndicates (nexus of PMC and MC) are known to get kickbacks ranging from Rs 5 crore to Rs 10 crore in prime localities. Redevelopment is their payday," he said. This developer further said what surprises him is that most of these shady MC members come from a wealthy background.

Housing activist Chandrashekar Prabhu, who has been pushing for self-redevelopment, said some builders inflate numbers in feasibility reports for redevelopment. "These builders spent huge sums to pay office bearers to select PMCs on their payrolls so that they can manipulate the feasibility reports to make it appear that the builders would hardly earn any profits in the redevelopment schemes. In return for convincing members to agree to a PMC, the architect, structural engineer, liaison consultant, other consultants, select managing committee members and office bearers are paid off. Some builders offer upfront payment to office bearers to identify vulnerable families willing to sell their flats. Moreover, if all members can be convinced the deal offered is the best, proactive office bearers will be given free flats in another project. For every decision that results in an increase of profits for the builder, there is a good share of the spoils for office bearers,'' he said.

Advocate Vinod Sampat said the positive aspect of MCs is they protect the interests of society members. ``Many of these committees are experts in various fields and are knowledgeable. Most decisions are taken transparently,'' he said. But Sampat said he has seen the dark side too, where an MC is hand-in-glove with the developer. "The rotten ones will deliberately leave loopholes in development agreements so that income tax and GST liability falls on the members instead of the developer,'' he said, adding arbitration with the builder in case of a dispute will financially ruin the society.