Colonisers overcharge EDC, delay deposit with HUDA

[s1joshi]

The External Development Charges or the EDC, as it is usually referred to, is not a new term for the flat buyers in Haryana. One of the sources of inflow of funds for the Haryana Urban Development Authority (HUDA), the EDC is charged from the colonisers in return for services like water supply, sewage, roads and other town-level facilities provided by the HUDA and the colonisers further transfer the burden to the flat buyers as mandatory charges thus nipping in the bud any enquiries on it. But there is certainly far more to it than meets the eye.

A bunch of alert flat buyers -- now united as the Greater Faridabad Welfare Association (GFWA), out to fight the over-delayed development in the Greater Faridabad or Neharpar, a 2,500 acre area comprising Sector 75 to 89 -- have shockingly discovered through a series of RTI applications that the colonisers not just charge the EDC arbitrarily, and probably overcharge making undue profits of several hundred crores, but are also allowed by the authorities concerned to enjoy the large sums of money thus collected for years together in furtherance of their business interests at the expense of the hapless flat buyers.

“It is a simple arithmetic. The Town and Country Planning Department collects the EDC from the coloniser per acre and the coloniser in turn collects it from the flat buyers at per square feet on the total super area (or saleable area) of the flat. But there being no transparency or uniform policy for collection of EDC and the government not collecting it directly from the buyers, the colonisers charge at will,” said Aashish Kaul, a working committee member of GFWA.

Explaining it with an example, Mr. Kaul, continued: “For instance, M/s Omaxe Limited was supposed to pay Rs.27,00,37,842 as EDC to HUDA at the rate of Rs.94.94 lakh per acre for its 28.443 acre group housing project, “Omaxe Heights”, in Sector 86 Faridabad. The company collected the EDC on super area (or saleable area) for the project which totals up to 23,00,000 sq. feet. So it should have collected the EDC at Rs.117.40 per sq feet, but instead charged at Rs.150 per square feet. It is thus evident that the coloniser over charged all the flat owners by Rs.32.60 per square feet thus making a profit of Rs.7.50 crore.”

Even an audit report by the Town and Country Planning (a copy of which is with The Hindu ) has conceded to such practices. “It is found that the colonisers are paying EDC to the Department as per the prescribed rates…but they are charging EDC, as fixed by them, on the saleable area per square feet from the buyers, which varies from coloniser to coloniser. It is also found that no uniform method is being adopted by the colonisers while fixing the rate of EDC,” it said. Though the audit report said that some of the colonisers increased the rate of EDC by including the interest because the plots/flats were sold in different years over a span of three years after obtaining licences from the Haryana Government, Mr. Kaul refused to take the bait. “Most of the projects are sold by the colonisers during the soft-launch itself before procuring the licences, which is an illegal practice but a norm in Haryana and no action is taken against it. So it is difficult to believe that the colonisers took three years to sell their projects and hence over charged.’’

Secondly he said, “the coloniser collects the EDC from the flat buyer usually at the time of payment of 3rd and 4th instalments itself, but is allowed by the authorities to deposit the same to them in six monthly instalments spread over four years. So the coloniser is not just allowed to use the large sums of money thus collected for his business interests, with the burden of interest being shifted to the flat buyers, but it also delays the development of the area and the possession of the flat. And it is again the home buyer who is hit the most hit by the delay as he continues to pay the EMIs as well as the rent and the wait for the flat turns into a prolonged agony.”

The information secured under the RTI Act has also revealed how several colonisers had not paid even 50 per cent of their EDC dues to the department even after four years of having procured the licences. All this while they continued to enjoy the interest on the money being extorted from the poor flat buyers. And still, no action was initiated against these colonisers by the authorities concerned.

Even though the audit report advocates the need for “uniform policy” to make the matter more “transparent and justified” and states that an “undertaking may also be obtained from each of the concerned colonisers that EDC is not being charged from the flat/plot buyers as profitable charge”, the government is mum on the issue that concerns lakhs of flat buyers, especially in Gurgaon and Faridabad, thus casting suspicion over the intentions of the Hooda Government which is already drawing flak for allegedly allowing the colonisers a free run and opportunities to make exorbitant profits.

Courtesy : Manish Gupta, Working Committe, GFWA
http://www.thehindu.com/todays-paper/tp ... 798709.ece