Some of the state municipalities have begun shooting 'demand letters' to builders, asking them to cough up hefty premiums under the repealed Urban Land Ceiling Act (ULCA) for real estate projects which were approved between 2007 and 2019.
The law, which capped the holding of vacant land in urban areas, came into effect in the mid-'70s and was aimed to reduce concentration of holdings, protect farmers, and address inequality. But following representation that the statute had achieved little, the central government enacted the ULC Repeal Act in 1999, which was adopted by the Maharashtra government in 2007.
But a provision in the ULCA, which allowed a state government to spare vacant land from ceiling restrictions if certain conditions were fulfilled, survived as a 'saving clause', thanks to a court ruling, even after the Act ceased to exist. Invocation of this clause later resulted in multiple litigations.
The conditions, which landowners lobbied were far too rigid, were scrapped by the Devendra Fadnavis government against a scheme of premium fee to be payable to the state every time there is transfer of land or acquisition of development right or change in land use as part of a one-time settlement scheme. The settlement offer was in line with the recommendations of the Justice Sri Krishna committee which was constituted at the direction of the Supreme Court.
According to the recent set of notices, the developer has to pay a premium for projects which were cleared after 2007 but before Maharashtra repealed the law in 2019 at 2019 premium rates. "This involves a lot of land, the stakes are very high, running into hundreds of crores. Builders will certainly challenge the state's decision to give retrospective effect to the law.
The 2019 circular on settlement did not cover projects approved before that year. Many of these projects have been completed, OC obtained, and the society has been handed over the building... So, who would bear the cost?," said a senior official of a large developer. "Pune municipality has issued notices and we understood soon Mumbai and other cities would soon serve the demand letters," he said.
