Maha to blacklist builders with criminal nexus

The Maharashtra government will amend its Development Control Rules, in a bid to contain criminalisation of realty. It also plans to strictly implement the provisions of Indian Penal Code and Criminal Procedure Code to stem the growing nexus between builders and gangsters and easy flow of black money into the sector.

"If builders are found guilty, they will be blacklisted. They will be debarred from any contract from the government or its agencies, the Maharashtra Housing & Area Development (Mhada) and the BrihanMumbai Municipal Corporation," the minister of state for housing, Sachin Ahir, told Business Standard. He added that a draft amendment to the Development Control Rules was being prepared.

The state's move comes when the debate on circulation of terrorist money in the capital markets is still on. The proposed amendment will be tabled in the budget session of the state legislature in March. Real estate developers, however, have expressed doubts over its implementation. They also do not want the government to measure all builders and developers by the same yardstick.

Said Navin Kothari of Bhakti Group, a Mumbai-based developer, "Often the builders and developers community in Mumbai finds it tough to win and execute big projects as fund is difficult to come by because of the perception that they are hand-in-glove with gangsters. Blacklisting some builders linked with gangsters and criminals will help improve the image of the rest of the industry players and set new standards."

An official, who did not want to be quoted, said developers generally spent Rs 25-100 a sq ft on built-up areas as "out-of-pocket expenses". He added: "A builder developing 1 million sq ft spends at least Rs 50 per sq ft as out-of-pocket expenses to obtain permissions and approvals. It is possible to mobilise that money either from family funding or savings, or by sourcing it from hidden sources."

Said Pratap Sarnaik, promoter of Vihang Group, "Hardly any criminal or gangster pumps in money openly. Instead, the state government can look at the fund sourced by the builder from various investors. The question is where do the investors source their money from."

A police official of the rank of director-general on condition of anonymity, said, "It is under the blessings of politicians that builders and the criminal-builder nexus is thriving. The move could be a double-edged sword, which the politicians may use by blacklisting names to keep a lobby of builders out of certain projects in the city."

He added that if there was transparency in the way a blacklist was prepared and if it was not used against builders to blackmail them, the move would be a success. "The Mumbai crime branch already maintains a list of suspected builders to keep a tab on their activities," he said.

(With inputs from Palak Shah)