Aditya Builders (name changed), a small time
construction company, routinely executes construction contracts for medium
sized builders and small factories in and around a southern metro. The
proprietor, Adityaram, a trained engineer with more than two decades of
experience as a construction engineer, has set his sights high. He is credited
to go about his work passionately and was widely appreciated by his clients who
have been with him for several years now. However being a very competitive
business that construction is, the capital formation in his books was modest.
At some point of time, a small piece of land in a
suburban area was offered to him for sale by a known person. Here was an
opportunity to go higher up in the value chain of construction business, he
thought and finally decided to take the plunge. Being capital starved he had to
borrow almost 70% of the property value from banks and private lenders.
Adityaram planned to develop the property as a small
apartment building and was enthusiastic as it was a major step of forward
integration for him.
He did not know what really lay ahead for him!
He applied for transfer of patta in his name as it
was a technical necessity. The process of issue of patta has been computerized
and what should happen as a routine measure, would take about two months, he
was told. The Revenue Dept. staff are busy on flood relief duties, they
reasoned. Of-course things can speed up but some ‘expenses’ will be there, he
learnt . Aditya was adamant he wouldn’t pay.
Two months passed by and after repeated visits and
endless waits in the dirty corridors of the Tashildar office, he got his patta
that too without any speed money! ; A small victory, he told himself.
Next was the issue of getting approvals for
construction. He submitted his plans online through a licensed surveyor;
ideally the plans should get cleared within 72 hours, but there was a software
glitch, he was told. After some fifteen days, the online clearance was
received. Armed with this and other property documents he sent in his
application with relevant attachments and prescribed fee.
After a long wait Aditya approached the concerned
officer to know the status of the application. He realized even though his
papers were in order and his drawings have been pre-approved, there were still
‘demands’ to be met. The Executive Engineer he met ‘briefed’ him about the
‘going rates’ for such approvals. What happens if someone doesn’t pay, Aditya
ventured to ask. Well, things get delayed; officers don’t take much interest!
After all they have lots of other work and your work gets de-prioritized, the
EE said in a thoughtful and compassionate tone, as if he was taking pains to
help Aditya. See, you have invested money and a delay of even one month can set
you back by way of lost interest on locked up capital; besides material prices
are going up rapidly and as a builder you
would be better off not minding the small payouts! After all take this as just a small additional layer of cost
which gets offset by the savings in time! The EE was now talking corporate
finance!!.
It was the time to make up his mind! Aditya rose and
said in a firm tone he wouldn’t pay up. Nor would he countenance unnecessary
delays! He added he will take up the matter with higher ups if necessary. The
EE was no longer interested in him and buried himself in other files, as if
saying Aditya could go out.
In the next few days Aditya thought dispassionately
and shot out couple of letters under RTI Act. The replies, mercifully, were
received in fifteen days. Studying them he learnt that the officials are
obliged to clear the files for new construction projects of the category which
Aditya applied for, within a maximum of 14 days and if they were rejecting a
proposal they need to communicate to the proposer the detailed reasons.Given
the on-line pre-approval of plans which Aditya had already completed, the officials
had to perforce come out with very good reasons to reject his proposal, Aditya
reasoned.
Next he shot out a detailed letter to the approving
authority asking for reasons for the delay in his case and why the laid down
guidelines are not being adhered to. He would approach the court for
compensation for the delays caused by the officers concerned and they would be
asked to compensate him in their personal capacity besides claiming damages
from the civic body, his letter added for good measure.
A week passed and then he got a call from the civic
body and was told his approvals are ready.
He reckoned an additional three months time had
passed beyond the ‘normal time’ period for such approvals.
At long last he commenced the work at site and the
construction gathered steam. One fine morning Aditya was asked to meet the
local councilor. Aditya, sensing trouble yet again, just ignored it. There were
repeated calls and he went on stonewalling them. Several warnings, some subtle
and some not so subtle, came his way, but he stood his ground. How councilors
can manage their wards if people who run their business there do not
contribute, he was asked to clarify!. The present councilor doesn’t take no for
an answer, was another friendly advice from one of his sidekicks!; Later he
would realize had he met the councilor the demand would have been approximately
INR one lac per apartment.
When he had planned the first level roof casting
work, he had to store lot of materials on part of the road as the site was
quite small and the materials had to be necessarily kept on the road. Aditya
was taking due care to avoid traffic blocks due to material stack. Just as the
labour team arrived to start the work, there was a group of officials from the
local body who said he was blocking traffic and the work could not proceed.
They had brought some policemen to the site who too commanded Aditya to stop.
A livid Aditya decided to take the bull by its horns
! He asked the officials if they had stopped similar works elsewhere and there
are atleast a dozen such construction works going on within a kilometer range,
he pointed out. Why is this selectivism, he demanded to know. He asked them to
give the order in writing and said he is prepared to pay the applicable fine
for such temporary disruption to traffic. He warned them he would approach the
court and ensure that he was being targeted and singled out. After some time
the team from local body lost its steam and went away saying he would be
penalized for the traffic disruption. The police team booked a case and went
away. After an hour of stoppage, the work resumed.
There were similar issues at the time of giving
power, water and sewer connections and he had to endure substantial pressure,
strain and delays at every stage.
Finally when the work got finished, he estimated he
had saved nearly INR 10 lacs by his spirited approach. This was nearly 10% of
the cost of the construction and added to his bottom line. He also worked out
the additional interest cost on account of loss of time was nearly 30% more
than the notional savings! .
But he could not resist feeling a moral victory of
sorts!.
If this is the pressure a developer has to face in a
small project (which happens in almost all the projects) the readers can
imagine the kind of demands a major project proponent will countenance!! And
the costs of such blackmail and rank illegality are being borne by the
developers and users of the project ultimately!
Multiply it million times, you get the effect it has
on the overall economy by way of loss of productivity, escalation of costs,
wastage of resources, undue and unjust enrichment and loss of revenue for the
exchequer!
Let us start resisting illegal demands of this sort
in our own small ways and soon it will form a crescendo!
Do write to us in case you have some interesting
information or feedback!
BVe Consulting Engineers
Engineering Project Consultancy & Property
Advisory Services,
Residential-Commercial-Industrial-Infrastructure
Designs
Due-diligence studies -Asset valuation services
Chennai -600 083
bv.consultingengrs@gmail.com
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