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The Bruhat Bengaluru Mahanagara Palike (BBMP), in an effort to prevent substantial financial losses amounting to over Rs 2,362 crore, has put forward a proposal to amend key sections of the Karnataka Municipal Corporations (KMC) Act, 1976, and the BBMP Act, 2020. The proposed amendments target the sections pertaining to the approval of building plans, issuance of commencement certificates (CCs), and Occupation Certificates (OCs), which currently grant builders the option to seek legal recourse.
The BBMP has found itself grappling with significant fiscal setbacks resulting from the misinterpretation and exploitation of certain provisions in the existing laws. Numerous builders and developers have taken advantage of perceived loopholes and inconsistencies in these laws to obtain court orders mandating a reduction in the fees levied by the civic agency. The primary contention has been that the BBMP has been collecting fees from developers without explicit provisions under the KMC Act or the BBMP Act.
A particular focus of contention has been the fees collected under various categories including plan verification, ground rent, licensing, CCs, and OCs. Developers argue that these fees are illegally being collected by the town planning division of the BBMP. One industry insider raised concerns about the imposition of ground rent, which is meant for the utilization of public roads and infrastructure maintained by the BBMP. They questioned the rationale behind such fees when developers do not employ BBMP properties for waste storage during construction.
The ambiguity in the relevant sections of the KMC Act and the BBMP Act has led to confusion over the legitimacy of these fees. As a response, the BBMP has issued circulars outlining the fees to be paid by developers based on property value. However, these circulars have faced legal challenges, resulting in court orders favouring the builders.
The predicament reached a critical point when the court directed the BBMP to reimburse the excess fees collected from builders, amounting to the substantial sum of Rs 2,362 crore. The civic agency, which had already allocated these funds to developmental projects, sought legal advice to mitigate the potential financial crisis.
Following consultations with legal experts, the BBMP has prepared a proposal for the amendment of the KMC Act with retrospective effect from September 9, 2015, and the BBMP Act from December 12, 2020. By implementing these amendments, the government aims to invalidate the interim court orders favouring builders. Failure to do so could result in the BBMP incurring substantial financial losses.
On May 18, 2023, BMP chief commissioner Tushar Giri Nath outlined the urgency of amending the Acts and secured permission from BMP administrator Rakesh Singh on June 12. With this green light, the BBMP has forwarded the proposal to the government for further action. Town planning division officials are hopeful that swift amendments will soon be made to the Acts, potentially averting the sizable financial loss and enhancing the regulatory framework for builders and developers in Bengaluru.
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