Buying properties on the Tender Plots allotted by CIDCO

cidcoBy Accommodation Times Bureau

As per the procedure being followed by CIDCO, when the allotment of a plot is confirmed to the highest bidder, initially an Allotment Letter is issued, followed by an Agreement to Lease and after the issuance of Occupancy Certificate on the completion of the construction, a Lease
Deed is executed in respect of the plot as well as the demised premises. The Allotment Letter in such cases, inter alia, provides as under :-
“ Transfer or Assignment of Rights :
The intending lessee can transfer or assign his rights, interests or benefits which may accrue to him from the agreement with the prior written permission of the Corporation and on payment of such transfer charges as may be prescribed by the Corporation from time to time. Such permission can however be granted only after agreed lease premium and any other amount required has been paid in full.

However, the intending lessee shall be permitted to sell the flats / shops / offices to his intending buyers and to obtain a lease in favour of a Co-operative Housing Society/Company / Association to be constituted of his buyers under the provision of the Section 10 of the Maharashtra Ownership Flats ( Regulation of the Promotion of Construction, Sale, Management and Transfer ) Act, 1963. ”
The Agreement to Lease, which follows such Allotment Letter is termed merely a licence by CIDCO to the Allottee to enter the plot and to raise the construction within a period of six years or the permitted extended term. This Agreement is not construed as a demise in law of the said plot to give the Lessee any legal interest therein until Lease Deed has been executed and registered; Clause No: 2 of such Agreement to Lease permits the
Lessee to have the lease in the name of a Co-Operative Housing Society or a Company or an Association of Apartment Owners’ , subject to the compliance of other terms and conditions and obligations as per Section 11 of MOFA.
Inspite of these clear cut-provisions about the transfer, sale of flats, shops or offices in the building constructed or to be constructed on such tender plots, an anomaly has been created by way of Clause (o) of the Lease Deed executed by CIDCO in its prescribed format. The Clause (o) is produced below:-

“ Not to sell, assign, mortgage, underlet or otherwise transfer wholly or partly the demised premises or its interest therein or part wholly or partly with the possession of the demised premises or permit any person to use wholly or party the demised premises PROVIDED THAT nothing contained herein shall apply if the Lessee shall perform to the satisfaction of the Lessor the following conditions :

PREMISES the Lessee shall pay o the Lessor one half of the difference between the declared premium ( i.e. premium calculated at such rate or rates as may be determined by the Lessor from time to time) and the premium paid by the Confirming Party to the Lessor, for obtaining the lease of the demised land, subject to a minimum of Rs.5,000/-.

(ii) In the instruments by which the Lessee shall transfer the demised premises the Lessee shall impose upon the person to whom the demised premises are so transferred obligation to perform and observe all the conditions and covenants of the lease granted to it including this covenant.”
When this anomaly pointed out to CIDCO by a couple of Promoters, Developers, Builders, it has been clarified by  CIDCO in writing that the intending lessee has been granted permission / liberty to sell the flats, shops, offices to his intending buyers and to obtain a lease in favour of a Co-Operative Housing Society, a Company or an Association of Apartment owners, to be constituted of his buyers under the provision of Section 11 of MOFA, thereby nullifying the said condition of the Lease Deed.

However, it would have been in the fitness of the things if CIDCO suitably modify this clause in its format of the Lease Deed pertaining to the properties on Tender plots. It is a well known fact that in the present regime of interest rates and handsome tax concessions, a majority of the
purchasers avail of the housing loans from the financial institutions such as Banks, Housing Finance Companies etc against the securities of the properties proposed to be purchased by creating mortgage of such Properties in favour of the lending institution, which need NOC for such mortgage from the Promoters, Developers, Builders, including the cases of resale. But where a Housing Co-Operative Society has already been formed and registered in respect of such properties, mortgage NOC will be required from such Society. Since CIDCO permits the sale of flats, offices, shops in the properties constructed or to be constructed on the tender plots, the question of obtaining Mortgage NOC from CIDCO or
registering the lien or charge of the lending financial institution in the records of CIDCO does not arise. A letter  dated 26.5.2005 issued by Cidco to M/s Concrete Builders clarifying this aspect is attached as Annexure hereto, the contents of which are self-explanatory.

However, otherwise also mortgage of the demised premises or any part thereof in favour of the Central Govt, a State Govt, Nationalised Bank, LIC of India, MSFC, HDFC or an employer of the Lessee or any other financial institution approved by CIDCO, is permissible by way of
EXPLANATION (I) to Clause (o) of the Lease Deed. Nevertheless, where a Promoter, Developer or Builder has availed of a Project loan for the construction on such plot, a Release Letter from the lending Institution will be necessary to avail of a housing loan for the purchase of the flat or the apartment or the office or the shop for the creation of a valid legal mortgage. Thus, in respect of the properties constructed or to be constructed on tender plots, CIDCO Transfer NOC and / or Mortgage NOC will not be a pre-requisite for the validity of the little or the security in favor of the lending institution.


City and Industrial Development Corporation of
Maharashtra Limited
Ref. No. : CIDCO/EMS/EO(II)/2005/1204
To, 26.5.2005
M/s Conercte Builders
Plot No. 20, Sector -2
Kharghar, Navi Mumbai
Sub : Regarding mortgage NOC to your intending buyers
for borrowing housing loan from the financial institutions
Plot No. 20, Sector – 02, Kharghar
Ref : Your letter dated 11.12.2004

This is with reference to your letter dated 11.12.2004 on
the above subject. In this connection, this is no inform you
that by Agreement to Lease dated 4.11.2004, our
corporation has agreed to lease a piece of land bearing
plot no. 20, sector 02, situated at Kharghar node of Navi
Mumbai for the purpose of construction of building for
commercial-cum-residential. As per condition No. (2) of
the said agreement and condition No. 23 of the Allotment
Letter dated 19.5.2004, the intending lessee has been
granted permission/liberty to sell the flats/shops/offices
to his intending buyers and to obtain a lease in favour of

Co-op Housing Society/company/Association of
Apartment Owners to be constituted of his buyers under
the provisions of Section 11 of the Maharashtra
Ownership Flats Act (Regulation of Promotion of
Constrution, Sale, Management and Transfer), Act 1963.
The property constructed on the said plot by intending
Lessee can be mortgaged to any financial institutions such
as any Nationalised Bank, Co-op bank registered under
Co-op societies Act, 1960, HDFC/ICICI bank, Standard
Chartered Bank, the Central Govt., the State Govt., LIC,
Employers of the intending buyer etc.
In view of the above, our mortgage, NOC is not required
for mortgaging the property such as flats, offices to be
sold to your intending buyers
Thanking You
Yours faithfully
Assilt Estate officer (HQ)
Navi Mumbai`

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