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Telecom staff HBCS found wanting in land purchase

Chethan Kumar, Bangalore, Nov 19, 2012, DHNS:

Money collected from members paid to developers for acquiring land

The Telecom Department Employees’ House Building Co-operative Society is found to have purchased agricultural land through middlemen in violation of the laws.

Section 79(A)(B) of the Karnataka Land Reforms (KLR) Act, 1961, bars house building co-operative societies (HBCSs) from purchasing agricultural land.

However, documents in possession of Deccan Herald show that the Telecom Department Employees’ HBCS has purchased agricultural land measuring 367 acre 38 guntas through middlemen.


Out of over Rs 600 crore collected from 11,057 members and the general public, who the Society terms associate members, as much as Rs 538 crore has been paid to various developers (read middlemen) for the purpose of purchasing and developing the land required to form layouts. And in turn, these developers have bought agricultural land in their names as opposed to the Society’s, and transferred it to the Society after conversion.

These violations were found during the statutory co-operative audit.
When questioned on employing middlemen/developers for purchase of land and registering land in their names, president of the Society said: “...since the agricultural land cannot be registered in the name of the Society, they had been registered in the name of the contractor/developer. This will be registered in the name of the Society after the conversion of the land and the original documents of lands registered in the name of the contractor/developer are in the custody of the Society.”

The employment of the developers as middlemen is a violation of Section 54 of the model byelaws of the HBCSs. The Supreme Court, in Sant Lal Gupta and others versus Modern Co-operative GH Society (October 2010), held that what is barred “directly” under the law cannot be legally effected by an indirect and circuitous contrivance.

Further, a circular issued by the Revenue department, while directing officials not to permit conversion of agricultural land in favour of HBCSs or developers who work on behalf of such societies, has warned that: “...otherwise the brokers, the builders, the house building co-operative societies will take undue advantages of your (officials’) carelessness and circumvent the provisions of the KLR Act, 1961, without much difficulty because they do have resources to manipulate.”

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