#18: 13th time lucky
Living on borrowed time with the special provisions Act
Introduction
On December 19, 2023, the Parliament of India passed the Delhi Laws (Special Provisions) Second (Amendment) Act 2023 without much debate. The law temporarily condones illegal construction in Delhi and prevents municipal authorities in Delhi from demolishing (or fining) any property that violates Delhi’s building code. However, this protection for illegal construction is limited to three years, and within this period, the Union Government (according to the law) must devise a policy to deal with Delhi’s illegal construction.
This is not the first time that the Parliament has protected illegal construction in Delhi, but the 13th time. Since 2006, the Parliament has been instructing the government to devise a policy to solve the problem, and the government has failed each time. This article argues keeping illegal construction in legal limbo may not be costless. Delhi may be paying a price in terms of reducing the rule of law, encouraging further construction and keeping old buildings beyond their intended life span.
The Delhi special provisions
The problem of Delhi’s illegal construction started in 2006 when the Municipal Corporation of Delhi started a campaign to lock up buildings violating Delhi’s building laws. The buildings violated rules in largely three ways: (i) horizontal (or vertical) expansion to make more floor space; (ii) unauthorized use (for example, residential buildings had shops in them); and (iii) encroachment of slums and residential property on parks and forests.
The extent of violations was so large that a substantial portion of Delhi’s population stood to lose their livelihood or homes (or both). As a result, massive protests against the municipal authority’s campaign started all over Delhi. The Union Government (responsible for urban planning in Delhi) stepped in to protect Delhi’s illegal buildings by enacting the Delhi Laws (Special Provisions) Act 2006 (Hindustan Times, 2024). The municipal authority was hence stopped from enforcing the law.
The new legislation did not solve the problem but pushed it down to a later date. Under the law, authorities were prevented from taking any punitive action against illegal construction (of the three identified types). The authorities could neither demolish illegal buildings nor fine their owners. Slum dwellers and hawkers were similarly protected from eviction. These protections came with some riders. Buildings were protected from the law, only if they were constructed before 2006. But slum dwellers and hawkers did not face any cutoff. The protection also had an expiry date–18th May 2007, a year from its commencement. By this date, the central government (under the new law) was required to come up with a new policy to deal with these constructions. The government could either penalise or regularise these violations.
The 18th May 2007 deadline was missed. To date, the government has not developed any policy or law to address illegal construction in Delhi. Instead, the Union Parliament keeps making new laws that extend this protection. The following diagram shows a timeline of the laws that extended the protection and ordered the executive branch to devise a policy to address the issue.
Since the 18th May 2007 deadline was missed, a presidential ordinance extended the protection to July 2008. The ordinance added protection to schools, dispensaries, and institutional buildings that had been illegally built. As ordinances lapse after some time, a second ordinance was needed in September 2007 to extend the protection till December 2008. This ordinance introduced a new qualifier for unauthorised colonies, requiring them to have existed before March 2002 to enjoy protection from demolition by the authorities. It also protected any modifications to illegal colonies, provided they were done before February 2007.
The protections continued with the government shifting from ordinances to legislation. In December 2007, the Parliament passed the National Capital Territory of Delhi (Special Provisions) Act of 2007. The Act extended the duration of protection till December 2008 and repeated the need for the Government to devise a policy within a year. The 2008 deadline was missed, and another piece of legislation had to be passed in March 2009, which moved the deadline to December 2009. Following the pattern set by now, the December 2009 deadline was missed, requiring another law in the same month, extending the deadline to December 2010. Again, this deadline was missed, and the Parliament had to re-legislate the protection in March 2011, giving a new deadline of December 2011. Â
In December 2011, the Parliament realised that a one-year deadline was not feasible. Therefore, this time, the executive branch was given three years to solve the problem of illegal construction in Delhi and the new deadline was December 2014. However, this three-year deadline also failed to produce any resolution, and since then, the deadlines have been moved five times—December 2014, December 2017, December 2020, February 2021, and December 2023.
A hypothetical: Greater Kailash-II
Parliament’s current approach of revising deadlines adversely affects Delhi’s property market and the safety of its residents. A hypothetical shows how the law creates uncertainty in the property market. Assume a 220 m2 residential plot in Delhi's Greater Kailash-II (GK-II) neighbourhood. Currently, a building here covers the entire plot and is four stories tall. This is common in GK-II, where buildings have expanded to touch each other. Each floor of our hypothetical building is 220 m2, creating a total floor space of 880 m2 (220 X 4).
This hypothetical building violates Delhi’s Master Plan and building bye-laws. According to the law, the footprint of the building should be limited to 75%, and the permissible floor-area ratio is 300. Thus, the law limits the floor space of the building to 660 m2. Therefore, our hypothetical building exceeds the legal limit by 220 m2.
The price of a built floor in GK-II is around Rs 2.5 lakhs (0.25 million) per m2. Therefore, the hypothetical building should fetch Rs 22 crores (220 million) (880 X 2.5 lakhs). However, if the building complied with Delhi’s building code, it would fetch a much lower price of Rs 16.5 crores (165 million) (660 X 2.5 lakhs), a reduction of 25%.
What happens if this building is put up for sale? Three scenarios show how Delhi’s special provisions distort the market:
The property was constructed before 2006;
The property was constructed after 2006;
The buyer intends to demolish the property and construct a new building that follows all building regulations.
In the first scenario, the buyer is protected till 2026. However, there is no clarity about what happens after 2026. The government may create a policy that makes the house illegal. Then, the buyer stands to lose a fourth of the property valued at around Rs 5.5 crores (55 million). The buyer will not lose this amount if the government continues with a 14th special provision or makes a policy that forgives prior violations.Â
In the second scenario where the building was constructed after 2006, the buyer takes on a greater risk. At any time, the government may demolish the excess 220 m2 the seller provides the buyer. The seller will naturally claim that the violations were conducted in 2006 and are protected by the law. The buyer has no way of verifying this claim.Â
The difference between the opinions of the buyer and seller occurs because of the way the special provisions operate. The excess floor space was built in violation of building regulations. Therefore, no plans or official records exist of when the excess floor space was created. The seller will rationally claim that the building was modified before 2006, but the buyer may not be able to verify the claim. The buyer may also not have any documentation to prove that the building existed before 2006, should the municipal authority decide to demolish the excess floor space.
In the third scenario, the buyer is guaranteed a loss when she builds a new building. Here, she demolishes this illegal building and builds a new residence compliant with Delhi’s building laws. In this scenario, the buyer purchases a building with 880 m2 but gets only 660 m2 of floor space when the building is rebuilt. At present market prices, the buyer stands to lose Rs 5.5 crores (55 million).
This may encourage the use of buildings beyond their intended lifespan. Old buildings are energy inefficient and may be unsafe. She has two choices here. She may continue residing in the old building with more floor space. Alternatively, she may reside in a new building that complies with building rules but uses lower floor space. People may gravitate towards the first option due to the unaffordability of the Delhi property market.
Consequences
The Delhi special provisions have consequences for the city’s real estate market by placing property buyers at risk and discouraging redevelopment of existing buildings. Property buyers in Delhi take on risk and uncertainty in property transactions. The Delhi special provisions add to the existing risk present in the real estate market. Present owners are burdened with uncertainty regarding how the government will decide the fate of illegal constructions. This risk is passed on to buyers, who will see a dip in the value of the property if the government penalises these constructions.
Such risk has led to owners continuing with older constructions. The protection granted to them for over two decades has led to their continued existence. Buyers are further discouraged from tearing down older constructions. New properties have to adhere to stringent standards and are subject to the full wrath of the state in case of violations.Â
The experience from the 12 missed deadlines indicates that the same situation will probably play out in 2026, requiring another extension. However, these extensions are not free. They hurt the respect for the rule of law because the laws discriminate between violators. Violators are protected if they violate the law before 2006, while violators after 2006 are at risk of having their buildings demolished. The law also punishes those who complied with Delhi’s building codes by reducing their usable land. As time passes, it will be difficult to prove whether the violation occurred before or after 2006. This will lead to litigation between building owners and the municipal authority. The authorities will claim that the illegal construction was after 2006, while the owners will argue that the illegal construction was done before 2006. Such disputes are already burdening Delhi’s judicial system.Â
It is time to admit that borrowing time for a solution is not working and take a new approach to Delhi’s urban planning.
References
Hindustan Times. (2024, January 16). 6 years and counting for traders as de-sealing tussle continues in Delhi. https://www.hindustantimes.com/cities/delhi-news/6-years-and-counting-for-traders-as-de-sealing-tussle-continues-in-delhi-101705425310902.htmlÂ
The Delhi Laws (Special Provisions) Act, (2006). https://www.indiacode.nic.in/bitstream/123456789/2073/1/A2006-22.pdfÂ
The National Capital Territory of Delhi Laws (Special Provisions) Second (Amendment) Act, (2023). https://prsindia.org/files/bills_acts/bills_parliament/2023/NCT_of_Delhi_Laws_(Special_Provisions)_Second_(Amendment)_Bill_2023.pdfÂ
The National Capital Territory of Delhi (Special Provisions) Second Act, (2011). https://lddashboard.legislative.gov.in/sites/default/files/A2011-20_0.pdf
Rohan Ross and Shubho Roy are researchers at Prosperiti.