43154 The Inspection Panel The World Bank 1818H Street N.W. INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT Washington, D.C. 20433 INTERNATIONALDEVELOPMENTASSOCIATION U.S.A. Edith Brown Weiss Chairperson August 10,2006 MEMORANDUM TO THE EXECUTIVEDIRECTORS India-MumbaiUrbanTransport Project(MUTP) (Loan No. 4665-IN; Credit No. 3662-IN) Dispositionof AdditionalClaim to the Panelrelatedto MUTP 1. The InspectionPanel would like to inform the Boardof Executive Directorsthat it received a new complaint ("the Additional Claim") related to the MUTP. The Panel has decided not to register the complaint as a formal Request as explained below. 2. On May 15, 2006 the Panel received a letter from the Powai Merchant's Social & Welfare Association ("the Association"), claiming to represent 218 private and commercial land owners who have shops in Adi Shankaracharya Marg, IIT Market, Powai, Mumbai. The complainants assert that under the MUTP they have been incorrectly treated as slum dwellers and, as a result, will be adversely affected by the Project. They claim that the Bank has failed to ensure that they are treated as private land owners and compensated appropriately. 3. The Panel notes that the issues raised in the complaint were considered in its Investigation Report o f this Project submitted to the Board on December 21,2005 (INSP/R2005-0005). Management's Response to the Investigation Report (INSP/R2005-0005/4; dated March 7, 2006) referred to these issues, but did not address them indetail. 4. The Panel's MUTP Investigation Report addresses the issue o f private land owners several times and includes a section on "Private Ownership of Land and Shops at the Old Locations" (pp. 79-83). In its Report, the Panel noted several instances in which affected persons claimed to have private ownership o f their land and their structures. The Panel found that complex tenure and ownership issues had not been addressed adequately under the MUTP, which the Panel concluded was not incompliance with OD 4.30. 5. Since Management's Response to the Panel's Report did not address the issues raised in the Additional Claim in detail, the Panel notified Management o f the complaint and asked Management to indicate whether the issue raised in the complaint were covered by its Response and Action Plan. On July 21, 2006, Management informedthe Panel that since November 2004, it had been incontact -2- with the implementing agency, MMRDA, regarding the issues raised by the Association. (Management's note o f July 27, 2006 i s attached). Management indicated that MMRDA had asked the Association to submit supporting documentation regarding the members' ownership claims. 6. Management also stated that under the MUTP affected owners o f private property would be compensated as follows: "Land may also be acquired under the Land Acquisition Act by paying compensation at market valuefor land and structures. In the case of MUTP, an additional MUTP-specific compensation is to be provided, which includes: an alternative house or shop unit equivalent to the area lost subject to a maximum of 20.91 sq.m; an additional area of up to 70 sq.m. on payment, or a cash supplement equivalent to the cost of construction offloor space occupied subject to a maximum of 20.91 sq.m. ... [TJhere is an option to purchase an additional 49.09 sq.m., which can be paid JFom the compensation amount. The market value of the property is determined using rates prevailing in registered sale transactions on the date offirst notification, plus a 30% solatium for compulsory acquisition and 12% interest per annum Porn the date of notijkation to date ofpayment of compensation. The land owner has the option to take either cash compensationfor afectedproperty, or TDR which may be sold on the open market and normally fetches more than cash compensation" (Management's note of July 27,2006). 7. In an e-mail to the Panel, dated August 2, 2006, Management agreed that the actual cash compensation may fall short o f full market value/ replacement cost. This is becausethe compensation under the Land Acquisition Act, which is based on the value o f registered land transactions, i s usually less than the actual cost involved. However, Management stated that this shortfall i s off-set by providing additional support inthe form o f a choice between a housing or shop unit free o f costs or a cash supplement and the possibility to purchase extra space. Management noted that it i s "confident that this set of measures makes the compensation consistent withBankpolicy". 8. The Panel has to make a determination on how to proceed with the Additional Claim and whether the provisions o f paragraph 14 (d) o f the 1993 Resolution', would apply in this case. This paragraph provides that the Panel shall not hear "[Rlequests related to a particular matter or matters over which the Panel has already made its recommendation upon having received a prior request, unless justified by new evidence or circumstances not known at the time of the prior Request."2 9. After a careful review of the Additional Claim, the Panel believes that it should not be registered as a Request at this time. Inthe Panel's view, the claims that the Association raises regarding compensation for private property have been 1ResolutionNo. IBRD93-10 o f September 22, 1993. 2This is further addressed inthe Panel Operating Procedures, paragraph22 referringto paragraph 2 (d), adopted by the Panel on August 19, 1994. -3 - consideredinthe Panel's MUTP InvestigationReport and covered to some extent inManagement's Responseto the Panel's Report and its note datedJuly 27,2006. Importantly, Management is actively engaged in addressingtheir concerns at this time. EdithBrown Weiss Chairperson InspectionPanel (Attachment: Management note dated July 27,2006). ManagementNoteon AdditionalCase Submittedto the InspectionPanelunder MUTP July 27,2006 Representationfrom PowaiMerchantsSocial and WelfareAssociationregarding landownerships issue 1. The Bank has been incontact with MMRDAon this issue for some time. As early as November 2004 the Bank first met with the Association during a supervision mission, (see para. 12 / annex 5 o f the November 2004 supervision mission aide-memoire). From that point forward, the Bank continued to correspondwith andlook into the concerns o f the Association. InJuly 2005 the Bank also forwarded to them the copy o fthe relevant RIP at their request. MMRDAheld a meetingon 4 May, 2006 with the Presidentand Joint Secretary o f the Association to discuss landownership issues. Duringthe meeting, MMRDAhas asked the Association to submit necessary documents insupport o ftheir ownership claim. The minutes o f the meeting have beenissuedto the Association by MMRDAinJune 2006, anadvance copy ofwhich was sharedwith Bank earlier. 2. Documents determined by MMRDA as necessary to verify ownership are as follows: A 7/12 abstract of city survey map: This is a certificate which gives the name ofthe current owner o fthe property as recorded inthe city survey map. This certificated can be easily obtainable from the revenue department by paying a nominal fee within 2 working days. A title search report:This report explains the various transactions takenplace on a particular propriety and indicates the current owner o f the property. This report can be obtained from the revenue department. This normally takes about 2 weeks and i s usually obtained througha lawyer or valuer. BuildingPermissionfrom MCGM: This document shouldbe available with every structure owner ifthe structure i s an authorized one since prior permission from M C G M i s necessary before undertaking any legal construction. Abstract of Tax Registrar: This certification confirms the payment o fproperty tax to a local authority,( i.e. MCGM), and also shows the name of the owner/ occupier o fthe structure. The latest property tax payment receipt should suffice. 3. The Bank has been informed by MMRDA that every owner would normally possess the last two documents; andthe first is easily obtainable. The only document that takes time to obtain is a search report.MMRDA indicated that they would be willing to proceed without the title search report ifthe other three documents are inorder, Should a legal challenge to ownership ensue, MMRDA can put the process on hold andwait until the title search report i s obtained and reviewed. 4. MMRDA has decidedto request from these claimants to submit documents supporting their entitlements within a specifiedperiod oftime. MMRDAintends to compensate the legitimate owners according to MUTP policy. Other shopkeepers will be resettled as per MUTP policy/process for non-owners. This issue andits application procedure were discussedon July 26, 2006 between MMRDA andthe Association. 5. The applicable State andMUTP policy and legal agreements provide sufficient entitlementto affected landowners; these includeas follows: Landacquisition may be carried out using the Maharashtra Regional and Town Planning Act, 1966 (MR&TP).. . The Development Control Regulations formulated using MR&TP provisions offer incentives to landowners to surrendertheir landby way of Transfero f Development Rights (TDR) inlieu of cash compensation. Landmayalso be acquired underthe LandAcquisition Act bypaying compensationat market value for land and structures. Inthe case of MUTP, an additional MUTP-specific compensation is to be provided, which includes: an alternative houseor shop unit equivalent to the area lost subject to a maximumof 20.91sq.m; an additional area of up to 70 sq.m. on payment, or a cash supplement equivalent to the cost of construction of floor space occupied subject to a maximum of 20.91 sq.m. 6. The following provides an example ofhow the processwill operate: ifan owner of a property of100 sq.m.i s affected, he/she will receive cash compensation at market value as defined under Land AcquisitionAct for the landand structure. Inaddition there i s an option to receive a free house or shop, (as the case may be), o f 20.91 sq.m. or cash equivalent to the construction cost of 20.91 sq.m..Ifhe/she opts for house/shop, there i s an option to purchasean additional 49.09 sq.m., which can be paid from the compensationamount. The marketvalue of the property is determinedusing rates prevailing inregistered sale transactions on the date of first notification, plus a 30% solatium for compulsory acquisition and 12% interest per annumfrom the date of notificationto date of payment of compensation. The land owner has the option to take either cash compensation for affected property, or TDR which may be sold on the open marketandnormally fetches more than cash compensation.