Despite civic clearances, two upcoming high-rises face an uncertain future, leaving about a thousand buyers in the lurch. A glimpse into India's urban nightmare
Puja Bhattacharjee | June 24, 2014
Imagine this: you have booked a flat in a housing project coming up on plot number 4 of Sector 93A, Noida – a plush locality in this uber-developed city bordering the national capital. You have put into it a large part of your savings and applied for a bank loan. Then you move in, expecting the best of amenities. Then you learn that the housing complex will have more than twice the number of flats announced initially. This means: the space – green or free – goes straight out the window. What do you do? You approach the courts.
Now imagine this turn of events from another angle: you have booked a flat in one of the two ‘monstrous’ – and disputed – towers that have led the first lot of flat owners to move court. The judge chastises both the builder and the officialdom, directing them to return the payment made by the first lot of apartment owners.
By then the realty prices in other under-construction projects have skyrocketed, making it difficult, if not impossible, for you to buy another apartment in the locality. What do you do? You curse the other residents for taking the matter to the courts. In either case, you are a victim. Of a nebulous but not illegal deal between the builder and the local authorities, at best, or corruption between the two, at worst.
This, then, is the story of a few hundred residents in this Noida project. This could be the story of any metropolis in India, shorn of any legal guarantee to regulate the real estate sector, hazy laws and rules, bullying builders, lack of genuine options for most buyers and large-scale graft.
While the supreme court has ordered status quo to be maintained on the Allahabad high court’s ruling to raze the two contentious towers and indicated that it may hold the Noida authority responsible for the “mess” (see box: The story so far), residents who have already moved in hold Supertech equally responsible. Referring to the builder’s decision to increase the floor area ratio (FAR) – or total covered area on all floors of all buildings of the project divided by total area of the project plot – to 14 and keeping the residents in the dark about it is just not done, said RP Tandon, ex-president of the Supertech Emerald Court RWA, which moved court against the builders.
“It is mandatory for a builder to discuss any change in FAR with the residents (under the UP Apartment Act-2010). If residents give their consent, the builder has to share the profits from the sale with them,” Tandon said.
In this case, the Noida authority gave the builder permission to add floors on the two towers, but never took consent from the residents of Emerald Greens. “The builder thinks he is the sole stakeholder (in the project) but he is not,” said Tandon, referring to the norm about sharing profits with residents in case of increased FAR. “The Noida authority is equally guilty of flouting norms.”
Satish Madhyayan, the lawyer who represented Supertech in HC, declined to comment on the issue, or any of the charges made by the residents, saying the case is sub judice.
Noida officials on their part maintained that they made no mistake. An official said on condition of anonymity that they had treated the two buildings as one, and accordingly there was no need to maintain a distance of 16 metres between them. Officials refused to elaborate further, since the case is sub judice, when Governance Now met them.
Investment worry for buyers
Backing the HC judgment, Amit Jain, director general of the federation of apartment owners’ association (FAOA), which represents rights of buyers, said: “Illegality cannot be supported. The judiciary is the only recourse in the face of inaction by police and the bureaucracy. The judgment is a step in the right direction and will set a precedent.”
Jain also said the Noida authority should be punished: “As the regulatory authority, they are the licensors. They should have ensured that all laws have been complied with before issuing the licence.”
Alleging that every illegality overlooked was due to bribes, Jain said, “The builder cannot avoid the authority’s scrutiny. The authority is shrewd and vigilant – they identify each mistake and (unscrupulous officials) take bribes to legalise it.”
Real estate consultant Saurabh Agarwal, however, does not think Supertech flouted norms, as it had all the required permission from the authority. According to him, buyers can be spared harassment in future by making it compulsory for builders to mention in the builder-buyer agreement of such possibilities (of change in plan).
“The RWA should be made a beneficiary in case of additional FAR and the authority must create a committee to look at issues relating to increased FAR in existing projects,” he said.
Uday Bhan Singh Teotia, the current president of Supertech Emerald Court’s RWA, said the 12th storey was under construction when they took up matters in 2012. Residents said the authorities could have intervened and stopped the construction until the matter was sorted out. That, Teotia said, would have spared the buyers harassment.
“According to information we obtained through RTI, lower-level officials (in Noida authority) had suggested that the towers be sealed and the layout plans be cancelled. But the CEO had overruled them,” Teotia alleged. The Noida CEO was not available for comments.
What builders’ association says
In its official statement, the NCR chapter of the Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for private real estate developers in the country, has pointed out that the UP Apartment (Promotion of Construction, Ownership and Maintenance) Act was notified in 2010, while the rules were framed in 2011.
The statement said: “The (Allahabad HC) judgment seems to have ignored the fact that a number of projects were launched before that dateline and phase-wise construction of those projects was in progress. On the one end, the rules were not properly communicated, on the other, there was an overlapping of rules. All this created confusion among the developers.
“While we welcome the Act, we, at CREDAI NCR, call upon the government to provide clarification on overlapping rules in the Act to avoid such incidents in future.”
CREDAI’s Uttar Pradesh Real Estate Development Council (UP REDCO) president SK Garg said Supertech made a mistake by not declaring its intention to the residents.
“The UP Apartment Act has the provision of declaration. The builder made a mistake by not availing of this provision,” he said. He also said the builder should not have gone ahead with the construction of the two towers without taking existing residents into confidence.
Who is liable for damages?
SK Pal, advocate in the supreme court and Allahabad high court who has represented residents in many cases against builders, said any development authority by virtue of being an arm of the government has a responsibility towards its citizens. He stressed that both buyers and builders are citizens.
“If any action or inaction of a state-owned organisation results in losses for a business house or for a common person (flat buyers), then it is the duty of the state to make good any such loss. The builder had given full disclosure to the authority (but) the authority misunderstood its own laws,” he said.
“Whether it was collusion or misinterpretation of the law, the authority is solely responsible,” he added.
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