House of horrors: How buyers are taking on the big builders

New Delhi: Amit Jain was just 32 when he decided in 2004 to wind down his export business in the United States and come back to India for good. His aging parents were back home, he missed India and since he had spent 30 years of his life in the country, he thought, "How bad can it be?"

As it turned out, things got very bad for Jain.

A decision in 2006 to invest in an upmarket real-estate project from one of India's premier developers - DLF Ltd - has blown up in Jain's face. To this day, the project hasn't been completed, and, worse, the company, which had missed several deadlines for handover of the apartment, cancelled his allotment, claiming he had fallen behind on his payments, and retained Rs 50 lakh as forfeiture money.

For years now, Jain has been on a cruel runaround of the developers' office, the courts, and the regulators for years. The entire experience has left him wracked by doubts about the wisdom of his decision - to invest in the DLF project and, at a more fundamental level, to return to India, where overly lax real estate regulatory laws have thrown thousands of prospective homebuyers like him at the mercy of developers.

"It was my first ever property buy in India and I was a first-time home buyer. But it was also the worst experience of my life," Jain recalls. "I was traumatised and so mentally stressed at times that I kept thinking to myself, 'Why did I come back?' There were days when I'd just feel like running back."

Jain's 'house of horrors' experience began in August 2006, when he paid a Rs 20 lakh down payment on a Rs 1.85 crore, four-bedroom apartment in DLF Belaire, an upmarket condominium complex in Gurgaon. At the time, he was living and working in Gurgaon's Sector 53; the Belaire project was to come up very close to the rented apartment he was living in.

Barely a couple of months later, the developer asked him to pay his second instalment of Rs 19 lakh. Since Jain lived nearby, he knew that no work on the residential apartment complex had begun as yet. He was concerned that he was being hustled to pay, particularly since he still didn't have an agreement of the purchase. But with few choices open to him, he paid the money.

The Association claimed that DLF was abusing its dominant position in the market and had imposed "highly arbitrary, unfair and unreasonable" conditions on the apartment allottees. New York Times

Things got progressively worse from there on. In 2007, DLF sent out a letter to the prospective buyers of Belaire telling them that the company was changing the terms of payment to a construction-linked plan and increasing the number of floors from the originally planned 19 floors to 29 floors. Even then, construction at the site had barely begun.

"We (the prospective buyers) paid our instalments regularly, but then realised that (DLF) was cheating us," says Jain. "By 2008, I had paid about 55 percent of the value of my flat, but only a skeleton of the building had come up by then."

Jain, and other prospective Belaire apartment owners, were beginning to get worried - and gave voice to their concerns to DLF's representatives. From time to time, they sought appointments with DLF chairman and CEO KP Singh and vice-chairman Rajiv Singh, but were repeatedly fobbed off.

Jain recalls that DLF officials were insistent that buyers should keep paying their instalments.

He says he kept asking for an appointment with KP Singh, and asked to be reassured that the project would be completed on time, by December 2009. "They kept saying it would, but refused to give us a date," he adds.

But by December 2008, having already paid DLF Rs 1 crore with nothing to show for it, Jain had had enough. He stopped paying his instalments.

In April 2010, DLF sent him a cheque for Rs 50 lakh saying that it was cancelling his flat allotment and was retaining Rs 50 lakh as forfeiture money.

"I went to their office, wrote letters and pleaded, saying that if they could explain why they were taking our money without having built much, then I was willing to give up my money," Jain says. "They even told me that they resold the apartment I'd been allotted, and that they couldn't return it to me."

Since then, Jain has been on a royal runaround of the courts and regulators' offices, trying to secure justice against the cavalier manner in which DLF had dashed his dream of a home, and even forfeited his money. He doesn't have a regular job and, both he and his parents live in rented apartments, cumulatively paying up to Rs 1 lakh per month as rent.

The experience of Jain and other members of the Belaire Owners Association echoes similar experience that thousands of prospective homebuyers across India face in an environment where regulatory rules are lax and weighted heavily in favour of the developers.

But unlike the Belaire Owners Association, who have decided to challenge the developer - in this case, DLF Ltd - many others are easily intimidated and silenced or have no faith in the country's justice system.

Some others, who have been fighting cases in the country's courts for years on end, have spent all their life's savings and energy on running from pillar to post in search of justice.

One of those is Neelam Tejpal, a retired school teacher, who lost her husband in 1985 and brought up two very young daughters on her own. In 1993, after her father-in-law's death, she received a share of money from the family property and invested it in buying an apartment with DLF. Till date, Tejpal has not received possession of the flat she was to have received in 1996and the court case she filed against DLF is still dragging on in the courts.

"For the past five years, we have had just one or two hearings in the courts and that too has been deferred. There is no justice in this country for the lay man - -only those who have money, can buy justice," Rajeev Kumar Sharma, Neelam Tejpal's brother told Firstpost.

Says Jain: "I know of people who have bought houses with their life's savings and insurance and pension money and have been cheated. Nobody should have to face the trauma that Neelam Tejpal or we have faced as home owners."

But it is people like Neelam Tejpal who also give Jain strength. "We need to stop being fearful because if we don't raise our voices, nothing will ever change," he says. "We can win against these big corporations, but we need to try. Only then will others start believing in a just system. We have to take the initiative."

On 5 May 2010, the Belaire Owners Association - formed by the apartment allottees of the Belaire Building Complex situated in DLF City, Phase-V, in Gurgaon - filed a complaint with the Competition Commission of India against DLF Ltd and the Haryana Urban Development Authority (HUDA), a statutory body under Haryana Urban Development Authority Act, 1977.

The Association claimed that DLF was abusing its dominant position in the market and had imposed "highly arbitrary, unfair and unreasonable" conditions on the apartment allottees. It said that as a result of the abnormal delay in the project, hundreds of apartment allottees had had to bear huge financial losses, with their money being locked up with DLF, and had had to wait indefinitely to claim possession of their apartments.

The Association also accused HUDA and the Department of Town and Country Planning of Haryana of having approved and permitted DLF to act in an "illegal, unfair" manner by allotting land and giving it licences, permissions and clearances even though it had violated the provisions of the Haryana Apartment Ownership Act, 1983, the Punjab Scheduled Roads and Controlled Areas (Restriction of Unregulated Development) Act, 1963 and Haryana Development and Regulation of Urban Areas Rules, 1976.

On 12 August 2011, the Competition Commission of India delivered a landmark ruling in which it found DLF guilty of using its dominant position in the relevant market to impose unfair terms on home buyers. It also faulted DLF for inviting applications for allotment, signing agreements and collecting a considerable amount of money even when the plans had not been approved by the competent authority. DLF, the CCI ruled, was also guilty of telling consumers who had already applied for apartments in 2006 in October 2007 that the project was being revised, when in fact the application for approval had been moved only in December 2008 and secured only in August 2009.

In its order, the commission imposed a fine of Rs 630 crore on DLF. The order said: "Keeping in view the totality of the facts and circumstances of the case, the Commission considers it appropriate to impose penalty at the rate of 7% of the average of the turnover for the last three preceding financial years on OP-1 (DLF Ltd.)."

On 9 November 2011, DLF Ltd filed an appeal before the Competition Appellate Tribunal against the Competition Commission of India's order and its decision to impose the Rs 630 crore fine.

In May 2012, the Tribunal in May refused to entertain DL F's appeal.

In an interview to Firstpost, Mohit Gujral, vice-chairman and managing director of DLF, had said of the CCI decision that "the arguments are still going on, we believe we have a good case and we are going to present our point of view which I believe is right.."

In a rehearing of DLF's appeal on 18 July, the Competition Appellate Tribunal's chairperson, Justice VS Sirpurkar, directed the Competition Commission of India to expedite and complete proceedings in three cases against DLF by 30 September, and refused to allow the company to use the contentious clauses in its agreement with buyers.

In many ways, the hapless members of the Belaire Owners Association are waging an epic battle against the biggest Indian developer, and indeed against a system that is for now heavily weighted in favour of developers. But it's also an inspirational struggle that holds out hope for thousands of other homebuyers who find themselves being similarly tossed around when their hopes of buying a dream home rapidly turns into a nightmare.