Hope rises for customers as big real estate brands are finally getting booked

Vanita Akhaury

Year 2016 has started on a rectifying note for the real estate sector. The customers are relieved that the law enforcers are opening a new chapter for those real estate builders who have stepped out of the ethical line of conduct and catching the law breakers in their legal net.

This has spread reassurance among the customers, who number in lakhs, and it is a signal to them that the stakeholders are slowly and surely trying to clear off the muck that has clogged the sector. It is being greatly appreciated by customers as a much needed act to clean the sector.


In the beginning of January, it was the realty firm PACL chief Nirmal Singh Bhangoo who landed up in jail for cases of forgery and cheating crores of people on the pretext of collective scheme offered to people over the years, through a network of 30 lakh agents for booking a plot in agricultural land. He collected around Rs 45,000 crore as illegal amassment of money.

Then the Unitech chairman, Ramesh Chandra, along with his two directors, Sanjay Chandra and Ajay Chandra, being sent to judicial custody for 3 years, was some news that shook the real estate fraternity. The Unitech bosses landed up in jail because they erred in paying up to customers in spite of the court’s warning. So the court deemed it fit to book the builder for non compliance.

Next, the Mantri Realty chairman, Sunil Mantri got into big trouble as he was called an unscrupulous developer since he misrepresented facts before the court and did not clear the dues of customers running into crores. Besides, he tried to siphon off his assets by creating third party rights on its Bengaluru property, Mantri Premeoro, even as the matter was pending before the HC.

This is just the tip of the realty iceberg that is swathed in fraudulent deeds. Sadly, this is the reality of realty dealings.

What is most shocking for consumers is that big real estate brands are involved in deception. The arrests of heads of these big brands have left the consumers more bewildered. It is alarming for them as these brands that were considered to be doing business of repute are now being questioned and held up by the court of law as defaulters.

So how does it impact the customer?

The customers’ trust is further invaded and the situation has become more perplexing for them. Now, they do not know whom to trust. But one thing is there, all these customers who have been affected, and the others too, are thankful that the errant builders are being slammed by the courts.

One would not have been surprised had small companies been exposed like this. But nay, it is the bigger fish that has been polluting the others. The big brands are circumventing the law and getting away with it, so the fledgling companies are also following them. Besides, real estate, which has been unregulated so far, is seen as a cool ground to grow rich in a short time, which has given rise to manipulation of laws by some, resulting in cheating and fraud cases that have multiplied galore.

The point is the waywardness of builders and unprofessional practices are the reasons why they are being knocked by the court. All kinds of law evading cases are coming to light. Projects by leading builders like Jaypee, Amrapali, Supertech, Omaxe, Unitech, Mahagun, Prateek, among others on Noida Expressway have not seen the light of the day even after 5-6 years have elapsed.

According to one grieving home buyer, a project by Jaypee, Jaypee Kosmos booked in 2009, is yet to be delivered. The delay has washed out the hopes and plans of the customer. What’s more, the developer was quick to communicate for collecting instalment payments for construction linked payments, lamented the buyer, but since past 2 years, has not even bothered to inform regarding the project delay.

All this boils down to the urgent need of a regulatory mechanism, which has to fall in place quickly as around 10 lakh consumers risk their investment in home purchasing rounding up to Rs 3.50 lakh crore annually.

And since real estate business is not being done in conjunction with the rules, it should be made the top priority, leaving aside political gimmicks.

For the law enforcers, the task ahead is tough. Not only the law has to be all encompassing and comprehensive, but a tighter mechanism of enforcement has to be put in place to stop the fraud as it happens.

Here are some of the recent orderings of the court in favour of the customers.

‘Polluter pays’ directive

Chief Justice of India T.S. Thakur has condemned builders across India for not complying with law and building and selling first, and later getting the clearances.

A few builders have been taken to task by the Supreme Court for applying for green clearance after constructing buildings. The court has clearly pronounced the ‘polluter pays’ principle in the judgements that it has delivered related to the construction industry.

The Supreme Court bench has directed the unruly builders to pay 5% of their project costs by way of provisional environment damage. The fine for the time being is provisional, till the time the National Green Tribunal assesses the damage caused from post facto clearances.

“The penalty will be in addition to criminal prosecution where the violations are grave in nature,” additional solicitor general Neeraj Kishan Kaul said.

In another directive by the Supreme Court on January 21, the builders who fail to keep the construction dust pollution in check will be fined to the tune of Rs 50,000 per day. The pollution control boards have been entrusted with the task of making surprise checks at construction sites. The court hinted that the board can even stop the construction activity if the builders failed to carry out the dust checking measures such as spraying water.

Compensation for delay in handing over flats

The most common complaint of consumers against builders is delay in handing over flats. In an apt judgement by the National Consumer Disputes Redressal Commission, which goes in favour of flat allottees, Commission has ordered Parsvnath Developers to pay monthly penalty to buyers for delay in handing over flats in Parsvnath Planet, a residential project. The complainants will be compensated, for flats up to 175 sq metres they will get Rs 15,000, and those who opted for bigger flats will get Rs 20,000 each month.

Gross disrespect of law

In this classic case, the Noida Authority on January 25 cancelled a project NPX Towers at Sector 153 in Noida, after giving completion certificates. Hi-Leads Infratech, the promoter company of NPX, was not registered as a company on the date it applied for application of land allotment. So now the project is being cancelled as an afterthought after seven years have passed by. The land was allotted by the authority in 2008 and the project was completed, registered, and the building offered completion certificate in August 2014. This shows at the time of allotment not much thought was given to the provisions.

The buyers of NPX Towers are now collectively raising an appeal against the cancellation of land allotment under the Federation of Noida Residential Welfare Association. They are at a loss as they have already paid up to 95-100 per cent of the total amount.

With the real estate regulatory bill hopefully, things will be more transparent and the fear of the law will force developers to act judiciously. Although, exceptions are there and we do have brands that are customer oriented and which follow rules well.

The Parliamentary affairs and housing minister M Venkaiah Naidu is pushing the opposition for the passage of the bill so that a regulator and mechanism is set up to protect the home buyers against reputed builders who follow bad practices. The law will cover existing projects where sales are in progress, so it becomes all the more crucial from the buyers’ stance. Till then, customers who have invested can keep their fingers crossed.

Updated Date: Feb 02, 2016 19:51 PM

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