Allahabad High Court – ‘The time has come when everyone should realise that the rule of law is not a purchasable commodity and illegalities will not be tolerated merely because the builder has taken protection against a sanction that, admittedly, is illegal and in violation of building regulations and the Act...
The Builder community in India has often used loopholes in the Building laws, a slow and corrupt bureaucracy and inherent delays in the judicial system to impose themselves upon hapless apartment buyers - who are forced to sign on the dotted lines and bear with poor standard of construction and maintenance. The dictum, ‘howsoever mighty you may be the law will catch up’ had almost proven itself hollow, as Builders with deep pockets and some top lawyers ensured that investors in real estate projects would keep moving around in circles - without any hope of getting justice. However, the recent judgement of the Allahabad High Court, against Supertech Builders in NOIDA, has changed the gestalt of the entire Real Estate industry, which has been used to even having its way with governments. Real Estate experts say that the unambiguous order of the Allahabad High Court, ordering for the demolition of the two 40-storied towers being built by Supertech, and simultaneous legal action against the NOIDA Authority for being complicit in this ‘illegal’ construction, will send a very strong signal to all the stakeholders that rules and regulations can't be violated at will, and transgressions would not be tolerated. The High Court Order is also being hailed for neutralising the stratagem often used by Builders, of creating ‘third party’ rights by quickly selling flats and apartments in contentious buildings to buyers - which often has forced the authorities and the judicial system to temper their decisions, keeping the interests of the innocent ‘third parties’ in mind. But the extant Allahabad High Court, taking into account the interests of the ‘new’ buyers’, has ordered that their money should be returned along with an interest of 14 per cent per annum.
Vineet Singh, CEO 99 acres, a Real Estate firm, says that this decision will definitely send the message not only to Builders but also the government authorities, that they should not implement rules and regulations as per their whims and fancies. “The High Court decision is based on the rules that were framed by the NOIDA Authority – which had then allowed the rules to be violated by its own people. That is why the Court has also ordered legal action to be taken against the officials who failed to implement the rules,” says Singh. In his opinion, this Order has also sent a signal to the government to review the rules and regulations, so that discretionary power is minimized, and cannot be misused by the officials or politicians. While the Builder might put the onus on government authorities, claiming that it has received all the requisite ‘approvals’, the (Supertech) Emerald Court RWA, which had filed the Petition, says that repeated requests to the authorities as well as the Builder had met with cold responses. Rajpal Tandon, President of The Emerald Court RWA, tells Friday Gurgaon that, ever since 2009 he has written hundreds of letters to the NOIDA Authority, complaining about the illegalities taking place in the Complex - but there never was a response. “We had to move the High Court because the Builder had begun developing two additional towers within the Complex, which was totally in violation of the laid down rules and regulations,” says Tandon. He recollects that it all began in 2005, with Supertech laying the foundation for 660 flats, to be housed in 12 towers of 10 stories each. The FAR was revised in 2006, and the Builder also acquired an adjoining plot of 6000 sq yards – with a plan to build a 12-storied tower. While the Project was under construction, the NOIDA Authority allowed the purchase of further FAR, which induced the Builder to first plan a 24-storied, and later a 40-storied, building. Tandon says that the Builder did not take the permission from the RWA for purchasing the additional FAR and for the construction of 857 more flats, which is required as per the law. With the NOIDA Authority not willing to listen to the woes of the residents, and the Builder playing truant, the RWA had no other option but to approach the Police in 2011. “An FIR was lodged against the Builder, but it had little impact. This forced us to approach the High Court in 2012, and there we presented our case forcefully,” says Tandon. The basic premise that they presented before the Court is that these two towers - called Ceyane and Apex - are unsafe, as the separation between the two buildings is less than the prescribed area. Further, the infrastructure, which has been installed for 660 flats, cannot meet the needs of 857 additional apartment owners. The builder has conveniently kept the common areas and facilities common/shared – and basically treated it as a single project. Tandon alleges that obviously the NOIDA Authority officials were complicit with the builders. In fact this has been taken into cognizance by the High Court, which has ordered action against the officials as well. The RWA also says that the ‘new’ buyers who have purchased apartments in these contentious towers, should force the Builder to pay back their money with interest – as also directed by the Court. Currently the price of the flats in this Complex is between Rs 6000 to 6500 psf, whereas the rate in the adjoining ATS Greens is Rs 11000 psf, says Tandon. “We don’t want to cause a loss to anyone, but the illegalities that have been committed should be removed, and exemplary punishment given to those who allowed them,” he asserts, The RWA has also filed a caveat with the Supreme Court, to ensure that no ex-parte decision is given, in case the Builder approaches the Apex Court.
While the Allahabad High Court Order may be challenged in the Supreme Court, it has caused more than ripples in Gurgaon. Even though the dominance of Builders in this City is more than that in NOIDA, Real Estate activists opine that this Order will shake both the industry and the authorities (especially DTCP), which have seldom taken any action against the repeated violations by the Builders here. Advocate Pooja Aganpal, who has taken up several cases on behalf of the local RWAs, points out that this Order has reinforced the faith of the buyers/residents in the judicial system, despite the recent setback in the Manmohan Law case - in which Supreme Court had favoured the Builder with reference to ‘common areas’. “This Order will set a precedent; it will make Builders and the authorities well aware that violations of even the spirit of the law may not be permitted,” she says. In Haryana this ruling would have special importance, because in many cases the State government has brought in retrospective regulations to help condone the violations by Builders. The Haryana Apartment Owners Act 1983 is believed to have been re-notified, on a specious plea, thereby allowing some powerful builders to escape the clutches of the law, allege some RWAs. The decision of the State government to bring apartments under the Societies Act 2012 is also being seen as another move to ensure that the apartment owners are left with no legal remedy - as the Societies Act 2012 bars them from approaching the courts in case of a dispute, says Aganpal. Col SS Oberoi, who has been involved in several legal cases with Builders, says that he has already filed an application with the Gurgaon District Court, citing the Allahabad High Court judgement, along with a score of others, to prove the illegalities that have been committed in their Complex. “Extra apartments have been built, which should now be demolished, and common areas and facilities have been compromised,” asserts Singh. Real Estate activists point out that violations in Gurgaon are primarily: delays in the delivery of houses, poor construction, lack of promised infrastructure and facilities, and the refusal of Builders to vacate the premises once the projects are ‘complete’. Sanjay Sharma of Qubrex says that one of the reasons that Builders are able escape scrutiny is that they never apply for ‘completion certificates’ - and in this the Department of Town and Country Planning (DTCP) is hand in gloves with the Builder lobby. Advocate Aganpal adds that if the authorities had the interest of the people in mind, the Builders would never be able to use the loopholes in the system to escape from their responsibilities - but clearly the people do not matter. A new dispensation at the Centre (and soon in States) may hopefully help change this attitude - fast. Aganpal also points to the DLF Belaire and Park Place projects, which were taken up by the Competition Commission of India after the RWA complained that the Builder had increased the number of floors and apartments without permission from the ‘original’ owners. The RWA also alleged that common areas, which belonged to it, had been ‘taken away’, in order to construct new apartments - which was against the rules. Finding relevance in DLF being a dominant player, the CCI had imposed a heavy penalty and also proposed that the agreement between the builder and buyer should be more fair and equal. While this is still pending before the CCI, it showed how the Builders can use their clout and financial power to subvert the system. The Allahabad High Court Order has revived the hopes of many aggrieved Gurgaon RWAs, which had been dampened by the recent Supreme Court Order in the (DLF) Silver Oaks case. It’s time now for Gurgaon RWAs and residents to keep the flame – that has been ably lit by a NOIDA RWA and residents - burning. Builders beware - ‘howsoever mighty you may be the law will catch up’.
Experts says that the ambiguity in rules and regulations in the Real Estate sector, which has been further confounded by the changing norms and bye-laws, has led to a situation where the nexus of builders, bureaucrats and politicians is able to hoodwink the buyers – as also the law. Till 2006, a Builder was allowed a FAR of only 1.75, which was revised to 3.00 in 2006 - which means that a Builder can now build three times the ‘ground area’. Tandon says that a Builder can also build only 80 flats on an acre. This forces them to go for vertical buildings with more than 5 stories, as the Builders need to utilise the entire FAR. In 2006, the NOIDA Authority also allowed 140 more flats on an acre of land. Tandon says that using this rule, Builders not only constructed more apartments in the under-construction projects, but also in those complexes that had reached completion or were being delivered. With no additional land to create common areas and facilities, every law in the book was subverted to take the ‘benefit’ from the changed norms. The Emerald Court RWA's contention is that many rules – for example, relating to the sale of car parkings, fire safety norms and construction norms as laid down by NBCC - were violated. Sanjay Sharma of Qubrex says that when FAR is increased, the infrastructure has to be built keeping the increased number of apartments in mind - but this is not happening in most of the cases
Giving a jolt to the hopes of hundreds of buyers who have invested in Emerald Court Phase II, the NOIDA Authority has sealed the twin towers as per the order of the Allahabad High Court - which has ordered the demolition of the two towers. The Authority maintains that it will file a Special Leave Petition with the Supreme Court, to challenge the Order, which directs for the prosecution of its officials. The buyers have become the biggest losers in this battle between the RWA and the builder. Most of the buyers want the Builder to be directed to give them flats instead of a refund of their money - as most of them are living in rented houses. The banks that have financed the buyers as well as the Builder are also worried. IDBI, ICICI, Corporation Bank and HDFC are the major creditors who have disbursed large amounts in the Project. Experts say that the Builder will take a hit of Rs 750 to 800 crores if the High Court Order is implemented in toto. The buyers, a majority of whom has paid almost 80 to 90 per cent of the cost, are now thinking about filing a criminal case against the builder - for allegedly suppressing facts about the litigation that has been ongoing for the last few years. Meanwhile Supertech has repeatedly asserted that it will approach the Supreme Court to challenge the High Court Order, and stated that the investments of the buyers were safe, as the two towers were built in compliance with rules.
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