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Super Nightmare

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There are times in life when dreams turn to nightmares. The Supertech saga is one of them. It all started when the Allahabad High Court on April 11 ordered the demolition of Supertech’s two 40-storey towers on grounds of Violation of building laws. These towers were under construction at the realty company’s Emerald Court project in Noida’s Sector 93Aalong the Greater Noida Expressway. In effect, about 150 buyers are now left in the lurch, their fate quite like that of Trishanku of Indian mythology —hanging between the virile heavens above and the hellish purgatories below

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As an IPS officer, Pradeep Chandra must have fought manya battle but this one may turn out to be his toughest yet. In 2009, after having retired from Uttar Pradesh police as a DIG, Chandra had invested his hard-earned money in a Supertech Emerald project flat at a tempting `2,700 per sq ft. He was promised possession by June 2012 which got delayed after which the company issued a delayed  schedule assuring possession by 2014-end. Alas! Even that was not to beas the Allahabad High Court brought the heavens down with its order to demolish Supertech’s two40-storey Emerald project towers — Apex and Ceyane.magazine_1_Page_26-001The former top cop bemoans his fate: “I am now a victim of llegal construction. I wanted a house of my own and invested my  hard-earned money in it. My dream house remains a dream now. I cannot afford a new house now as the current market rate for the same  flat ranges between `5,500-6,000 per sq ft and the rate of ready-to-move flats in the locality is `8,000-10,000 per sq ft.”

Like Chandra there are many others who now have woe-filled tales to tell. Like 42-year-old self-employed DK Sharma of Delhi’s Mehrauli. He had booked a 2-BHK flat on the13th floor at `3,000 per sq ft in the same project. And now, he is a man in distress.

As many as150 such victims have cobbled up a group  that has decided to fight for their rights for their dream homes.

The judgment was passed on a petition from the Emerald Court Owners Residents Welfare Association which alleged that the approval and construction of the two towers was “in complete violation of the UP Apartment Acts”.

What is the Supertech case?
The Allahabad High Court ordered demolition of Towers 16 and 17 on Plot 4 of Emerald Court at Sector 93A in Noida “within a period of four months” for breach of the Noida Building Regulations and Directions, 2010 and the Uttar Pradesh Apartment Act, 2010.
Under the Apartment Act, a developer had to take prior consent of buyers or residents regarding amendments or revision of the sanctioned plan. In this case, the court observed that Supertech failed to obtain this consent and slammed the Noida Authority for not ensuring compliance.
The Court further ruled that the developer did not maintain the mandatory distance of 16 metres between the two buildings that is required for buildings taller than 55 meters and said that it also failed to maintain a clear space of 7.5 meters in the parking space for the movement of fire tenders. There was also deviation on the use of the basement as the developer had carried out illegal construction in the basement.
The Court was scathing in its indictment of the Authority. The Noida Authority has colluded with the respondent company in sanctioning the plan hence there was no occasion for the Noida Authority to respond to the specific grievance of the petitioners.

At the time when the magazine was going for print, three Special Leave Petitions (SLPs) were filed in the Supreme Court in a span of a week. Firstly, the buyers took initiative to file SLP in SC on April 26, followed by Supertech and Noida Authority on April 30 and May 1 respectively.

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With the development, Rama Raman, chairman of the Noida and Greater Noida authorities told media, “The Authority has mentioned that approved maps of these two40-storey residential towers conformed with the National Building Code 2005 and the Authority’s by laws.”

“Our ground for filing the SLP is that no norm was flouted while approving the maps for these two towers, and Supertech also adhered to those norms. The Authority had allowed a requisite gap of 9 metres between the two building blocks. And realtor complied with that norm too. Therefore, we will appeal to the apex court to review HC order that did not take these things into consideration,” He added.

However buyers are interested in clubbing in all the three SLPs at the time of hearing. Manoj Rai, the officer on special duty (OSD), Noida Authority, told Realty& More, “The authority has no objection in clubbing the three SLPs and we are very concerned about the affected buyers and our priority is always there for the protection of their rights and interests.”

Needless to point out that the home buyers have been punished for no fault of theirs in the Supertech issue.

“We booked the flats as it had all approvals in place and even banks were giving loans for this particular property. We will definitely fight for our own rights in the Supreme Court against the High Court order.  The Authority should play its desired role to protect us from the developer’s misdoings,” said Chandra, getting battle-ready for litigation.DSCN0185At the same time, the home buyers have their fair share of troubles as a division in their ranks brew — one, the genuine buyers who desire to own a home and two a second group who are investors and had booked the flats for investment purpose with an eye to earning profits.

Should here be a regulator in place?
The Supertech story once again awakened the dire need for a regulator for the real estate sector. The developers’ association Credai-NCR states that there is overlapping of rules that is creating confusion among developers and has called upon the government to provide clarification on the overlapping rules in the Act to avoid such incidents in future.

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Fall from grace for Supertech
RK Arora, CMD, Supertech, had dreamt big when he set up a broking house 20 years ago when the company was incorporated. Till today he is a big developer having 75 million sq ft of real estate under construction. His journey hit a roadblock on April11 with the Allahabad High Court order for demolition of two new towers in its Emerald project, Noida. The judgment was passed on a petition from the Emerald Court Owners Residents Welfare Association, which alleged approval and construction of the towers was “in complete violation of the UP Apartment Acts”.
The company has cash reserves of around `542crore but liabilities of `3,228 crore at the end of 2012-13, according to the documents from ministry of corporate affairs. Earlier, it had grown to a company with revenues of `1,874 crore at the 2012-13from `218 crore in 2007-08, riding on the back of a real estate boom. Experts are of view that the Supertech brand has already taken a hit, and it might suffer a huge loss in profits if the order is executed.
There are about 857 apartments in Apex and Ceyane towers in Emerald Court, out of which 600 were sold. Subsequent to the order, the towers have been sealed by the Noida Authority.
“We have collected about `180crore from the buyers and the construction cost is around`90-100 crore in these two new towers. We have given buyers the option of taking apartments in our other projects as well for refunding. Buyers’ money is safe with us,” says Arora.
Supertech has about 40 ongoing projects worth`14,000 crore at Gurgaon, Noida, Greater Noida, Uttarakhand and Bengaluru. Supertech has a little over 75 million sq ft under construction across residential, commercial and hospitality segments. It also recently launched a university in Uttarakhand.

“The second group of buyers is very much interested in getting refunds with 14 per cent returns and is coaxing others to do the same instead of going to the courts. Many of them are already living in their own flats in the same Emerald project and are members of the RWA that had filed the case,” says Sharma.

That is why the petition, which will come up for hearing on May 5, was filed by only 40 homebuyers out of the 150 aggrieved ones in Apex and Ceyane..

Buyers Concern

Pradeep Chandra, Supertech buyerI am now a victim of illegal construction. I wanted a house of my own and invested my hard earned money in it. My dream house remains a dream now. I cannot afford a new house now as the current market rate for the same flat ranges between `5,500 – 6,000per sq ft and the rate of ready-to-move flats in the locality is`8,000-10,000per sq ft.
PRADEEP CHANDRA, Retd DIG, UP Police

How Supertech sought to pacify buyers’ anger with options

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In a bid to convince the buyers that their investments in the two 40-storey towers- Apex and Ceyane – were safe, Supertech chief RK Arora handed them a list of options drafted on a company letterhead in April-end.
The three options were:
1. Buyers can opt for a cash refund at 14% compounded interest as ordered by the high court.
2. Buyers can shift to any other ongoing Supertech project that is proportionate with the investment in Apex and Ceyane.
3. Buyers can opt to wait for the Supreme Court verdict and continue in the same project till such time.
The promises came after a marathon meeting between Arora and the buyers at Supertech House where the buyers were asked to let the company know of their decision latest by May 31. Arora also reassured the buyers that despite Supertech’s decision to move the Supreme Court, the refund process will not be affected.
Asked pointedly by Realty & More to elaborate on the offers Supertech was giving to the affected buyers, like, for instance, the projects where the affected buyers were being offered options, etc, the company spokesperson responded in an email: “Please be informed that Supertech management is unavailable to respond at the moment, thereby we shall not be able to participate for the quote.”

DK Sharma, Supertech BuyerI booked a 2-BHK flat on the 13th floor at`3,000 per sq ft in the same project. In line of Chandra’s fate, I am in the same boat. The buyers have been punished for no fault of theirs. We booked the flats as it had all approvals in place and even banks were giving loans for the particular property. Despite the fact, if developer ignores the buyers’ interest, now we will definitely fight for our own rights in Supreme Court against the High Court order. The authority should play its role to protect us from the developer’s misdoings
DKSHARMA (42), Self-employed, Mehrauli, Delhi

What steps should buyers take while purchasing a flat or any other property from developers?
One of the most important things to do is to insist on getting the copy of the plan from the developer every 2-3 years.
Buyers should read the norms: Under law, the builder is supposed to show the latest plan to the residents that has been approved by the Authority and has the proposed changes to be made in the initial plan.
As the validity of the developers’ maps is only for 2-3 years, the builder makes new maps with changes in the plan. Therefore, buyers should regularly demand for the new maps to know the changes proposed by the builder in the original plan.
Buyers should ask their bank or housing finance company to inspect these maps as the banks are also interested parties and they too should exercise a check whether the rules are being followed.
Buyers should follow the RWAs who have the right to represent the apartment owners in litigation pertaining to disputes between owners and developers.
Buyers should be aware of the provisions and can use it effectively to check the developer who promises, say an open space oran amenity such as a club house on the map, but then goes ahead and constructs another building and markets it as a different project.
While the court order says that existing buyers should be compensated for the principal investment with an interest rate of14% per annum, experts feel that, given the passage of time, that sum may not be enough to buy a property with similar specifications in that area.
If any violation is in place, buyers should ask for adequate compensation and it could be a similar flat in a comparative location or a compensation that takes into account the market price in that locality.

DSCN0189For Sharma, mobilising all the buyers is a major headache now as most of the buyers had booked the flats for endues purposes only and not for investment, so they are not ready to accept the refunds in lieu of the flats. “Those who had booked the flats for investment purposes are ready to take the refund,” he adds.

“Many among the buyers are senior citizens who are unable to attend regular meetings of the affected buyers’ newly formed association due to health reasons. The association is not yet registered,” Sharma said, adding that the association will focus on a plea seeking intervention on humanitarian grounds before the court. They are also mulling knocking at the doors of the National Human Rights Commission.

Asked about the lawyers on their side, Sharma added: “We have two genuine lawyers on our side — TVS Raghavendra and Vishwapal Singh, who have agreed to fight the case on humanitarian grounds. The affected buyers are collecting `2,000 each for the court expenses. My dreams lay in tatters now.”

Supertech’s Emerald Court episode is not an isolated case of alleged illegal construction where complicity of developers as well as Authority officials is required. In Noida and Greater Noida area, scores of buyers have been cheated by various developers till date. On their part, the buyers with very few exceptions, allege the involvement of Authority officials besides the obvious complicity of developers.

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ASHUTOSH LIMAYE, HEAD - RESEARCH & REIS, JONES LANG LASALLE INDIAWith such incidents, brands take a beating and sales drop. There won’t be any immediate impact on prices but only on sales
ASHUTOSH LIMAYE, Head, Research & Real Estate Intelligence, JLL India

BABUSPEAK

rama_ramanThe Authority has mentioned that approved maps of these two 40-storey residential towers conformed with the National Building Code 2005 and the Authority’s bylaws. Our ground for filing the SLP is that no norm was flouted while approving the maps for these two towers, and Supertech also adhered to those norms. The Authority had allowed a requisite gap of 9 metres between the two building blocks. And realtor complied with that norm too
RAMA RAMAN, Chairman, Noida & Greater Noida Authorities

manoj raiThe authority has no objection in clubbing the three SLPs and we are very concerned about the affected buyers and our priority is always there for the protection of their rights and interests
MANOJ RAI, OSD, Noida Authority

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According to the media reports, developers such as Assotech Realty, DesignarchInfra, VXL realtors and others to name a few (see box) are alleged to be flouting norms in one way or the other.

For instance, Assotech Realty has been alleged to be for prohibiting resident welfare associations (RWAs) from taking under its mandate and use the common areas and facilities in the realty firm’s Windsor Park project at Indirapuram, Ghaziabad.

When contacted, Neeraj Gulati, managing director, Assotech Realty, said in an e-mailed response: “There are multiple RWAs in the Winds or Park complex. The company wants to hand over the complex to the genuine RWA but is restrained from doing so in the light of multiplicity of RWAs and pending litigation. The Ghaziabad Development Authority (GDA) has instructed all the RWAs to maintain status quo in the complex.”

One thing is obvious, despite the Allahabad High Court’s order in the Supertech case, local authorities seemingly have not been really effective in protecting the rights of the home buyers. On the other hand, developers are all too tight-lipped on such issues.

DSCN0190While experts feel that issues like the Supertech towers are natural blow to developers as far as sales are concerned, but they have no impact on prices. “With such incidents, brands take a beating and sales drop. But there won’t be any immediate impact on prices,” said Ashutosh Limaye, head, research and real estate intelligence, Jones Lang LaSalle India.

Last but not the least, this verdict has brought forth a new set of checks that a buyer should carry out — be aware of the rights provided under the law. Seek answers to the critical questions that one needs to ask developers besides the pre-requisite due diligence on a continuous basis.

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