Unholy Nexus between development authorities and builders

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HC charge of ‘collusion’ between development authorities and builders not unfounded, say RWAs and homebuyers

HT Estates, 26 April 2014

The “collusion” between a development authority and builders was highlighted recently in an Allahabad High Court judgment in the Emerald Court case. Ordering the demolition of two towers in Sector 93-A, Noida, in Supertech Emerald Court, the HC had held that “it was a case of violation of building regulations by the Noida Authority, in collusion with the respondent-company, in sanctioning the map, that has adversely affected the rights of the apartment owners.”

How can this “collusion” be defined? Is it something new? Members of various residents’ welfare associations (RWAs) from many group housing projects in Delhi NCR allege that development authorities allow developers to “openly flout” building bye-laws and apartment acts. People seeking details of projects/apartments they want to invest in and even RTI applicants cannot get the requisite information easily. The allegations by RWAs and homeowners against the authorities have been made on the basis of RTI replies. Here are a few cases that underline the need for strict scrutiny of the builder-buyer nexus.

Approval for illegal flats

More than 400 homebuyers in a group housing project in Indirapuram have alleged that the Ghaziabad Development Authority (GDA) gave a completion certificate for the project in 2008 even though some of its apartments were ‘illegal’.

“There are 400 apartments in the project and recently we came to know through an RTI reply that the builder had sanctions for just 295 flats, which means 105 apartments in the project are illegal. A completion certificate certifies that the construction work has been carried out according to the layout plan sanctioned by the authority. How can a project with illegal apartments get such a certification without the involvement of officials of the authority,” asks the president of the project’s RWA.

The RTI revelation has come as a big blow to the owners of the ‘illegal’ apartments. “They are pressuring me to not pursue the case as they are afraid of losing their apartments if GDA passes any demolition order. Nothing obviously will happen to the developer,” the RWA president adds. There is another interesting case in which a completion certificate has been awarded prematurely. Yash Chadha, a Delhi-based businessman, had invested in an IT park in Greater Noida for which the developer had promised 12% assured returns till the project got a completion certificate. The ‘return’ came regularly to Chadha for a yearand-a-half and then stopped suddenly. On making enquiries, Chadha was told that the project had been completed and that he would be given possession soon.

“A visit to the site revealed that even the most basic services such as lifts, firefighting equipment, water and electricity supply etc were not in place. I was also shocked to find out from the Greater Noida Authority that despite all these deficiencies the project had been awarded a completion certificate,” says Chadha. He and several other apartment owners in the project are fighting a case against the developer in the Tis Hazari Court.

In another interesting case, the Noida Authority has allegedly tried to suppress information to protect a developer who has been marketing his commercial projects without having any land leased out in his name. The developer has put up banners all over the city in Noida and Delhi offering lucrative deals and assured returns to buyers.

Ashish Kaul, an RTI activist, says, “When I filed an RTI seeking information from the Noida Authority on the developer’s projects, I did not get any response in the first 30 days. When I filed the first appeal, the deputy CEO, Rajesh Prakash, ordered the official concerned to give me the information. Then I was told by the Noida Authority that it had not leased out any land to the developer and his company. However, the authority refused to reply when asked what action it had taken against the developer.” The department of town country planning (DTCP), a nodal department for the regulation of urban development in Haryana, has been accused on and off for allegedly overlooking the homebuyers’ plight. In a recent case, a developer launched a group housing project on 12 acres in Gurgaon after getting a license and a building plan approved by DTCP. When the project was sold out, the developer signed an agreement of collaboration with another developer who then signed another agreement with a third developer, who roped in a fourth developer for another agreement. This developer launched a new group housing project on the 12-acre land parcel bought by the first developer. Investors who had put in money on the projects launched by the first developer were shocked when they found a new project coming up at a place where theirs was supposed to come up.

“We complained to the DTCP but nothing happened. Meanwhile, we also came to know from various land records and RTIs that the first developer had also mortgaged the land to a multi-national bank. This is a huge scam which will rob hundreds of investors of their hardearned money,” says a buyer.

The buyers of the first developers’ project have complained to the State Consumer Disputes Redressal Commission that the developer is asking for more payments while he has not only mortgaged the land to a bank but also signed several collaboration agreements. The commission has restrained the developer from making any demand of the homebuyers.