New Delhi: Seema Saini, a widow who looks after her family of five on a monthly pay of Rs 25,000, loses a part of her salary every time she takes time off work for protests and court hearings against the realty giant Amrapali Group. But she has no option: Saini used her late husband’s provident fund money, Rs 5 lakh, and also took a loan to buy a Rs 11.5 lakh home in one of their projects. Now she neither has the money, nor the home she hoped to own. She doesn’t even know when she will.
For lakhs of people, the dream of owning a home has turned into a nightmare, with several builders, including giants such as Jaypee and Amrapali, failing to complete big-ticket realty projects in over a decade.
Anxiety stalks buyers, many of them with their life’s savings at stake, who sought to become homeowners by investing in projects undertaken by real estate majors such as Unitech Ltd, Amrapali Group, the 3C Company, Gardenia Group and Jaypee Group — many of them launched as early as 2007.
According to a 2018 study by Mumbai-based Anarock Real Estate Consultancy, the top seven cities of India [by economic activity and population] account for 5.6 lakh pending homes together worth Rs 4.51 lakh crore.
The Delhi national capital region (NCR) and Mumbai Metropolitan Region (MMR) — which include the urban agglomerations surrounding the main cities — collectively account for 72 per cent of the housing units, worth Rs 3.49 lakh crore, stuck across these seven cities.
While industry sources said there was no clarity on how much of the Rs 4.51 lakh crore had already been paid by homebuyers, they estimated that it could easily be over Rs 3 lakh crore (roughly 67 per cent).
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No comfort
Amendments brought to the Insolvency and Bankruptcy Code (IBC) last year have given homebuyers equal creditor status as banks with the promise to safeguard their interests: This means that homebuyers, too, have a say on how insolvency proceedings against the firms go ahead and who acquires the firms.
“They now have the assurance that even when a developer files for bankruptcy, the state authorities will intervene to safeguard buyers’ interests,” Anarock chairman Anuj Puri told ThePrint.
“Besides monitoring cash inflows of the concerned entity, the government will seek to ensure the project’s completion, either by the developer himself or by outsourcing the job to a third party,” Puri said.
However, homebuyers say these legal changes have brought little relief and the process is time-consuming.
For thousands of dejected homebuyers — from senior citizens to young professionals — many weekends as well as working days are now spent at rallies and protest meetings to seek a refund of their investment or possession of the homes they were promised.
Saini, the Amrapali buyer, told ThePrint that she had booked a 585-square-foot apartment in an Amrapali project at Noida Extension — a property with a Rs 11.4 lakh price tag for which she had to pay Rs 10 lakh up front, 50 per cent of the sum funded by a loan taken from the State Bank of India. Possession was due in 2013, but, six years on, Saini is clueless when her wait will end.
A receptionist at a Noida-based export company, Saini said her firm “deducts a particular amount of money from my salary” when she takes leave for court hearings and rallies against the realty major.
The pay cut represents a steep price for Saini, whose salary provides for her mother, two children and sister. But it’s a price she can’t help paying.
“It was my husband’s provident fund amount — the only money he left us — which I invested [to buy a home] in 2010,” Saini told ThePrint.
Starting August 2017, Amrapali homebuyers, braving the hot and humid weather, sat outside the builder’s corporate office in Noida for 50 straight days. The builder didn’t pay heed and the demonstration was called off in the absence of a solution.
Buyers in projects of realty firm Unitech have held three dharnas outside the Prime Minister’s Office and organised 48 protest meetings at the project sites over the past few years.
They have also met other senior ministers and civil servants with the hope of getting some relief.
When the Bharatiya Janata Party [BJP] took the reins of the Uttar Pradesh government in 2017, it promised to look into the matter, the homebuyers said, but their wait continues.
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The legal angle
The aggrieved buyers have also taken the legal route, taking the matter to the Supreme Court and the National Consumer Disputes Redressal Commission (NCDRC), the quasi-judicial forum for consumer issues.
Several affected homebuyers have created registered associations to file cases before the NCDRC. However, legal battles are long-drawn and expensive with no guarantee of relief.
The NCDRC has in many instances pronounced judgments in favour of buyers and imposed heavy penalties on builders for delays and failure to give possession.
Just last Thursday, the panel directed that buyers could seek a refund of their investments if a project is delayed beyond a year.
However, the ruling has brought little hope to homebuyers because previous assurances of refunds have often not yielded results.
Ajay Vaish, an employee with the central government, booked an apartment in Unitech’s Anthea Floors in 2011, for which he, his wife — who took voluntary retirement — and their son paid Rs 33 lakh.
With the project delayed, Vaish approached the builder, who offered to refund the principal amount. “We accepted the offer. However, Unitech paid only two instalments and never bothered to pay the rest, leaving us broke,” he added.
“On paper, this [the NCDRC decision] seems to be a positive move but we have no hope of getting the money back,” said K.K. Kaushal, an investor in an Amrapali project. “For the past eight-nine years, we have been assured by several agencies and authorities of refunds but nothing has materialised.”
“There is no hope of getting the entire money back… in the best-case scenario, homebuyers have only been given back part payments,” added Kaushal.
Homebuyers unhappy with banks
While the bulk of the anger targets real estate companies, homebuyers are not exactly pleased with banks that cleared loans for projects not approved by government authorities.
“I got a loan from a private bank despite the builder not getting the required clearances… I don’t understand how the bank gave me the loan… The project I invested in is stuck and I have also defaulted on my EMIs,” said Sanjeev Sood, an entrepreneur.
Sood has invested in a Unitech property — Unitech Golf and Country Club — for an apartment worth Rs 1.4 crore, of which 90 per cent was paid-up.
Last month, the Unitech homebuyers association also sent a letter to the Attorney General of India, faulting banks as well as state governments for the predicament, accusing the latter of inaction and lenders of not doing their due diligence.
However, a senior official at a larger private sector bank told ThePrint that it would be wrong to place the onus on lenders. “The customers sought loans and these have been approved based on their repayment capacity,” the official said.
The Unitech homebuyers association has also approached Prime Minister Narendra Modi and finance minister Arun Jaitley, but are yet to secure relief.
Will NBCC be able to help buyers?
Meanwhile, the proposed takeover of debt-ridden Jaypee Infratech by National Buildings Construction Corporation (NBCC), the government-owned Navratna enterprise, has given a ray of hope to dejected buyers awaiting over 25,000 homes from the firm.
The NBCC also seeks to take over a few projects of Amrapali, with a view to complete them through buyer investments, which it reportedly wants to control via an escrow account. The Amrapali group alone is yet to hand over possession to more than 40,000 buyers.
Though many firms are yet to deliver flats, Jaypee and Amrapali have emerged as the biggest defaulters, with a total of over 65,000 hapless buyers between them. Unitech has around 16,000.
“Assuming that the NBCC adopts just 50 per cent of stalled projects, the resultant construction activity would not only unfetter supply but also create considerable employment, most notably for the EWS and LIG segments — who are also the chief consumers of affordable housing,” said Puri.
Also, if an entity like NBCC undertakes the completion of stalled projects, banks will have fewer reservations about funding the construction as a government entity is involved, he added.
The NBCC has proposed to invest Rs 200 crore equity capital in the projects, and the completion of flats by July 2023.
The takeover of Jaypee by NBCC is aimed at settling the firm’s dues of Rs 23,723 crore to creditors. For its offer to be considered, it has vowed to transfer 950 acres of Jaypee land worth Rs 5,000 crore as well as the Yamuna Expressway, the private firm’s sole cash-generating asset, to banks.
The NBCC, however, does not want to inherit the financial and tax burden of Jaypee.
The civil engineering firm has sought tax concessions of Rs 40,000 crore as part of the takeover plan under the IBC. Sources said the NBCC may not have any major difficulty in finishing the projects as the additional cost for the Jaypee and Amrapali projects is estimated to be less than Rs 15,000 crore.
Consumer rights expert Bejon Misra said it was incumbent on the government to play a more proactive role in ensuring that homebuyers’ interests are protected.
“The government, until now, has been lying low and has not taken any active measure. it must do so and create a mechanism by which the stalled projects can be rescued and the unfinished homes completed and handed over to their owners,” he added. “This is of utmost importance.”