it’s by far the worst-ever real estate crisis that’s struck home-buyers in the National Capital Region (NCR). More than five lakh apartments in Noida, Gurugram and their surrounding pockets are either incomplete or have not been handed over, long after their delivery deadlines got over, government and industry estimates have revealed.
It’s a completely hopeless situation for all those who have invested their hardearned money for dream homes, with realtor after realtor going bankrupt after failing to keep commitments. In the latest case, the National Company Law Tribunal (NCLT) on Thursday ordered insolvency proceedings against 3C Company’s subsidiary firm Granite Gate Properties.
Around 3,500 buyers are yet to get possession of their flats in its Lotus Panache and Lotus Boulevard projects launched in Noida in 2010. Other big real estate firms in Noida which are facing insolvency proceedings for not delivering projects on time are Jaypee Group, Amrapali and Unitech. Not just that, several builders have been arrested for failing to hand over flats to buyers as promised. The prominent ones among them are the Amrapali and Unitech directors.
In Gurugram, buyers of projects along Dwarka Expressway are protesting the nonremoval of Kherki Daula toll plaza. There are over 175 residential projects along the link. Around 1.30 lakh units have been sold on the promise that the toll plaza would be removed by 2017-18. Most buyers are awaiting possession of their flats.
“We are now left with no option but to sit on a hunger strike,” said DXPWA member Kanchan Jain. Advocate Aditya Parolia, partner at PSP Legal, which is representing 3C Company buyers, said, “It is sad that a firm which collected over Rs 2,000 crore from home-buyers across projects has not been able to refund Rs 10 crore. This clearly shows that the builder never intended to complete projects and hand them over as it had no money left.”
NCLT expert Venkat Rao also warned that with a number of real estate companies going into insolvency proceedings, a lot is at stake for home-buyers. Abhishek Kumar, president of NEFOWA (Noida Extension Flat Owners Association) said that home-buyers have been in crisis since 2008. “Despite laws such as the Real Estate (Regulation and Development) Act, 2016, no authority is willing to take any action.”
There are three possible solutions to the crisis, according to Uttar Pradesh RERA member Balwinder Kumar. “One is to bring co-developers into the project, then open an escrow account for payment from buyers to avoid the misuse of funds.”
Second, he said, is to reregister already-registered projects, let RERA take over them and award them to another developer for completion. The third is to ask buyers to wait rather than seek a refund if the builder’s finances are in place and he has promised a particular date, Kumar added.
The IBC gives home-buyers the status of financial creditors, but thousands of them are losing their life savings. As many as two lakh units in NCR launched in 2013 or before are running behind schedule, a report by Anarock Property Consultant said in September.
Another recent report by Gurugram-based real estate research firm PropEquity said nearly 1.80 lakh units valued at Rs 1.22 lakh crore are facing an uncertain future in the NCR. Over 70 per cent of the underconstruction projects are fully sold out but not delivered even after completion deadlines got over, the report said.
While the Insolvency and Bankruptcy Code (Amendment) (IBC) 2018 gave homebuyers a say, it is a process which is little understood by many, Rao said. “Also, unlike RERA and consumer forums, NCLT is more for corporate issues that makes it a costlier forum for homebuyers,” he said.
Jaypee Group accounts for as many as 25,000 undelivered flats for which money has already been taken from homebuyers. The realty firm owes nearly Rs 9,800 crore to various banks.
Amrapali Group has over 45,000 incomplete units. Staterun NBCC, which has been appointed by the Supreme Court to develop the group’s stalled projects, has informed the top court that it would be able to complete 11,400 apartments within 6-12 months of starting work.
Amrapali CMD Anil Kumar Sharma has even admitted to diverting Rs 2,990 crore to other companies to expand his businesses. Real estate major Unitech failed to deliver flats to 16,300 buyers who collectively invested Rs 7,816 crore in the project.