In Progress ….
The Grimes & Crimes of Builder Navin Raheja, Chairman NAREDCO & Raheja Developers
urf CMD Raheja Developers,
Jo pechle 8 Saal main hazaron ghar launch karke,
Bana paye aajtak 9 ghar hi poore nahi,
Chale yeh builder PM Modi ko patane aur samjhane,
In the hands of people like Mr Raheja, the noble vision of “Housing for All by 2022” has been reduced to a joke.
We request Hon’ble Ministers like Shri Venkaiah Naidu, Shri Prakash Javadekar, and other important govt officials like Ms Sumitra Mahajan to stay away from functions such as the 12th National Convention of NAREDCO (National Real Estate Development Council) Chaired by Mr Navin Raheja, or the 7th Summit of ASSOCHAM & CREDAI held on Sept 30, 2014 that was also attended by builders such as Mr Navin Raheja; lest the fair name of Prime Minister Shri Narendra Modi be tainted.
And for NAREDCO Chairman Mr Navin Raheja, a
Here is a photo of Mr Navin Raheja & Mr Sunil Dahiya at the 2013 ASSOCHAM function.
Watch the video here https://www.youtube.com/watch?v=6-74S5sSctY
And what if it turns out that all the bigness that Mr Navin Raheja claims to be is just a web of lies? And what if the path to his position today is paved with crimes & illegalities? In a prescient photo in The Hindu newspaper about the NAREDCO convention, though the caption to the photo carried Mr Raheja’s name, his image was chopped out from the photo with Mr Naidu & Mr Javedekar – as if the editor realized, just in time, the error of showing respectable govt people on same stage with Mr Raheja.
This is the story of the grimes & crimes of Mr Navin Raheja, the employees of Raheja Developers, and their brothers-in-crime who enabled for all of it to come to this – 43 of the buyers of Raheja Atharva have sued them at the NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION in July & August 2014, and October started with one customer in Raheja Navodaya suing them. The litany of charges is startling, and there are more to come.
Even the Facebook Likes of 101,200 on their www.facebook.com/rahejadevelopers page seem to be impressive at first, but scratch below the surface and the ugly reality pops out.
In the week of October 03, 2014 a quick analysis of the Raheja Developers Likes-data shows that they got 693 likes on a single day, while the other days of the week there were zero likes. Similarly, in the week of October 20, 2014 on a single day they got 635 likes, and zero like on other days !! Also, if you look at the most engaged people, it turns out that they are in Istanbul, Turkey and their age group is 18-24 years !! These people are too young to be buying property, and it is suspicious that there is so much interest in Istanbul for Raheja properties, and of course the huge spike in likes on a single day – it all reminds of the fake & promoted likes of Rao Dharampal of the Congress Party.
Puffing your facebook “likes” to show that you are more “liked” than you actually are is not harmless fun, but a systematic way to deceive people. That is why in the October 15, 2014 elections for Haryana Assembly the Election Commission made it their mission to monitor these fake likes …
There are even false claims in paid full page ads of Raheja Developers that try to show the builder to be much bigger than it is. On January 15, 2013 the front page jacket advertisements of Indian Express claimed that Raheja Developers had delivered over 290 million square feet, effectively make them the 2nd largest builder in India …. But, it was a BIG LIE !! And after they were caught and exposed in our article “Raheja of NAREDCO – The Man who would be King,” https://app.box.com/s/8ao640agr9bsc3gzu35u they have started claiming 29.5 million instead of 290 million ! yet, the truth is that they have not “delivered” even 29 million sq.ft let alone 290 million, and the 29.5 million sq.ft revised number that they are trying to communicate in their corporate video http://vimeo.com/101993585 is again highly misleading.
Here is the advertisement by Raheja on Jan 13, 2014 that even stooped lower and tried to exploit the patriotic fervour of the Armed Forces for Raheja’s own monetary gains.
These false and bombastic claims are a recurring pattern, and Mr
Raheja’s have even made false claims of 13 ongoing projects in Gurgaon, giving the impression that it is one of the largest builders in Gurgaon with 13 projects spanning 176.81 acres. If you were to look at the website or the Raheja Impressions newsletter, you would be impressed – not realizing that in reality there are only 5 licences for 60.12 acres in Gurgaon. Talk about puffing oneself, as seen in the screen capture of the website.
Even in the full-page ads they took out in Hindustan Times newspaper at the beginning of the auspicious Navratri (September 2014)Rahejas gave the false impression that there were 6 different projects (plus the Atlantis). To make it sound authentic that they really had 6 DIFFERENT projects, they made it clear that Atharva & Shilas were TWO DIFFERENT projects by writing that Atharva is the “first delivered project on Dwarka Expressway” while for Shilas “Occupancy Certificate Applied” – but, are they really TWO DIFFERENT projects? And are the projects shown in the advertisement below really SIX DIFFERENT projects?
In the Raheja Impressions newsletter (of May 2014) of the builder, they do even better and try to give the impression that Atharva & Shilas are THREE DIFFERENT projects, i.e. Atharva, Shilas Low Rise, and Shilas High Rise !!
And to make it sound authentic Rahejas give the areas of these projects on their website as Atharva – 15.61 acres, Shilas – 15.64 acres, and Shilas IF (Independent Floors) – 15.64 acres. If you were to add all these up there should be 46.89 acres for these projects, but in reality there is only 1 licence (Number 257 of 2007) for 15.64 acres on which all these “THREE” projects are built !! And this is validated by the statement that Rahejas are now trying to get the Atharva buyers to surreptitiously sign (which needless to say has not gone down well with the Atharva buyers)
… It has been confirmed and clarified that Raheja Atharva includes Raheja Shilas & Shilas IF (Independent Floors) and combination of these phases is known as Raheja Atharva …
Let us look at the Raheja Navratri advertisement a little carefully ….
If Atharva and Shilas are the same licence (project), as Raheja’s are saying in the new Agreement that they are compelling the buyers to sign, then how come Atharva is the “First Delivered project on Dwarka Expressway,” while “Occupancy Certificate Applied” for Shilas project? The simple answer is that it is a falsehood, and Raheja’s have been lying all along. And they have been lying that Vedaanta, Vedas, and Vedaanta Floors are different projects, and they have been lying that Navodaya & Sampada are different.
So, on the Raheja’s website to mislead buyers Navodaya is supposed to be 17 acres http://www.raheja.com/raheja-navodaya.asp and Sampada 15.45 acres http://www.raheja.com/raheja-sampada.asp. (Just in case they change the numbers on their website, you check the archives of these webpages at https://archive.today/nPyA3 and https://archive.today/hgRsx.) But the total area for the two “projects” Navodaya & Sampada is not 17 + 15.45 = 32.45 acres, because there exists only one licence number 216 of 2007 which is for 17 acres only, and on which are built BOTH Navodaya & Sampada. When Navodaya was sold the buyers were not told that there would be another bunch of buildings that would be added and called Sampada, which would require even the previously planned buildings of Navodaya to be shifted. And after shoving this unilateral “forced” change the buyers throats, the Rahejas had the cheek to tell the buyers, “only the location will be changed and you will be relocating to a new tower. We would like to assure you that the final layout would be something that you would be happy to be a part of, and we can together be rewarded to be a part of a much better project.” If this is not abuse of the buyers, then what is? There are court cases of how the original Navodaya allottees were cheated and their allotments were unilaterally & forcibly changed, without their slightest consent, to fit in this “NEW” project called Sampada.
Similarly, when Atharva was sold buyers were falsely told that there would be only 440 apartments, but now with the Shilas low & high rise there will be a total of 600 apartments. A
Thus, Rahejas had only 3 licences in reality, but claimed to have 8 “projects” in Gurgaon with the sole intention to mislead the buyers. The deeper you go, the more rot you find in how Raheja Developers have taken people for a ride. In all cases the initial buyers who trusted Rahejas were shafted, and eventually so will be the later buyers.
Coming back to the false advertisement given on the auspicious occasion of Navratri in a little more detail, you will see that even “First delivered project on Dwarka Expressway” is a LIE. First, is the problem with “first” and then there is a problem with “delivered.” Tackling “delivered” project first, needs looking at the legal process. All that Raheja’s have received is a “Part Occupation Certificate” on May 20, 2014 as shown below for some of the towers of Atharva, and for none of the towers of Shilas High Rise or Shilas Low Rise which are part of the same Atharva “project” (Licence 257 of 2007). So, even the full occupation certification has not yet been received, yet they claimed to have “delivered” the Atharva project. Seems that the Rahejas do not understand the difference between “offer possession” to owners of a part of the project and to “deliver” the project. It is like someone fills up and submits the form to take the IIT (Indian Institute of Technology) entrance exam, and on basis of that starts calling himself or herself an IITian.
And one of the conditions of the part occupation certificate (for only 4 towers) was that within 3 months the builder had to “complete the basement, community sites and shopping centers.”
As the Occupation Certificate was issued on May 20, 2014 the 3 months were over on August 20, 2014 … and as of Oct 20, 2014 these conditions have not yet been met … and yet the Raheja ads falsely claim, on the religious, auspicious, and pavitra occasion of Navratri that they have “delivered” the project. They have not even offered possession to majority of the people, let alone “delivered” the project. They have not even gotten the completion certificate, and yet they are claiming they have “delivered” the project. They have not yet done a single Conveyance Deed to “deliver” the property to the buyer, and yet they claim to have “delivered” the project.
Coming now to the “first” in the “First delivered project on Dwarka Expressway” claim of Rahejas. They did get the “First licence” along Dwarka Expressway for Vedaanta (Sector 108, and for which they yet do not have even a “part occupation certificate”), but the FIRST
As Tulip Infra started giving possession of their Dwarka Expressway project 2 years ago, Raheja Developers started making excuses for not completing and handing over possession in the classic, but untenable, claim “Availability of basic infrastructure comprising of roads, sewage, water and electricity awaited from HUDA (Haryana Urban Development Authority).” In communications ad nauseam to the buyers, they have been playing the victim and making this devious excuse for the agonizing delay in completion of their projects. This is a false excuse and to pin the blame on HUDA is mischevious. All that has been said in the licence for Atharva, for example, is “6. That you will have no objection to the regularization of the boundaries of the licenced land through give equal and take equal with the land that HUDA is finally able to acquire in the interest of planned development and integration of services. The decision of the competent authority shall be binding in this regard.”
- First, there is no basis for Rahejas to say that HUDA did not deliver because HUDA never made any commitment to deliver anything in any time frame. From what document or assurance do Rahejas derive the assertion that HUDA has not delivered something. Did HUDA make any commitment to Rahejas as a part of granting the licence? Has HUDA given anything in writing that they will deliver something by August 2011 (when Raheja was supposed to start delivering his projects), and if NOT, then where does Raheja derive this fiction of some commitment by HUDA which HUDA has not fulfilled.
- Secondly, the FLAT BUYERS AGREEMENT was between Raheja Developers and the buyers only. It is NOT a tripartite agreement wherein HUDA is the third signatory. So, in the failure of Rahejas to deliver to the buyer according to the Flat Buyers Agreement, how does the failure of HUDA to provide something (that was not committed in the first place) become a justification for not performing according to the agreement between itself and the buyer? HUDA is not even a remote party to the binding agreement between Rahejas and the buyer. How can the performance of a Third unrelated party be invoked to justify the failure of the First Party to perform according to the agreement between two (First & Second) parties?
- Thirdly. If Tulip Infra could deliver their project Petals, then why not Rahejas?
Falsehoods after falsehoods, mischievous lies after lies, obfuscation and stonewalling by Rahejas, and you wonder why you have not been hearing or reading much about it over these years?
The answer is intimidation and gagging by all means, as all is fair in love & war.
Rahejas are gagging customers with clauses in their agreements that penalize them for speaking up. https://www.box.com/s/h1qbunfiya5inga2rh98 that:have also been reprimanding their own buyers & customers for posting online anything unfavourable about the builder – leaving many with a taste of veiled threat. It does have a chilling effect on the buyers who have already paid tens of lakhs to Rahejas, and are suseptible to this soft blackmailing. For the newer buyers Rahejas have even formalized this GAG clause into the “Agreement to Sell” itself, saying without any finesse, and probably illegally (Raheja Revanta Builder-Buyers Agreement)
“The Purchaser agrees, accepts and undertakes not to make or publish either by words spoken or intended to be read or by signs or visible representations via internet or any form of media any imputation/defamatory material concerning the Seller/Management/Projects, which harms the reputation and credibility of the Seller/project/Owners Association.” Rahejas then tries to justify the transgression in right to free speech (which the United States has now explicitly stated is not illegal for the same reasons http://tinyurl.com/b4g49mp) in terms of profits as “The Purchaser understands and acknowledges that beyond and apart from him there are other Purchasers who have invested their hard earned money in this project and any defamation of this complex/project by web posting or creating Google groups/e-groups can undermine valuations or reputation of their investment in the project.” The price of speaking up against Navin Raheja is very very heavy for his newer buyers. As the Raheja’s Buyers Agreement states, “Upon commission of any such act by the Purchaser the Seller (i.e Rahejas) shall without prejudice to any other remedies and rights available including termination, cancellation of agreement or allotment, claim liquidated damages which the Seller might have suffered due to such irresponsible acts of SELF DEFAMATION breach committed by the Purchaser.”
While effectively blackmailing Raheja property buyers with threat to their property worth hundreds of lakhs, they tried blackmailing brokers/analysts like Qubrex (i.e. us) by withholding money running into tens of lakhs. They also have made disparaging and defamatory comments against us as seen in comments on the Forbes website http://forbesindia.com/blog/business-strategy/its-builders-vs-buyers-in-the-indian-real-estate-industry/#comment-58434 by Dimple Bhardwaj, DGM Corporate Communications of Raheja Developers. For reporters like an Indian Express reporter, who also happened to have submitted a negative story on Raheja to the editors, the result was him getting fired.
It is effectively WAR against people who don’t toe the line. And it is LOVE for others who toe the Raheja line.
Dimple Bhardwaj, spokesperson of Raheja Developers, attacked us (WAR) further in the Forbes articleto say that “t
http://www.caravanmagazine.in/reportage/road-gurgaon “When I met Raheja last summer at his bungalow in Sainik Farm—an affluent unauthorised residential colony in South Delhi — he said there were 38 cabinet and chief-minister level guests at the reception, including the Congress minister Ambika Soni, and Tejinder Khanna, then the lieutenant governor of Delhi (whom Raheja counted as “chief-minister rank”).” The list of guests was helpfully published in the builder’s official newsletter “Raheja Impressions.” It included “almost all of who is who of India graced the occasion.” “Personalities included Ambika Soni, Sushil Kumar Shinde, Bhupinder Singh Hooda, Lt Gov Tejinder Khanna, Kumari Shelja, Harish Rawat, Salman Khurshid, Subodh Kant Sahay, Saifuddin Soz, Shahnawaz Hussain, Lalu Prasad Yadav, Rajiv Pratap Rudi, Vinod Sharma (?), Mufti Mohammed Sayyed, Amar Singh, Ram Jethmalani …” many of whom can be seen in the video dream weddings that was broadcast on CNBC https://www.youtube.com/watch?vMr Navin Raheja demonstrated that he is rich and mighty during the wedding of his son Nayan Raheja. Navin Raheja “flaunted his success at his son’s wedding,” as Caravan reported.
It reminded us of the rice-eating ceremony of the grand-daughter of Saharasri Subrata Roy. Describing the incident of March 20, 2013 Mail Today (dated March 23, 2013) wrote that Roshna “beamed like a star, as guests, comprising political Who’s who, leading sportsmen and Bollywood celebrities, queued up to bless the newest arrival to the Sahara family. The creme-de-la-creme in attendance included an ex-President, several Governors and Chief Ministers, the Lok Sabha Speaker, many Central Minister, over 175 Members of Parliament and over 120 senior bureaucrats. The guest list comprised Farooq Abdullah, Mulayam & Akhilesh Singh Yadav, Lalu Prasad, Arun Jaitley, Shri Jaya & Abhishek Bachchan, Sridevi & Boney Kapoor, Anil Kapoor, Anil Kapoor, Hema Malini, Sachin Tendulkar, MS Dhoni, Virat Kohli, Ravindra Jadeja, Suresh Raina, Michael Clarke, Sardar Singh and Harbir Singh, amongst others.”
Very rich people are indeed different from people like us.
CHAPTER 2: TALE OF CRIMES BEHIND THE MASK OF RAHEJA SUCCESS
The Rahejas seem to be well on the path to success, with Mr Navin Raheja recently announcing that they are planning an IPO (Initial Public Offering) in 2015. With that IPO they will be tap into the thousands of crores of the public’s money, and super-success seems imminent. Soon, the Rahejas from the North will be on par with the Rahejas from the South, and won’t be looked at in askance anymore. Soon, Raheja Developers Ltd may be the talk of the nation, like DLF Ltd was in 2007 when in India’s largest IPO till then they mopped Rs 9,137 crores from the public.
But then DLF’s story turned sour, and SEBI found in DLF “the case of active and
deliberate suppression of any material information so as to mislead and defraud” the investors, thus barring it from the markets for a period of 3 years. http://www.sebi.gov.in/cms/sebi_data/attachdocs/1413191997529.pdf It turns out that DLF had hidden information of an FIR against one of its “subsidiaries” from its RHP / Prospectus for the IPO.
We are sure that Mr Navin Raheja and Raheja Developers would take lessons from the DLF saga and not suppress any information from SEBI (Securities and Exchange Board of India). It is interesting to speculate as to what such a document for Raheja Developers IPO might contain. Would it contain information of all the FIR’s that were filed against it over the years? Or the numerous cases that were filed against it in the criminal, civil, and consumer courts? Would it have details about Income Tax raids where “unaccounted cash” was unearthed? http://www.builderscoop.org/tax-evasion-worth-rs-80cr-unea-387415259.html
Would the Raheja Developers come clean on the Collective Investment Schemes they launched in Sohna? Would they disclose more about the assured buyback and assured return schemes that are designed to skirt the strict regulation of the financial markets regarding raising money from the public?
The illegal Collective Investment Scheme (CIS) in Sohna is something that would be very interesting to know more about, and CISs have been in the news since last year due to the implosion of Saradha Group. http://www.ndtv.com/article/india/chit-fund-scam-how-saradha-duped-its-investors-358210
The Raheja Collective Investment Scheme can be seen clearly in the email that was sent for the Sohna plots by Raheja Developers shown below asked for “investment of Rs 28,500 per sq.yd … Entire amount of BSP (Basic Sales Price) upfront. Lockin of 18 months. After 18 months, 30% absolute return buy-back scheme in which 30% return on Rs 28,500 would be given. However, if the investor would like to continue and stay invested, the plot would be allotted …” It is the fact that no plot would be allotted to the “investor” for 18 months that makes this scheme very interesting and very dangerous; and highly illegal. And only a full financial audit of Rahejas can reveal the money mopped up in this, and other similar, illegal schemes.
The Agreement with the Raheja Developers in this scheme pointed out that the money was being taken from the buyer and no plot was being allotted in return. It was money with no strings that was being raised from the public, and it was money with no limit. The investors were offered nothing in return, and had no idea of as to how many other investors had participated in the scheme. The business plan was that Raheja Developers would collect money from the public (Rs 10 crores, 100 crores, or 1000 crores …) and use this to acquire “land parcels at different locations in Gurgaon and Sohna in particular which may come up in future as residential township / Industrial Township, etc, which may be covered under the Gurgaon master plan. Subsequent to the acquisition of the land parcels, the Developer (Rahejas) shall approach the relevant authorities for obtaining sanctions/ approvals towards the development of the proposed township, etc.” This is pure and simple a Collective Investment Scheme http://www.sebi.gov.in/faq/cis_faq.html, and schemes that have a corpus of Rs 100 crore or more are to be regulated by SEBI.
In fact it is easy to show that this scheme was designed to be for collecting from the public much more than Rs 100 crores. By their own acknowledgement Rahejas have said that Rs 1000 crores would be needed to develop the Sohna project. And of you do a quick calculation of the worth of 108 acres, i.e. 108 X 4840 square yards, or 5,22,720 square yards being sold at Rs 28,500 per sq.yd and leaving 50% of land for development activity – the potential money mopped up turns out to be Rs 745 crores. Add to this the fact that the land can be expanded to 250 acres, and also the fact that as no allotments are being made so there is no restriction of size of land parcel on collection of money against it …. the money that may have been collected is much in excess of Rs 100 crores.
And who knows how many schemes like this Raheja Developers have floated. And all the money that has been collected is backed by nothing except a Rs 100 stamp paper (hopefully) agreement. That is all the investor has with him. This is dangerous and that is why the govt regulates it, and that is why the govt is considering regulating through SEBI even Collective Investment Schemes below Rs 100 crores. The further danger in such schemes is illustrated by the fact that over 160 acres of land that Raheja supposedly acquired in Sohna has gone into dispute, and Raheja Developers had to take out a public notice about the disputed land on August 01, 2014 in the Indian Express. What happens to the investor money?
In addition to the CIS scheme like Saradha, Raheja’s ways of raising money are in some ways similar in spirit to the PACL schemes. In August 2014 SEBI clamped down on PACL’s schemes and also the CBI has registered cases against them.
The essence of the PACL (also called Pearls Agrotech Corporation Ltd) scheme was described well June 2011. A detailed expose on PACL was done by Economic Times in June 2011 http://articles.economictimes.indiatimes.com/2011-06-28/news/29712743_1_pyramid-scheme-land-bank-deposits Sruthijith KK wrote in the ET that “the final word has not yet been said about what kind of an animal PACL actually is.” “Customers who have given money to the company ostensibly to book a plot of land they can’t see or choose.” “More than the prospect of owning land, customers are more likely to be lured by the “expected value of land” the company indicates for investment terms ranging from 5 to 10 years.” “This works out more than a 12.5% annual return on investment.” “This is a big menace. These companies are saying they are collecting deposits for land or cattle or what not, but they are essentially a finance operation,” Gwalior Collector Akash Tripathi said. If a customer puts down Rs 50,000 for a 500 square yard plot, he or she can expect to get back Rs 1,01,365 in six years, or Rs 1.85 lakh in 10 years. PACL director S Bhattacharya said about 80% of customers opt to take the money at the end of the plan term instead of the plot of land they supposedly paid for. And here is the key takeaway:
“From a customer’s point of view, he or she can entirely ignore the plot of land that is supposed to back their investment, walk into a PACL branch, deposit money and expect to get a very attractive return at the end of the plan term. It is not hard to see how this plan quickly gets morphed into a “double your money in six years” scheme. That is exactly what happens,” concluded Sruthijith KK.
The fig leaf of “land as collatoral” is just a method to hoodwink the stricter financial regulation of raising money or finance …
Rahejas operation in Sohna was essentially a finance operation. It did not matter where the land was, whether it was in Sohna or Gurgaon, or anywhere else, as long as the Agreement gave the investor the option to exit with 30% returns after 18 months. The Raheja Agreement (which you can download here And Raheja’s scheme is more attractive as they are giving 20% annual return (30% for 1.5 years) versus the PACL return which was a paltry 12.5% !says clearly in item 3 of the image from the Agreement below that the investor can take his money and be done; or as a second preference in item 4 if “the investor desires and opt to re-invest the said amount…”
And over the past months Raheja’s have done even better. Non-existent land has been replaced with apartments that have not yet been built, or plots that have not yet been developed. In essence these are just finance operations, where the returns have been increased to lure the investor, and un-built apartments and un-developed plots have replaced agricultural land. In May 2014 they were offering 66% returns in 3 years (22% per annnum) holding as collatoral Revaanta apartments that are just thin air right now. Or in September 2014 they wanted to offer 72% returns (24% returns per annum) on Aranya “plots” in Sohna. Maybe by December 2014 they will have even better offers … SEBI was worried that PACL’s assured returns of 12.5% per annum were too excessive and could not be done by conducting legitimate business, and we wonder what they would think of the returns being promised by Rahejas !! Jokes aside, we would recommend staying away from these financial products from Rahejas as the Raheja ship is sinking after hitting its titanic iceberg. A detailed analysis is given here
Illegal Collective Investment Schemes, dangerous assured buyback schemes, too good to be true assured return schemes, mis-selling, false ads, false claims … if this was not enough, Raheja Developers have violated many housing laws and acts of Haryana. So far, the Congress and Bhupinder Singh Hooda government had been turning a blind eye to the misdeeds of this and other builders.
Rahejas have violated with impunity (so far) the provisions, esp LC IV A of the Haryana Apartment Ownership Act, and a detailed exposition was given in an article we wrote in February 2013 called
It is a very slippery slope from using the legal process, to misusing the legal process, and then ultimately resorting to illegal means when the use/misuse of legal process does not work. What the Rahejas could not get done legally has been achieved illegally.
And who better to explain the slide from using the legal process to misusing the legal process than Cyberlaw Expert & Supreme Court Advocate Mr Pavan Duggal. In a discussion on “Face The Nation” show on IBN, about 21 minutes and 13 seconds into the show http://youtu.be/EHCnxIPWAu8?t=21m13s, on the controversy of Arindam Chaudhuri’s IIPM getting 73 urls critical of IIPM blocked by court order, Mr Duggals says, “What all is the limited ambit of blocking. You cannot take the broom of blocking and start brushing all across. Somewhere down the line the governments of the world and the relevant stake holders have to realize that blocking is a failed experiment from the word go. Today it is so ineffective …” “So ineffective, that the more you block, the more it spreads, as we have established,” interjects the host of the show. Journalist Shivam Vij then asks the million dollar question, “Pavan, don’t you think it is important for courts also to ask the aggrieved party to defend themselves before passing a blocking order?” And Mr Duggal provides the priceless answer. “That’s a great point that you are making. Because that’s a problem in the law. The law does not give you an opportunity of being heard before your website is going to be blocked. Once your website is going to be blocked, it will not even give you an effective remedy of how to get your website de-blocked. It can take months – that’s a problem with the law,” helpfully explains Mr Duggal. Click on the image below to see the exact section where Mr Duggal explains this well.
Mr Duggal, acting on behalf of Navin Raheja and Raheja Developers, served us 18 legal notices (all of which can be seen here https://app.box.com/s/kulgmwza7jxsre4krpx5) on April 18, 2014 that leveraged “this problem” with the IT law, knowing fully well that they were denying us any effective remedy against their onslaught. And, as Mr Duggal & Mr Raheja expected, almost 6 months after our host Scribd took down the article “Raheja of NAREDCO – The Man Who Would Be King,” it continues to be blocked. Before the article was unfairly taken down, the article had accumulated over 8000 views and downloads, which was remarkable for a niche article on a small-time builder operating predominantly in Gurgaon. It was being referred to in hundreds of links from across the web, all of which are broken now – and many of these links have been removed from the Google and other search engines. Six months (and counting) is a long time for the article to be in a coma on Scribd.
And it has been six months now, in October 2014, since Mr Duggal filed a case against us in the Delhi High Court (around April 2014), and yet it continues to be a hanging sword over us – still “Under Scrutiny” most probably because they have not made a sincere effort to get the honorable courts to accept it.
The strategy of Navin Raheja & Raheja Developers is to SLAPP us into oblivion or submission. As Wikipedia defines it, http://en.wikipedia.org/wiki/Strategic_lawsuit_against_public_participation “A Strategic Lawsuit Against Public Participation (SLAPP) is a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. The typical SLAPP plaintiff does not normally expect to win the lawsuit. The plaintiff’s goals are accomplished if the defendant succumbs to fear, intimidation, mounting legal costs or simple exhaustion and abandons the criticism. A SLAPP may also intimidate others from participating in the debate.”
Scribd, Evernote (which was hosting an article about a fire in 2009 at Raheja Atlantis, and again a gas pipe explosion in the same complex in 2013), and others were intimidated by the Paval Duggal notices and removed our articles/videos. Mr Duggal’s notices also demanded immediate action within 36 hours or else. Scribd & Evernote complied with Mr Duggal’s demands, and as Mr Duggal knew and expected, Scribd & Evernote denied us any relief. And what about the action we demanded from Mr Duggal within 36 hours after we sent him our reply – Nothing! It is almost 6 months now (over 4100 hours), and Mr Duggal has not even bothered to respond to our reply. You must look at our reply here https://app.box.com/s/4r7oc7qjguuf8j6bkp3l
Mr. Duggal was very successful in silencing us at some platforms by cleverly leveraging the “problem with IT law” against us, but his notices to Youtube, Twitter, Facebook, etc went unheeded. And justly so. And it is after this that the efforts to silence us on behalf of Rahejas descended into criminality. Cyber-impersonation, hacking, threats via emails & phone, cyber-defamation, false claims of copyright, etc etc which when seen in light of the Indian Penal Code could send shivers down the spine of even the most resolute.
Robbing us of our money was one thing, but trying to silence us by cybercrimes and outright criminality is unpardonable; and very provocative. Due to false claims of copyright, our youtube account at http://www.youtube.com/qbtpl has been terminated resulting in loss of over 350 videos. These videos were filmed & collected over the last 9 years, and were a crucial element of our business, for which the economic loss is immeasurable. Our hard work over the last 9 years, and position achieved in Search Engine Optimization is gone. Hundreds of links across the web broke as our embedded videos were removed. The damage to our reputation runs into many crores, and we have essentially been wiped out from the the world wide web. If you were to visit our youtube channel page, this is what you would find instead of the 350+ videos – a notice stating:
“Youtube account qbtpl has been terminated because we received multiple third party notifications of copyright infringement from claimants including Zee News, Fox Star Studios.”
And crossing the line from legal/misuse to illegal/criminal must have seemed very easy and natural to do. They just moved from making false defamation claims to making false copyright claims. The copyright claim for the youtube videos that led to the account’s termination was not by Zee News, and nor was it by Fox Star studios, as we now know for sure. It was by someone impersonating Zee News, and someone impersonating Fox Star Videos. Attempts were made to remove the article on Navin Raheja & Raheja Developers from the Federation of Apartment Owners Association (FAOA) website at (archived here https://archive.today/HStsD as the original FAOA website seems to be down http://www.faoaindia.org/news/navin-raheja-is-he-the-face-of-real-estate-in-india/) by someone pretending to be an employee of NAREDCO, and in addition to emails threatening phone calls were made to two officials of FAOA from fake numbers registered to a poor old lady in Jhansi. And many articles were removed from the IndianRealestateForum.com including at http://www.indianrealestateforum.com/real-estate-gurgaon/t-cbi-probe-demanded-against-raheja-builders-lucrative-project-despite-massive-delays-76507.html by someone impersonating Dr. Sanjay Sharma – that is someone impersonating me !! The cybercrimes and the IPC sections that are invoked by all these actions are eye-popping, and more details about these crimes & investigations will soon be shared publicly.
Currently it is sufficient to say that this criminal version of “reputation management” is called “disreputation management,” and in whitewashing the web instead of addressing WHAT the content is, it hits out at WHERE the content is. You can read a more detailed article here http://comments.gurgaonscoop.com/2014/05/15/is-your-money-safe-with-builders-indulging-in-criminal-disreputation-management/
CHAPTER 3: HOW EVIL IS STRANGLING INDIAN REAL ESTATE
If you would want to know why real estate in India is in a slump, and that of Gurgaon in a dump, all you need to know is that the builders have been busy killing the geese that could have kept on laying golden eggs. Instead of basking in customer delight, the builders are gloating at the customer plight. With one sided and abusive agreements, and Hooda & HUDA on their side, builders – big and small – set out to plunder the real estate market. And in the wake of this day light robbery are left long delayed, incomplete, and construction-not-yet-started project sites that dot the landscape like a blight. No wonder, Anil Tyagi in GFiles called it the Great Land Robbery in Haryana. http://gfilesindia.com/Contents/pdfMagazine/Feb2014/Default.html
The relationship of Raheja Developers with their past and current buyers is a microcosm of what is wrong with the real estate market, and why any new buyers walking into the parlour, and up the winding stairs, would be doing so at their own peril. It is highly unlikely that the buyers and investors who are currently stuck with builders like Navin Raheja would pour in more money and buy new properties, and even more unlikely that they would recommend to their friends and associates to invest any money into projects being offered by the builders. Their experiences have been harrowing, and in the sufferings of Raheja customers you can find almost every exploitative tool that the builders have been using against their hapless customers.
On May 20, 2014 Raheja Developers were issued a Part Occupation certificate for Towers A,B,C & D, comprising of 204 apartments. These 204 apartments are less than half of the 441 apartements that have been sold as Atharva, and are about one-third of the approx 600 apartments for which this licence 257 of 2007 has been given. Despite the misleading marketing by Raheja Developers, the Shilas High Rise and Shilas Independent Floors are part of the same licence that “Atharva” is.
The Rahejas then created a sort of Guinness Book of World Record for the fastest sprint from “offer of possession” to “delivered project” for 204 apartments, or 441 apartments, or 600 apartments, depending on how you look at it. Of course, it is all a big LIE. And it is important to understand how this lie arises and is sustained by the builders and the system, for it lies at the heart of the rot that has besieged Indian real estate.
- On May 20, 2014 the Part Occupation certificate was issued by the Town & Country Planning department.
- Within 6 days by May 26 the media was reporting the big news that Rahejas had “offered possession” to Atharva. http://content.magicbricks.com/industry-news/industry-buzz/raheja-offers-possession-of-raheja-atharva/69307.html (archived at https://archive.today/hJfm4).
- And within 15 days after that, by June 13, Rahejas advertisements in newspapers, also posted on the Raheja Developers facebook account, were claiming “First to Deliver.”!! https://www.facebook.com/RahejaDevelopers/photos/a.144369789461.137979.119816589461/10152452179749462/?type=1 (archived at https://archive.today/UjneS).
- Within weeks they were claiming “First delivered project on Dwarka Expressway,” and the advertisement that they took our during Navratri (Spetember 2014) has already been discussed.
The write-up in Magicbricks (controlled by Times of India Group), and also on the Raheja website described Atharva https://archive.today/R5UXI making it sound as if many facilities were already present and functioning on the project site. Magicbricks even described it as “ready to move in.” “Constructed by Shapoorjee Pallonjee, this would finally be amongst the first project which is now ready to move in,” says Magicbricks. In the ads Rahejas say “@Ready to move in homes in Gurgaon.” And on its own website Raheja describes facilities that don’t yet exist, as if they do. “With the necessary indulgences of a Private Club, a Swimming Pool, a Gymnasium, Tennis Courts, Spa, Steam Sauna, 24 hrs. power back-up, Modular Kitchen, Hi-tech security system, School and a Shopping Complex, Atharva is where your search for an exclusive luxury home ends. At Atharva, we make sure that most of your memories in life, are happy ones.”
- The Private club does not really exist yet.
- The swimming pool does not really exist yet.
- The Gymnasium does not really exist yet.
- The Tennis courts do not really exist yet.
- The Spa does not really exist yet.
- The Steam Sauna does not really exist yet.
- The Modular kitchen in most of the apartments has not yet been installed.
- The School does not really exist yet.
- The Shopping complex does not really exist yet.
By June of 2011, almost 3 years ago, Raheja Developers had taken almost 90% of the total cost of the apartment from the buyers. And yet 3 years later, neither is the project complete, and nor are any of the facilities that were promised ready. Even the legally mandated condition that was imposed by the Town & Country Planning department as a condition of giving the Part Occupation Certificate has not been fulfilled. Mr Anurag Rastogi, IAS, Director General, Town & Country Planning, sitting in Chandigarh had written on May 20, 2014 that “you (Raheja Developers) shall complete the basement, community sites and shopping within three months from the issuance of this occupation certificate.” Does Mr Rastogi have even a clue, or does he care, or does his department care, or does any one in the administration care, or does anyone in Haryana Govt care that what was to be finished in 90 days, is still incomplete 150 days later. And has Mr Rastogi ever thought that if he is issuing Part Occupation Certificates to one third of the project site, how will the buyers/allottees live here when construction is going on in over 66% of the project site. And has Mr Rastogi ever thought that if the project is only one-third complete how will the builder provide the community & shopping sites? This is problem number 1 – Complete collapse and capitulation of the Haryana state machinery. They are doling licences, permissions, and CLU’s without the least modicum of monitoring and accountability. It is not that the system does not have the framework, but that the people populating the system seem to have no spine.
And Mr Rastogi did not realize that the day he signed the “Part” Occupation Certificate for the Atharva project, he had hung a millstone around some of the “unlucky” buyers. For these buyers (204 out of 600 units), the maintenance charges started on May 20, 2014 the day Mr Rastogi signed the certificate. These buyers cannot move into the apartments, the facilities are not fully functional, community sites are not ready, and these “unlucky” 204 buyers also have to bear the full cost of the maintenance because the other 400 buyers are not there to share the costs. Rahejas have pegged the maintenance costs at Rs 4 psf per month unilaterally, which is quite high compared to the norms. Also, these 204 buyers have to start bearing the costs immediately (from May 20 onwards), whereas the other “lucky” 400 buyers will only start bearing the costs many months or years down the road.
The negative financial implications will be very painful to all the 600 buyers due to the delay in construction of the Atharva project by Rahejas. In addition to double burden of paying rent for current accomodation, and installments for the bank loans taken to pay Rahejas, the buyers lose on the exemption on the interest amount that the Income Tax (I-T) allowed. The I-T Act says if a house to be used by the buyer is not handed over the by the builder “within three years from the end of the financial year in which capital was borrowed”, the exemption on the interest amount will only be Rs 30,000 and not Rs 2 lakh, raised from Rs 1.5 lakh in the budget. http://articles.economictimes.indiatimes.com/2014-08-05/news/52470942_1_1-5-lakh-home-loan-exemption
If the tax burden due to Rahejas delaying the Atharva project (and all other projects as none of the projects launched in the last 7 years are on schedule) was not enough of a pain to impose on their buyers, Rahejas are now denying even the paltry Rs 7 psf per month penalty that they had promised to pay to the buyers for any delay in the project. For many buyers the Apartment Buyer Agreements were signed in the 3rd quarter of 2008 and the delay penalty for an average 2251 sq.ft apartment works out to be 7 Rs psf per month X 2251 sq.ft X 36 months = Rs 5,67,000 as of Oct 2014 . The delay penalty is approx Rs 5 lakhs per apartment and counting, and will keep on increasing till the time the apartment is complete and possession offered to the hapless buyer. But, many buyers will give up without a fight on the delay penalty because they feel helpless against a phalanx of lawyers that Rahejas have at their command ready to be deployed against the hapless buyers. This is problem Number 2.
Rahejas have been abusing the customers and stonewalling their queries for the last 4 years about whether, and how much (or formula of how it will calculate it), penalty will it pay to the buyers. Time and time, buyer after buyer, individually and in groups, the buyers in Raheja projects have been asking Rahejas to clarify as to how much penalty will be paid – but, Rahejas have never answered and have kept their answer secret & vague over the last 4 years. Raheja Customer Service has been hiding behind the vague Clause 4.2 of the ABA (Apartment Buyers Agreement), keeping the buyers in the dark about what the darn thing means, never ever clarifying what “and after providing necessary infrastructure in the sector by the Government, as aforesaid,” means. There have been hundreds of emails exchanged and all Raheja has done (for example in the email below for the Vedaanta project), just repeating again and again, and never clarifying, that
Further with reference to the penalty @Rs 7/-psf we would like to draw your attention towards the clause 4.2 of the agreement to sell duly signed by you it clearly states that “If the company fails to complete the construction of the said building/Apartment within thirty six (36) months from the date of execution of this Agreement and after providing necessary infrastructure in the sector by the Government, as aforesaid, then the company shall pay to the Allottee(s) compensation@Rs 7/- sq.ft of the super area per month for the entire period of such a delay.”
They have never given any clear answer of “Yes” or “No” about whether they will pay the delay penalty, or what “necessary infrastructure” means, but just keep on repeating this line about Clause 4.2 again and again. And to top it, they have kept the delay penalty secret and vague even as they are raising the FINAL DEMAND NOTE for the buyers in Atharva Towers A, B, C & D and offering them possession. Unbelievably, in the FINAL DEMAND NOTICE, where they are even asking money for the Stamp Duty for the Conveyance deed, they are still keeping the delay penalty “secret” and “vague” by the “Disclaimer: The price escalation and delay compensation amounts, if any in the terms of agreement to sell are not a part of the total demand.” This is just unbelievable.
The unbelievable extent to which Rahejas have gone in the last FOUR years to hide and keep secret the “delay compensation penalty,” and are going to spring a surprise on its customers one fine day, would be very funny except that this behaviour was exactly what the COMPAT (Competition Apellate Tribunal) nailed DLF for in the Belaire & Park Place case while upholding the Rs 630 crore penalty imposed by CCI (Competition Commission of India) on DLF. The crux of the relevant matter in the DLF Belaire & Park Place case was that DLF had told its buyers that it was building a 19 storey building. DLF eventually built a 29 storey building, and even as it was building it beyond 19 storeys it never told the customers of its true intentions – always providing vague answers, relying on a vague clause, and keeping the relevant information secret. Similarly, the Rahejas were to complete and deliver the Atharva (and Vendaanta & Navodaya) project by April 2011 but it never did, and even as it continues delaying the project it is still not telling people how long the project will be delayed, and more importantly as to if, and how much, penalty will by paid, or how will the calculations of the penalty be done. COMPAT had the following to say in this matter in para 101 http://compat.nic.in/upload/PDFs/mayordersApp2014/19_05_14.pd about DLF keep the answers vague and matter secret, and this applies directly to the behaviour of Rahejas.
Rahejas should be hauled in court on fire as to why their clause 4.2 (of ABA) on the delay compensation is so vague, and why did they keep its meaning vague & secretive for the last 4 years even when buyers have been constantly asking for a clarification of the same. They have shamelessly imposed unfair conditions on their buyers and abused the buyers, who had been trapped into abusive agreements with Rahejas after paying such heavy amounts of money. In June 2009, after buyers were getting worried and wanted to exit the Vedaanta project, Rahejas would not give the trapped customers an honorable exit, and wrote to the buyers that the installments paid to Rahejas were not a liquid asset and hence they could not be allowed to exit. In the same letter the Rahejas also accepted that they knew and acknowledged “that 80% of the buyers were looking forward to staying in their house in the time to come,” and yet when the time came in April 2011 to deliver, the Rahejas did not deliver. And as the delay continues year after year, with no end in sight, the buyers are being denied even the minimum delay penalty compensation amounting to Rs 5 lakhs for an average 3 BHK as calculated as of Oct 2014.
In addition to being “vague” and “secretive” about the delay compensation penalty, Rahejas have also been cagey about the “price escalation.” The modus operandi seems to be that in addition to denying the buyers the delay compensation penalty, the Rahejas want to extort from the buyers an “escalated price !!! This is problem number 3. The strange disclaimer in the FINAL DEMAND NOTE on offer of possession says, ” the price escalation and delay compensation amounts, if any in the terms of agreement to sell are not a part of the total demand.”
The price escalation clause that was signed into the Raheja Agreements in 2008 was that “the Prices of apartment(s) are free of escalation to the extent of increase in prices of inputs by 10% and the same would be absorbed by the company but in case the prices of input increases higher than 10%, the same shall be added to the cost of the apartment(s) as per the input price index of construction material on pro rata basis. The decision of the company in this behalf shall be final, conclusive and binding on the applicant/ intending allottee.” Six years after the signing of the agreement, and on the occasion of the “offer of possession” you would expect that Rahejas would know what the price escalation has been – but, they have not yet shared it with the buyers. Again, the clarifications that have been sought by buyers over the last years are being denied by Rahejas. They are being vague & secretive about the price escalation.
In fact, the price escalation should be invoked only if Rahejas had delivered the project in a timely fashion in 2011. The buyers had paid almost all the cost of the apartment to the Rahejas by 2011, and if Rahejas had also finished and handed over the apartment by 2011 then it would be fair to charge for the escalated cost of the raw materials in the contract period. But, if the delay is on Rahejas part in completing, and not on the buyers part in paying, then the penalty of the escalated cost should be on Rahejas and not the buyers. If the Rahejas have been sitting on the money taken from the buyers, and then 1, 2, or 3 years later buy the raw materials at an escalated cost, the onus should be on the Rahejas to bear the escalated cost. If the Rahejas had, with consent of the buyers and within the parameters of the Apartment Buyers Agreement, asked the buyers to delay the payments as the construction was not on schedule, and apprised and sought concurrence of the buyers that the delay would cause escalated prices, then the discussion here would be different. But, now and here, there can’t be a double whammy on the buyers as they first lost interest on the money for the delay period, and then they are paying a higher cost for the materials which were bought after a delay – all because of deliberate and mischievous actions by the Rahejas. The active action was taken by Rahejas in demanding the money by 2011, and for individuals who made minor delays in payments the Rahejas charged 18% interest.
The story of extortion from buyers trapped in abusive agreements gets even better. On May 20, 2014 the Part Occupation Certificate for Towers A, B, C & D of Atharva was signed by Mr Anurag Rastogi in Chandigarh, and three (3) days later the Rahejas had raised the demand note for approx 200 allottees for the installment due on the “receipt of Occupancy Certificate” according to the Apartment Buyers Agreement (ABA) duly signed by the buyers. In addition to the legal point that this was not “occupancy certificate” but a “part occupancy certificate,” and the “part” had not been described or anticipated in the ABA, there was something else very interesting in the demand note. The Stamp Duty & associated legal registration charges amounting to about Rs 4,00,000 per allottee had been demanded within 30 days of the Demand Note that was raised on May 23, 2014, and 18% interest would be charged on any delay in its payments by the Rahejas. See the demand note below where the Stamp Duty is demanded by June 23, 2014.
It is very important to point out the nature of this financial charge (Stamp Duty) to understand the gravity of the charges that are going to be framed against the Rahejas.
- First, the stamp duty charges are not a part of the installment payment plan of the Apartment Buyers Agreement. To demand it by coercion, and to further impose interest penalties on its non-payment is wrong. This money is not going to go towards the construction of the apartment, and so the builder cannot give an excuse that as this money has not been paid by the buyer he has to arrange finances from alternate means and, hence, the interest charges. But, Rahejas have have a track record of misdeeds, and have charged penal interest in their previous projects like Raheja Atlantis.
- Secondly, the stamp duty money is meant for the Treasury & Accounts Department of Haryana http://www.hrtreasuries.gov.in/ If it is not paid to the builder, there is nothing wrong as it was never meant for the builder. The builder has no legal right to collect this money on behalf of the T&A Dept, and then hold it in its own bank accounts for even 1 day. And it should be permissible for the buyer to arrange the stamp papers on his/her own once the builder intimates the buyer of when they can execute the Conveyance Deed. It only takes 1-3 days for the buyer to receive the stamp papers once he has deposited the money into the T&D Dept account. But, Rahejas have done this in previous projects like Raheja Atlantis, because they collected the money but then did not execute the Conveyance Deeds for many months.
- Thirdly, the stamp duty charges are due when the builder is ready to convey the property via a conveyance deed to the buyer, the possession of the property has been handed over, and the Deed of Declaration has been filed by the builder. Even though Rahejas were demanding the Stamp Duty money within 30 days, the chances of them filing the Deed of Declaration (based on the Part Occupation Certificate) and executing the Conveyance Deed in 30 days were ZERO.
Today, even 155 days after the Demand was raised by Rahejas for payment within 30 days, the Deed of Declaration has NOT been filed and NOR A SINGLE Conveyance Deed executed. “The Demand Note, as shown below, says “you (buyer) have to execute the Conveyance Deed with the Company for the said premises after building audit and filing of Declaration Deed with DGTCP Haryana, under Apartment ownership Act Haryana.” The wording in the Demand Note of May 2014 from the Rahejas is so vague that it could be even 2 to 3 years, or longer, before they execute the Conveyance Deed because they have not committed by when they will do the building area audit, and most importantly by when will the Rahejas file the Declaration Deed.
Further, the demand notes reads, “should there be a marginal difference in Super Area due to additional provision of Sewage Treatment Plant, water recycling systems etc. the same may become payable before execution of conveyance deed.” The Super Area will most probably not be calculated till the “final building area audit” is done, which may takes years; already 5 months are over since they offered possession and nothing has happened so far. And it should be disturbing for the buyers that even as Rahejas are “offering possession” the Sewage Treatment Plant may not already be in place, and the water recycling systems may not already be in place. And the worst is that the “etc.” (which is the height of vagueness and subterfuge because only God and Rahejas know what etc. entails) because until this “etc.” is completed the conveyance deed will not be done – and, until the conveyance deed is not done the builder will be sitting on the money collected for “Stamp Duty” (approx Rs 8,00,00,000 from 200 allottees) … If the money was not paid to Rahejas then the allottees would have to pay 18% interest on this amount, and if this was paid then the builder could use this money interest-free for many months (maybe years) instead of arranging their own funding at around 16% interest. This is how Rahejas are extorting crores of Rupees based on hot air of false assertions – and this is major problem number 4.
The 5th major problem is that Rahejas maybe selling thin air in the form of “Super Area”, which is much beyond the area they have legal sanctions to sell, and that too at exorbitant & extortionist prices. It is, at this moment, difficult to quantify the “excess” area that is being sold without any legal sanctions because Rahejas have not yet filed the Deed of Declaration for Atharva, and they have not yet done the final building area audit to finalize the change in super areas of apartments which are currently 1640, 1755, 2251, 2990, etc. sq.ft. Hence, this section is proactive in nature, and the guesstimates will be changed based on the documentation that becomes available, after Rahejas file the required documents at HUDA, DGTCP, etc., through RTIs (Right To Information applications), and data made available by the allottees. It is important to raise this issue now because it has implications on the unsanctioned areas sold for illegal & excessive profits, and also on the “excess” EDC’s (External Development Charges) being collected when the super area is changed by the builder just before executing the conveyance deed.
The basic process to calculate this “excess” area sold by the builder is explained in the article “Lets catch Super Chor = Your Super Area” by Federation of Apartment Owners Association at http://www.faoaindia.org/news/lets-catch-super-chor-your-super-area/ (archived at https://archive.today/CvRZe). The modus operandi is very simple, and pivots on the problem of defining “SUPER AREA,” because there is no legal sanctity to the word “super area,” no reference to the “super area” in any of the Haryana Housing Laws, Acts, or policies, and no standard way of builders to calculate it. So, each builder invents his/her own definition of “super area,” and no builder has ever put their “super area” calculations in public domain for scrutiny, for good reason. This needs to be tested in courts, especially when the Rahejas revise their “super areas” mentioned in the Apartment Buyers Agreements (ABA) after their “final building audit.” Architect Sudhir Vohra has also opined that “the term Super Area is NOT a term defined either in Planning laws, nor in Municipal Laws. It is, on the other hand, a term which has been developed and adopted by the Building / Developer / Real Estate industry.” http://www.faoaindia.org/news/wp-content/uploads/2013/03/Appendix-C1-SV-Super-Area.pdf (archived at https://app.box.com/s/mev5x3gw1hl8dgozmpqw)
This “super area” scam is worth thousands of crores in Gurgaon itself, and the rampant continuation of the “Super Area” scam exposes the broken administrative, government, and political system that is being shamelessly and maliciously exploited by Rahejas, and other Developers, without checks & balances. Exemplary penalty must be imposed on the administrative & government officials / departments that allow these real estate scams to flourish. Housing is a basic necessity, and licences are given to builders in furtherance of a social goal, not for the builders to gorge excessive profits from the vulnerable public. Builders are being given the privilege of helping the government address a social need via the license, not an opportunity for profiteering and plunder. That is why the Form LC IV A of the HARYANA DEVELOPMENT AND REGULATION OF URBAN AREAS ACT, 1975 http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm has two specific sections that set a limit to the price at which builders can sell.
- Firstly, Section 1 (o) (c) which deals with how the builder is supposed to determine the price at which he/she should sell the apartments in the open market, and
- Secondly, Section 1 (o) which sets an upper limit to the price at which the builder can sell his/her apartments in the open market.
- Section 1 (o) (c) states that “the owner while determining the sale price of the flats in open market shall compute the net profit @ 15% and the details of which including the cost of acquisition of land shall be supplied to the Director as and when demanded by him. The total project shall mean a defined phase or a compact area of the colony, as approved by the Director.”
- Section 1 (o) in Form LC IV A states “That the owner shall derive maximum net profit @ 15% of the total project cost of development of a colony after making provisions of statutory taxes. In case the net profit exceeds 15% after completion of the project period, surplus amount shall either be deposited within two months in the State Government Treasury by the owner or he shall spend this money on further amenities/facilities in his colony for the benefit of the residents therein.”
- In plain words the Section 1 (o) stipulates that the builder shall make no more than 15% profit, and Section 1 (o) (c) states the builder’s sales price in open market should be reported to the Authorities so that they can evaluate whether the profit being made by the builder is within the terms set in the law.
- In the 15.64 acre plot for Raheja Atharva, with an FAR of 1.75, the total build-able area (which includes the common areas) works out to be around 11,92,237 sq.ft.
- Add to this the sanction-able constructed area that is added based on the Field Report on which is based the Occupation Certificate, and let us say that the total sanctioned area that the builder can sell works out to be 12,50,000 sq.ft. (Note: This is just an estimate pending actual data.)
- Now add the total area that Rahejas have sold for the licence 257 (of 2007, for Sector 109) for the 600 apartments, i.e. 1640 sq.ft X number of apartments + 1755 sq.ft X number of apartments + 2251 sq.ft X number of apartments + 2290 sq.ft X number of apartments + that of penthouses + area sold in Shilas High Rise + Area Sold in Shilas Low rise. Anything in excess of 12,50,000 sq.ft (as estimated in point 2) has been sold illegally. The Conveyance Deeds may get done on these sold areas, but that is just because there is no department of the govt monitoring the sum total of the area that the builder has gotten registered compared to the area that he/she was sanctioned to sell. This is one of the major oversights of the departments in Haryana associated with Housing. Let us call this excess area SUPER AREA DELTA 1.
- Then, many builders according to a clause in the ABA that empowers them to change the super area by ±10%, increase the super area and charge extra for that increased area. Let us call this excess area SUPER AREA DELTA 2. Conveyance Deeds may get registered on these areas too, but that is because there is no govt department monitoring this in a major oversight.
The scams of the Super Area Delta 1 are huge, but the builder can hide behind the facetious explanation that he/she could just increase price per sq.ft of the apartment if the area is reduced, and the total money to be paid by the buyer would remain the same. From the legal point it is true that the builder can do that in the future, but retrospectively a clever lawyer can get them to cough out the money for all their misdeeds till date. But, even better is the Super Area Delta 2 scam for this has absolutely no justification in the way it is implemented.
The problem with the Super Area Delta 1 is that its lower limit is zero (i.e the sanctioned area is the same as the sold area), but it has no upper limit. It could be 10%, 20%, 30 % or more, and there is no checks and balances on it by any govt agency or department. So, if we assume that the total sanctioned area of Atharva is 12,50,000 sq.ft, Rahejas could sell 13,75,000 sqft, or 15,00,000 sqft, or 16,25,000 sq.ft or more, even though the actual construction area is only 12,50,000 sqft as that is mandated by law/license and can be checked during the building area audits. Now, because there is no standard definition of Super Area, the Rahejas could make up any number and no one could check it. Further, you couldn’t compare it with other builders because their definitions are different. And, all along Rahejas are increasing the price of the apartments as time goes on, so now there is absolutely no way to know how much money they are collecting for what. Are they making 15% profits, or 30% profits, or 300% profits, or more profits than an illegal drug dealer – there is no way to tell. This makes mockery, and blows to smithereens the spirit and intent of the Form LC IV A of the HARYANA DEVELOPMENT AND REGULATION OF URBAN AREAS ACT, 1975 http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm that sets a limit to the price & profits at which builders can sell. Why are govt administrators sitting in Chandigarh allowing these grave violations of Section 1 (o) (c) which deals with how the builder is supposed to determine the price at which he/she should sell the apartments in the open market, and Section 1 (o) which sets an upper limit to the price at which the builder can sell his/her apartments in the open market.
The problems with the Super Area Delta 2, which the builders add when offering possession are even graver. The project land, which the builders love to say is the most expensive ingredient in the project, does not change from the starting of the project to its ending in most cases. Also, as majority of the supporting services have been planned in the beginning itself, no more expensive additional “construction” has to be done towards the end of the project. In most cases it is just minor accounting of the areas that leads to increases in “super area.” So, what is the justification of charging this increased super area at the full cost at which the project was initially sold. If Rahejas increase the “super area” on average by 100 sq.ft each (around 5% increase for a 3 BHK), for 600 apartments, should they be able to charge Rs 8875 per sq.ft from buyers who have recently bought into the project – when no new land has been added, nor substantial construction has happened? What is this Rs 8875 X 100 = 8,87,500 being charged for?
The misuse of Super Area Delta 2 becomes even more serious if the EDC is also charged based on this additional “super area,” because the total EDC payable to the govt is based on per acre of plot area and has already been factored in at the beginning of the project. This leads us to important problem number 6 of handling of EDC (External Development Charges) that the builders collects from the buyer to pay to the govt. How much EDC and enhanced EDC charges have been collected from the buyers compared to what was needed to pay the govt, and has builder paid it in full to the govt as and when it was collected from the buyers – or is he/she sitting on the money and using it? Just like the builders collect the money for stamp duty and then sit on it, they do so for EDC. A nice expose on this was done by Aaj Tak on the BPTP Freedom Park Life case, where the builders overcharged and misused the money. https://www.youtube.com/watch?v=X2OGmyYJ7O0
The big question, which is one of the foundations of the evil that is strangling real estate in India today is why are the builders/developers so short of money, and rapacious. They have been paid in advance for the Raheja Athara project, in many cases almost 90% of the payment had been received by 2011, and yet 3 years later the project is incomplete and they are still trying to shake down people for more money. Where did all the money, almost 90% of the total price of the apartment, that the Rahejas had taken almost 3 years ago disappear – that is the most important, and problem number 7. A clue may be found in the legal notice that Mr Pavan Duggal sent to us on April 18, 2014, where he said that “my client (Navin Raheja & Raheja Developers) is also one of the biggest companies in India with executable and sanctioned projects over 60 million sq.ft in hand with projects spanning over 900 acres of land at various stages of deliberations.” Maybe this gives a clue of where the money collected from buyers like in Atharva, Vedaanta, Navodaya etc went, and even 3 years after they had paid almost 90% of the money to Rahejas, their projects are nowhere complete, and they are being extorted for more and more money.
How did the money for 60 million sq.ft in hand (which is equivalent to 600 acres of Group Housing or Commercial development, and much larger if it is plotted development), and 900 acres in various stages of deliberation come into the hands of a person who by his own accounts was a failed scooter salesman before getting into the field of real estate. In the scooter business he, vaguely claims, “was successful in bringing up the sales to over a few hundred percent up within a few months,” before closing down his scooter agency. http://vimeo.com/101993585 But, then Mr Raheja says something interesting – it was real estate that gave him “the taste of money.” And what a taste it is. And maybe herein lies the problem, because the taste may be of other people’s money (OPM).
It is reasonable to speculate that they money that is stuck in the disputed deal of 160 acres in Sohna, Village Raisina, falling in rectangle no. 148, 149, 150, 151, 166, 167, 168, 169, 178, 179, 180, 194, 195, 196, 197, 204, 205, 206 and Village Mohammadpur Gurjar falling in rectangle no. 13, 17, 19 belongs to buyers who have paid him in advance of their home in Gurgaon, but have not yet gotten their homes 7 years after they were launched. It is reasonable to believe that the Rs 6 crores paid to DDA for the Kathputli Colony Slum Rehabilitation Project, other miscellaneous expenses, and the tens of crores spent on making the “transit camp” 2 years ago on Anand Parbhat for 2000+ slum dweller families who never came, may have come from the money taken from home buyers / investors in other Raheja Projects. It is reasonable to speculate that the money for the defunct SEZ’s for which Rahejas were acquiring 5000+ acres of land must have come from unsuspecting buyers in other Raheja projects. It is reasonable to believe that the money that was need for acquiring and sanctions of 60 million sq.ft of projects may have come from buyers in other Raheja projects. It is reasonable to believe that the money needed for the 900 acres currently under deliberation may be coming from buyers in Raheja projects whose homes were supposed to have been completed 3 years ago. The notice Shri Pavan Duggal sent to us on April 18, 2014, shown below, listed the upcoming projects of Raheja Developers, and the question that kept on cropping in our head was where is he getting all the money from. It is reasonable to believe that money has been diverted from the projects that they were meant for, away from the purpose that the buyers paid Rahejas for, and that is the crux of problem number 7.
How big a problem is the diversion of money in Raheja Developers can only be established by a detailed financial audit. The money shortage seems to be severe, because Rahejas had offered to pass on a discount of Rs 1,29,433 over 2 years ago directly to one of their buyers in Raheja Atharva, namely Mr Malhotra. After tagging Mr Malhotra along for 2 years Rahejas have now refused to honor that – pettiness over a paltry lakh rupees shows how far the fall has been in the Rahejas fortune. Only a full fledged financial audit can protect the interests of the Raheja buyers and explain why the builder is so short of money that he is offering assured buybacks, assured returns, not completing his projects launched over 7 years ago, using illegal Collective Investment Schemes (CIS) to mop up money, trying to raise money on pretext of stamp duty …
Every Rs 1 lakh that is taken in excess from the buyer, for which his/her bank loan amount has to be increased, effectively condemns the buyer to keep paying an additional sum of Rs 1,000 to the bank every month for the next 20 years. Shouldn’t some action be taken against the builder when, as Chief Justice H.L. Dattu recently noted that, if a “common man who steals Rs 10 may be sent to jail for three months,” then why should the powerful not be punished as severely. http://www.telegraphindia.com/1140917/jsp/nation/story_18842506.jsp
It is difficult to pry open the finances of private builders and find out where the money has been diverted to, or how it disappeared. Luckily, as the Kathputli Colony Slum Rehabilitation project is a PPP (Public Private Partnership) between Raheja Developers and DDA (Delhi Development Authority), the recent ruling by Supreme Court may open the door for a CAG (Comptroller and Auditor General) audits in the case of Raheja. http://www.business-standard.com/article/companies/after-telecom-companies-ppp-players-could-face-cag-audit-114041701058_1.html Or SEBI could initiate an investigation into Raheja Developers to investigate the Collective Investment Schemes (CIS) of Rahejas that are obviously more than Rs 100 crore in scale. Or, the civil and criminal courts may take cognizance of the fact that projects launched 7 years ago with promise of delivering them in 3 years, are still incomplete 3 years after the promised date of delivery, and order a full audit of the Raheja books to protect the hundreds of crores of buyer’s money that is at at risk.
CHAPTER 4: MAHABHARAT – HOW BUYERS ARE FIGHTING BACK
Bhagavad Gita (Chapter IV-7)
“Yada Yada Hi Dharmasya, Glanirva Bhavathi Bharatha,
Abhyuthanam Adharmaysya, Tadatmanam Srijami Aham’.
“Whenever there is decay of righteousness O! Bharatha,
And a rise of unrighteousness, then I manifest Myself!”
It all started with 5 buyers in Raheja Atharva who decided that enough is enough. They engaged the services of Mr ML Lahoty, Senior Supreme Court Advocate of the CCI & DLF Rs 630 crore fame, to file a lawsuit in the National Consumer Disputes & Redressal Commission. By July & August another 38 buyers had joined them, and cases were filed by the 43 Raheja buyers. Some other Atharva buyers wanted to join the case against Rahejas, but decided to do so after they had taken possession of the apartments. A buyer in Raheja Navodaya also filed a case in early October, opening another front against the builder. Cases are soon expected to be filed by buyers in Raheja Vedaanta, and the battle has started in earnest.
In this battle Navin Raheja & Raheja Developers have many things on their side, except the facts of the matter.
No one wants to get into a fight with the builder who is building your home, and who will be in charge of the maintenance till the RWA (Resident Welfare Association) is in a position to take it over. As this is a very high ticket transaction, committing many buyers to paying almost half their salary towards this purchase, month after month for the next 20 years, a sort of Stockholm syndrome sets in where many people side with the builder who has dragged them through years of psychological & financial abuse.
And Rahejas exploited to hilt the weaknesses of the buyers. The knowledge that there exists a builder-babu-neta-police nexus dissuaded many from picking a fight with the Rahejas in the first place. The builder also knew that many of the buyers are lazy, and wanted others to do the tough work for them. Many buyers were content sitting on the sidelines hoping that the actions of others will reap them benefits. Some buyers were beholden to the builder being paid in money and kind; buyers were selectively paid a few thousand rupees every month to keep their mouths shut, and to refrain from inciting others. There was no question of them raising their voice against the builder. But, no more.
It did not happen that these 44 people woke up one fine day and decided to take on Rahejas. You can see their anguish over the last 6 years in the letters/emails that they have exchanged with the Rahejas. You can see their helplessness as they discuss their problems in the Yahoo & Google groups amongst each other. You can see their disappointments in not being able to meet Navin Raheja for resolution of problems even after months of pleadings, as junior employees of the company string them along on a hellish ride. You can see the frustrations in the buyers as promise after promise is broken by the Rahejas. You can see the bewilderment as the Raheja employees agree to certain things in the group meetings with buyers, only to turn around and reject the minutes of the meeting when they try to document the proceedings.
Buyers have now realized that you can’t get relief unless you ask for it – whether from the consumer courts, or civil courts, or criminal courts. You have to complain to the Police, EOW (Economic Offences Wing), SEBI, RBI, or to the CCI. Laaton ke bhoot, baaton see nahi maante. You have to make your cause known to others, rather than fighting your own lonely battle. An article in the Economic Times of Oct 22, 2014 captures the rising consumer activism well. http://www.gurgaonscoop.com/homebuyers-take-up-cudgels-aga-783242460.html
The Raheja Atharva buyers first setup Google/Yahoo groups, and then later a facebook page https://www.facebook.com/AtharvaFlatOwners. They participated in Change.org petition in Feb 2014 where many of them pleaded with Raheja Developers to first complete their residential project before taking on new and unmanageable projects, but the Rahejas paid no heed. http://www.change.org/p/najeeb-jung-to-stop-the-relocation-of-residents-of-kathputli-colony-till-raheja-builders-demonstrates-ability-to-finish-2800-flats-in-time-of-two-years There was an article in Forbes by Shabana Hussain in June 2014, where the buyers expressed their anguish in the comments. But, the Rahejas still did not listen. http://forbesindia.com/blog/business-strategy/its-builders-vs-buyers-in-the-indian-real-estate-industry/
The situation is no different in Atlantis, which the Raheja Developers tom tom as their “much awarded” flagship project. http://timesofindia.indiatimes.com/city/gurgaon/Raheja-Atlantis-residents-up-in-arms/articleshow/13003475.cms
The buyers made official complaints against Raheja Developers, like that of Lt Col PS Bhinder, per Raheja ke naak per jun nahi rengi. http://www.complaintsaboutbusiness.in/raheja-developers-ltd-delhi-violation-of-agreement-and-unlawful-practice-by-raheja-builders/
Some of the people who can give frank uninhibited and un-gagged opinions about Raheja Developers are the ones who have exited the Raheja projects. But, strangely, not only have Navin Raheja & Raheja Developers not sought the feedback of their ex-customers, they have prevented TV and news reporters from quoting their ex-customers in various stories on Rahejas lamely saying that all these exiters have an axe to grind with Rahejas !! They have managed to kill many stories on people like Mr SK Bangia, an ex-customer, but who has an active case filed against Rahejas in their Atharva project. Pray, any moron can understand, that people in an active relationship with Rahejas would be hesitant to speak against them – only people who have managed to escape from the clutches of Rahejas can speak up, like the ones below.
The wrongs committed by Raheja Developers, the individual employees of Raheja Developers, and the brokers who peddled their wares, must not go unpunished just because some of the buyers have been repaid, or may have exited the projects. Criminal acts stand on their own, and it is the duty of society to mete out just punishment for those crimes. In a recent case the Supreme Court held that just because a loan obtained by fraudulent means had been repaid, does not mean that the fraud itself can be condoned. The Honorable SC Justices Dipak Misra and Vikramjit Sen ruled that courts could not brush aside the modus operandi adopted by the bank official and the borrowers even when it was shown that the money had been paid back to the public financial institution. “The modus operandi as narrated in the chargesheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact… the gravity of offence creates a dent in the economic spine of the nation,” the justices wrote in the judgement. http://timesofindia.indiatimes.com/india/Repayment-of-loan-obtained-by-fraud-no-ground-to-quash-case-SC/articleshow/42935784.cms
Housing is a basic necessity and wrongs in this business have an immense societal impact. Rahejas cannot be left off the hook just because the buyers against whom offences were committed have exited the project.
The real journey of accountability from Raheja, at the pain of punishment, has started in the consumer court with the Raheja Atharva buyers. And with Mr Arunesh Madan of Navodaya suing them in the National Consumer court. If pursued alone the costs of lawyer & legal fees is about Rs 3-4 lakhs, and if a group of people can file the case together the costs can be split amongst them. The DLF buyers Associations that are fighting in Supreme Court the Park Place and Belaire charged their members Rs 20,000 and Rs 50,000 respectively. There are delays in the courts, but not as bad as they seem, and the situation for the aggrieved is getting better every day.
Even contractors of Raheja Developers are fighting back. The contractors in projects like Navodaya & Vedaanta have sued them in Delhi High Court, and cases have been filed by M/s Topline Build Tech Pvt. Ltd., H.S. Oberoi Buildtech Pvt. Ltd., and M/s S.P. Contracts (P) Ltd. in the Delhi High Court. In addition to the buyers who have approached the Consumer Courts, the contractors have approached the Civil Courts.
The buyers are also getting empowered by the winds of change that are sweeping the country. Where information was hard to get, RTI (Right to Information) has now made it possible to buyers to arm themselves with the facts of the builders actions and performance. The buyers in Rahejas have filed many RTI’s about when clearances & approvals were applied for and received, how much was paid for EDC (External Development Charges), etc. but the information is still in silos amongst various buyers and amongst the various projects. The govt’s notification to put all RTI information online on an open platform will make it possible for lot of information sharing amongst Raheja buyers. See below the news report from Economic Times of Oct 22, 2014.
The buyers also understand the confronting the builder for his/her misdeeds does not imperil the project, but makes it more likely that the project will be completed – whether the builder himself/herself is finished or not. In this express case the buyers are not seeking to oust Rahejas, but want any money that has been diverted by the company from their project, to be bought back and put into the project that money was collected for – that is the only way their project will be completed. After all, the buyers paid over 90-95% of the cost of their apartment over 3 years ago, and so why is the project still incomplete? When the builder can no longer deliver on the commitments made, it is better to get some outside help. The Maharashtra Housing Regulation & Development Act of 2012, which received the Presidential assent in Feb 2014, makes it explicit that in case of a delay the regulator can take the project away from the builder and hand it over to a competent authority who can complete it. http://www.thehindu.com/news/national/other-states/maharashtra-to-get-nations-first-real-estate-regulator/article5714379.ece
More tools are coming into the hands of the property buyers, and the way forward is to expand this battle with the builder onto many fronts. Seven years of pleadings, group meetings, letter writings, emails, and occasional articles in the media have not yielded any results, and now it is important to reach out to platforms that have coercive power to force Raheja Developers to complete the projects with all the promised amenities – or else. Police, EOW (Economic Offences Wiing), SEBI (Securities & Exchange Board of India), CAG (Comptroller and Auditor General), CCI (Competition Commission of India), and the new Chief Minister of Haryana Shri Manohar Lal, are some of the platforms under consideration, in addition to the consumer, civil, and criminal courts.
CHAPTER 5: MAHAnBHARAT – NAYA (NEW) BHARAT – NYAY (JUST) BHARAT
Please stay tuned…. more will be added to the story in a few hours …