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Unfair Trade Practice by Gurgaon Builder – Says MRTPC Petition

MRTPC notice to Gurgaon builder
Tribune News Service

New Delhi, August 24
Picture this. You enter into an agreement with a private developer to buy a two-room flat for Rs 10 lakh in an apartment complex. You begin paying the installments. Even as the construction work is on, the builder makes certain structural modifications to add one room. Pay for the third room now or your allotment stands cancelled, you are told. Should you feel cheated?

The Monopolies and Restrictive Trade Practices Commission (MRTPC) is inquiring into a similar complaint filed against DLF Universal. What engages the attention of the Commission is: Can a builder cancel the allotment of space on the ground of refusal by the buyer to pay for excess area? Does that amount to an unfair trade practice ? The Commission is learnt to have issued a notice to DLF Universal and sought a reply. The matter will be heard next month.

Akhilesh Singh (name changed) enters into an agreement to buy a certain commercial space in DLF City Centre in Gurgaon, Haryana. He begins paying the instalments. He is then told the saleable area of the building has been increased and an additional amount will have to be remitted as per the new payment plan immediately. Thirty days time is given.

After the lapse of a few months (in the interim both parties send and receive communication), DLF Universal dispatches a letter demanding payment of the extra amount at a higher rate of (penal) interest and also intimidating that on payment default, the allotment shall be cancelled.

The complaint is the agreement is biased. It allows the builder to increase the area, compelling the allottee to give up his claim. The buyer has no option but to either pay more or lose his allotment. The Commission is examining in particular the relevant clauses in the agreement that are allegedly against public policy.

One of the ‘controversial’ clauses reads : “[If the buyer’s written consent or objections to the changes are not received within 30 days] the intending allottee shall be deemed to have given his/her full and unconditional consent to all such alterations / modifications and for payments, if any, to be paid in consequence thereof.”

Another of the clauses states the builder reserves the right to correct, modify, amend or change all the annexures attached to this agreement and also annexures which are indicated to be tentative at any time prior to conveyancing of the said premises, as deemed necessary by the intending seller at its sole discretion.”

The Commission is studying if the agreement can be manipulated according to the whims and fancies of the builder. Also if the clauses in the agreement are a ploy to cheat the intending buyers. Furthermore, it is investigating the charge against DLF Universal that it is making huge profits at the cost of the allottees, who are being compelled to give up their claim, by making use of their money that is received at a low rate of interest and selling it to a third party at a higher rate.

Another Cheating Builder Caught in the Police Net

CON BUILDER CHEAT CRORES IN NAME OF BUILDING 26 FLOOR COMMERCIAL COMPLEX
Gurgaon based builder Ashok Mahendroo had allegedly cheated customers in name
of providing commercial flats at Andheri, Mumbai

Vishwas Kumar

It was like building castle in air! A Gurgaon based builder,Ashok Mahendroo and his assosciates collected around 30 crores from 40 customers for providing space in 26 floor business centre to be constructed in Mumbai. Among those who paid money for flats were several residents of Delhi, NRIs and socialite like Uma Gajapati Raju. In the last two years, however, not a single storied building had been constructed. Moreover the accused persons have shut their office at Gurgaon and vanished.
Shockingly investigation had revealed that the builder Mahendroo’s company “OZO Media Estate Ltd” had submitted building plans to Mumbai Municipal Corportaion for only two floors in Oct 2006. However since April 06, the builders have been selling flats in 16 to 21 floors! “The fact that the builders had permission for only two floors but he had sold flats for 25 floors show their intention to cheat,” alleges FIR registered at Gurgaon police station.
However despite more than dozens criminal cases registered against Ashok Mahendroo, Gurgaon police have been unable to arrest him. Sources say Mahendroo is using his political clouts—he claim to be close to CM Bhupinder Singh Hooda–to evade his arrest.
Cases against Mahendroo was filed on the intervention of Punjab and Haryana High Court which had also appointed Satinder Kumar Gupta, an upright IPS official to investigate the case. The accused had been booked under sections 420, 460, 468, 34, 467, 409, 471, 120-B of Indian Penal Code (IPC). Beside Mahendroo other accused in the case are: M/s OZO Media Limited, M/s Champak Textiles Private Limited, Vinit Handa, Vikas Sethi, Anand Mahendroo, Asim Mahendroo, Atul Mahendroo, Ram Lal, Saket Tiwari, Rajiv Gupta, R B Beri, A K Beri, Anil Verma, ravi Gupta, Jagdish Chawla and Shivangi Mahendroo.

HOW THE SCAM TOOK PLACE

In Jan 2006, Ashok Mahendroo floated company in name of
OZO Private Limited claiming they had colloborated with M/s Champak Textile Private Limited which owns a plot of 2128 square meters at Andheri West to develop a 25 floors commercial towers. The flats were sold at different rates from Rs 15 to 40 lakhs. The money was to be paid in installments and the building was supposed to be constructed in two years time. Customers regularly paid their installments after booking the commercial flats.

However in the beginning of 2007 few of customers suspected of foul play and started making enquiry from Mumbai corporation. To their shocking disbelief they found that the builders till Oct 2006 had only applited to corporation to construct two floors but they collected money for selling floors on 16 to 21 floors!. Alarmed over the finding, the customers filed a criminal case against the builders. Soon other customers also came to know about the fraud and several cases of similar nature was filed against the builders in Delhi and Gurgaon police station. The customers also filed a writ petition in Haryana and Pujab High Court demanding thorough investigation of the cae. The investigation was handed to SP Gupta, the then DCP, Gurgaon. His investigation revealed the builder had sole intention to cheat customers. It was revealed that the company Champak Textiles which had ownership of land was actually owned by Anand Mahendroo and in a bid to cheat he had formed a company in name of “OZO Media” and showed it to be collaborating with Champak to construct commercial flats.

WHY MAHENDROO WANT TO SELL OFF LAND

On 7 March 08, Guroan police filed an application in the court requesting to attach the Champak’s land fearing effort by builders to sell off and once again cheat other innocent customers. The court is yet to pass order on cop’s application.
According to sources, the builder’s intention changed when last year Maharashtra govt repealed urban ceiling act, which now allow them to freely construct multi-storied buildings. Due to change in the act, there was boom in prices of the land. The builder began to think that the price which had fetched from selling flats were very less in comparison to return it would get from selling off the lands. And this was the reason why the builder went on their words of constructing commercial flats and started efforts to sell of the land.

BOX:

Names of few complainant who had bought flats and had registered cases against builders:
1) Balvinder Singh, (resident of Singapore)
2) Mrs Neelam Anand and RM Anand, New Delhi
3) Rohit Anand (resident of Jakarta, Indonesia)
4) Mrs Sunita Behl, New Delhi
5) Manmohan Kapur and Mrs Neena Kapur, (resident at Dubai, UAE)
6) Ms Kavita Gautam, New Delhi
7) Mrs Purnima Kohil, (resident of Russia)
Mrs Uma Gajapati Raju and Romesh Sharma, Gurgaon
9) Satya Pal Anand, New Delhi
10) Dr Satish Bhatia & Mrs Saroj Bhatia, Gurgaon
11) Anil Kohli, New Delhi
12) Alka Arora, New Delhi

Application for Job – Unsolicited Request

Hi [_________],

I happened to notice your email ID on a chain mail sent to me.

A bit of background:

I am a qualified attorney with about 5 years of work-ex. After a long break of 6-7 years, I now look at getting back to meaningful work – to pick up from where I left.

Going to your website, I noticed you have an office in [_____________]. Given that I am staying in [_____________________], it appealed to me to approach your firm first for employment as an attorney.

Attaching my resume.

Please let me know if you could grant me a personal interview to explore possibilites of working with [____________] now or in the near future.

Best regards,

[______________________]

Oakwood Estate, DLF Phase -2, Gurgaon – Specifications

Hi, I stay in a 3 bed rented accomodation in Oakwood Estate, DLF Phase -2 @ a rental of Rs. 25500 per month everything included, except for electricity charges since the last 2 years.

The room specifications are (all in feet):

Master Bed:  15 X 12.4

Second & Third Bed: 9.33 X 11.5 each

Kitchen: 11.5 X 6.5

Drawing Room: 20 X 5.8 + 23 X 12

Passage: 3.25 X 20.8

Please post the specifications of your house on the Internet. A measuring tape costs just Rs. 35.

Builders & Brokers in Haryana Beware – RTI Act / HUDA Act

I have had my share of bad luck in buying property – not once but twice. First was an investment in Central Park -2, Sector 48, Gurgoan that has turned out to be the cause of my undoing. Bought that property when the prices were sky rocketing with with the hope that this will be my home some day. But this was not to be as the project has been hopelessely been delayed with no relief in sight. I will disucss this a bit later.

The second investment was in Landmark the Mall, Sector 66, Gurgaon which is a case of bad investing gone worse. The builder and broker first fooled me into investing and now there is no construction in the property at all. The builder has political lineage – he is related to someone belonging to the ruling party. I sold my house to pay installments here. After several mails to the builder, I have stopped writing because there is never from the folks in control. Some junior level guy will write back giving false assurances which obviously never turn out to be true. Nothing more to say, the rest is just they way it always is.

Doing what I do best – I am a lawyer – got down to researching my rights. First, was the Right to Information Act. If the intent of the act is to be believed this can be something as a hope if there is no other way to get information about your investment or the builder, etc. The act provides that each Government department will set up an information cell to provide answers regarding matters that are within its preview. So, for example, HUDA is the authority that gives licenses to a builder (IT park, commercial or residential) and so you will need to file an application with HUDA to get information about anything relating to the project. The application is to be made on a prescribed format available over the Internet along with a demad draft / postal order of Rs. 50. It is advisable to get a blank postal order from your local post office and fill up the name of the relevant person / department when you go to file the application after making due enquiries. The HUDA office is to revert to you within 7-10 days giving the details of costs (towards photocopying, etc.) that you will need to deposit. Thereafter, the information should reach you within 30 days.

Then is the Haryana Development and Regulation Act, 1971 which provides that a builder is to file an application giving detailed information to HUDA for permission to build a commercial or residential project. HUDA, after due enquiry, will issue a license that will be valid for 2 years and thereafter renewed for a further period of one year on payment of prescribed fees. No builder or broker may issue any advertisement or accept any money if prior to grant of license by HUDA. If any person breaches any provision of the act they can be sent to jail. This, however, is easier said than done.

Now as an investor the dilemma is what do you do. There are options but these seem stupidly titled in favour of the builder.

1. You could file a consumer compliant – this will be decided in about 1-2 years and thereafter another 1-2 years will pass if a party appeals. During the pendency of the case before the consumer forum, the builder will suspend all its obligations towards you and this will pressurise you into settling – not a happy state of affairs. If you persist and win, there is very litte that the forum will award and you would have spent more time and energy than you would benefit. NOT WORTH IT.

2. File a criminal complaint – but there is a danger here that the police may not agree to file a complaint or that the builder will get aggressive which is not in your interest, unless you have the clout in the police or the power corridors to take this through. NOT WORTH IT.

3. Sue the borker if the has misguided you or induced you to make booking before a license was granted to the builder. Here, you can both sue the broker before the consumer forum (as his customer) and file a criminal complaint against him for breaching the HDR Act.

THE ADVANTAGE WITH THIS IS THAT THE BROKER IS THE SMALL FISH IN THE BIG POND AND WILL HAVE TO TAKE MEASURES TO ENSURE THAT YOUR INTEREST IS PROTECTED AS HE WOULD HAVE EARNED COMMISSION. IF THE BROKER IS PROSECUTED HE WILL MAKE AMENDS AND SO WILL OTHERS FROM THIS COMMUNITY IF THEY WANT TO STAY OUT OF TROUBLE.

Explain To Me

While driving back home on the National Highway – 8, we realised how smooth the drive was. There was no damage to the road despite the rains. It suddenly dawned on us that the roads were in a good shape because they were under the management of the toll authority that had built them with their own cash and the only way they could earn money was to have fully functional roads. How does one acheive full functionality - by using world class material and worksmanship of repute.

Move over to the slip and sector roads, they are so badly damaged and get in this state twice every year, you can’t help but wonder that there is something horribily wrong. I think the contractors and public authorities are hand in glove. They use substandard materials and keep fat margians to themselves. Some of it is sent to the public authorities. The road conveniently gets damaged again and the cycle restarts so that the  new guy who comes can earn some cash.  Does this explain why using BAD MATERIAL helps?

What can we do. Well, we can begin by demanding explaination for this anamoly. Use RTI, use your contacts, use the parliament but get information in the open and then face these cheats with the data.

Lodge police complaints of cheating in case you find some wrong doing.

Ask for building of roads to be given to private partners.

Action Around Sector 48, Sohna Road, Gurgaon Picking Up

Bestech recently announced the launch of Park View Spa – Sector 47. Unitech has announced Villas & Commercial Space in Sector 48. The R-Mall, ILD Commercial are almost ready for possession bang opposite the Central Park 2 (CP2). The plot next to Uniworld Garden also opposite CP2 will be the place where Uniworld Garden – 2 has been launched.

My guess is that CP2, Sector 48 should will have great sorrundings  – if you discount the sewrage treatement plant and the sector road cutting 1/4th of the project from the rest. The bigger question now is when will Bakshi invite investors for taking over possession. I personally cannot handle any more delay as debt is beginning to pile up and hurt.

Stuff Picked From Gurgaon Scoop – Central Park 2

It seems the central park 2 project is not moving ahead after all. In Sept 2004, the company, M/s Sweta Estates Pvt Ltd did a prelaunch for Central Park 2 in Sohna road.

At that time, they neither had licenses, nor owned the complete land. It was expected that the compnay would launch the project soon and construction would start. Seveal things have changed since then : All those who booked the apartment at a rate of Rs. 2050 p.sq.ft are stuck. Since Sept 2004, neither has the project been launch, nor has the construction started. Several times, the company told property agents that the project would be launched soon, first at Rs. 2500 pr sf st, then at Rs. 2700 per sq ft.

The property agents in turn, increased the price of resale. Present prices are floating at around Rs. 2600+ but all the transactions are happening only becuase of the property agents, there are no genuine buyers for the project The construction of the sample flat has been on for the last 6 months. If a company cant construct one flat in six months, how can it make 1600 flats in 3 years ? When the project was launched, it had 1600 flats and the price decided was according to that.

Now, while the website still mentions 1600 flats as on 22nd Feb 2006, the company has quietly modified its desgns to make 1700 flats in the same plot without reduing prices for previous bookings !! The much touted launch has now been AGAIN postponed till April 2006, and by that time, might get postponed again.

For your records, between prelaunch and launch, Central Park 2 has made a record in Gurgaon being the most delayed project ever.

The major builders who built Central Park 1 – Gesco – has backed out of the project becuase of unethical dealing by Bakhsi’s in the project.

Now, the Bakshi group has no builder who can make Centrla Park 2 for them so it is very likely that the project will either never finish, or become a good example of poor constrction quality. Beware ! Investors have had a field day making money in good projects, this one might let them down.

Central Park -2, Moving On, Moving Along

It seems that the rates have begun to improve. I am told that the last transaction happened at Rs. 2700 per sq. ft. This is an improvement from 3 months ago, when the rates had fallen to Rs. 2250 per sq. ft. With the builder reducing the transfer charges to Rs. 50 per sq. ft. from the earlier Rs. 200, things have begun to look better.

Factors that have affected the project:

Improved market sentiment

Better home loan terms

Project getting closer to completion

Reduced transfer charges

Investors having money and picking up invetory to cash in – in fact Bakshi himself has sold inventory in CP-1 and bought in CP-2

The things that still remain tricky / suspect

Builder may not deliver even till December 2009

The sewage treatement plant may dampen things

The road cutting off CP-2, Phase-1 from rest of the project

Bakshi’s reputation till now

Chances of additional demand on account of escalation

Overall perception

High cost of flats due to big size and luxury tag – the down turn is not attracting a lot of buyers even at the current price levels