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.

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,

[______________________]

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.

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.

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.

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.

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.

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

But the swimming pool when you can use it is great – it is covered and heated. Luxury at its best. The food is nothing to write home about, but who goes to such places for eating.

The best are the hammocks tied to the pine trees. Tranquil and lovely.

The price is a bit steep but you could try booking in advance for a great trip. We drove to Naldera – I would say a long drive from Delhi. If you have children drive down to Chandigarh or Kalka and then catch the toy train to Shimla. From there hire a local cab to Naldera. Fun ka fun and chutti ki chutti.

They have some old books and magazines that you can borrow. The kids love this as they can go down and choose – makes them feel like adults. The landscaping is great.

The place is well maintained and the toilets are clean – the biggest factor for me when judging a place.