Real estate barons betrayed people's trust, pulled down a growth sector
The Supertech Twin Towers in Noida that are supposed to be decimated next month is representative of the fall of the real estate czars in the recent past, especially in Delhi-NCR.
New Delhi, April 23 (IANS) The Supertech Twin Towers in Noida that are supposed to be decimated next month is representative of the fall of the real estate czars in the recent past, especially in Delhi-NCR.
The real estate landscape in the region suffered multiple blows as leading names of the trade were mired in scandals in the recent past and some of them even landed in jail.
This is a story of how real estate barons have played with the system, betrayed people's trust and created multiple crises.
Ashutosh Kashyap, Director, Advisory Services, Colliers India pre 2012, said the residential real estate dynamics of NCR were characterised by double-digit capital value appreciation coupled with robust absorption.
On one hand, prospective buyers were in a hurry to buy, apprehensive of price rise, while on the other hand, robust absorption motivated developers to go on a project launch spree.
In the absence of a proper regulatory regime (such as RERA, which came later), the financial ring-fencing of projects was not proper, which allowed developers to use booking money from one project to acquire more land, which was only based on the underlying premise that the robust absorption will sustain.
"The reason, most of these happened in Noida was because the city offered the option of staggered payment for allotted land. This allowed builders to accumulate and launch more projects in anticipation of robust demand. The residential real estate segment witnessed a prolonged muted period (till 2020-21), especially for the primary market. Most of the developers that built their pipelines on anticipated demand found it difficult to sustain this phase and what we see today is the result of the same," Kashyap added.
A number of real estate czars have faced enforcement action and some even bankruptcy. This has in turn caused immense despair and hardship for home buyers stuck with incomplete projects having poured in their life savings.
Members of the Chandra family of the Unitech Group are in jail. The Supreme Court on Wednesday asked the Enforcement Directorate (ED) to propose steps to bring back homebuyers money amounting to Rs 5,000 crore diverted to tax havens, which was revealed in a forensic audit.
At the beginning of the hearing, Additional Solicitor General N. Venkataraman, representing the Centre-appointed board of the Unitech, submitted before a bench headed by Justice D.Y. Chandrachud that over a thousand crore is outside the country and some money should come back, which could be utilised for the purpose of construction, and the court should ask ED, what progress has been made so far.
In April last year, the ED attached movable and immovable properties worth over Rs 300 crore in 10 separate cases of money laundering.
The agency had said that Unitech Group had diverted proceeds of crime, which are over Rs 300 crore to Carnoustie Group and in turn, the entities of Carnoustie Group purchased several immovable properties from these funds.
In December 2019, the top court had directed the Centre to take over the management of Unitech by appointing independent directors after a forensic audit revealed that home buyers' money worth over Rs 5,000 crore had been diverted to tax havens such as Cyprus. The diversion of money affected the completion of at least 74 projects and damaged the interests of nearly 12,000 homebuyers.
Also in jail is the Ambience Group owner Raj Singh Gehlot. An (ED) probe has revealed that the group has not made the obligatory contribution of Rs 462 crore for the construction of a Rs 1,272 crore luxury hotel project at Shahdara in the national capital, violating the loan conditions of a consortium of banks, led by the Jammu & Kashmir Bank.
The observation came to light during the recent hearing of the bail plea of Gehlot, who was arrested by the ED on charges of allegedly defrauding the banks which granted Rs. 810 crores loan.
Denying bail to the Ambience Group promoter, the court also noted that the loan amount disbursed by the bank was siphoned off through certain entities, which have been found to exist only on papers.
In a recent case, Rohtas Goel of Omaxe group allegedly had unaccounted cash transactions to the tune of Rs 3,000 crore, according to the Income Tax Department.
The Central Board of Direct Taxes (CBDT) said in a statement said that it raided the premises of a leading real estate group active in North India on March 14. The search action covered more than 45 premises in Delhi-NCR, Chandigarh, Ludhiana, Lucknow and Indore.
"A large amount of incriminating evidence including hard copy documents and digital data have been found & seized during the search. The seized evidence contains unaccounted 'on-money' cash receipt data of the group from various customers for more than 10 years," the statement said.
In March, real estate developer Supertech Ltd, which has several ongoing projects in Noida, Greater Noida, Gurugram, and Ghaziabad, was declared bankrupt by the National Company Law Tribunal (NCLT).
The NCLT order is likely to hit over 25,000 homebuyers who have booked their homes with the company for over several years.
An ATS group company is also mired in trouble. The Delhi bench of the National Company Law Tribunal has initiated bankruptcy proceedings against Anand Divine Developers, a group company of ATS over dues of Rs 25 crore. According to the NCLT order, ICICI Prudential Venture has moved the tribunal after the developer defaulted on payment.
Real estate barons Ansal Brothers are fighting against a jail term. The Delhi High Court earlier rejected petitions by Sushil and Gopal Ansal seeking a suspension of their seven-year jail term for tampering the evidence linked to a fire in Delhi's Uphaar Cinema in 1997 that killed 59 people.
Earlier this year, Income Tax officers conducted raids at properties linked to Ajay Chaudhary, CMD of Noida-based real estate company Ace Group. The raids took place 40 sites in Noida, Agra and Delhi.
Chaudhary is believed to be close to Samajwadi Party President and former Uttar Pradesh Chief Minister Akhilesh Yadav.
Another former big wig, Anil Kumar Sharma, jailed former CMD of Amrapali Group, is seeking relief on medical grounds.
The Supreme Court has been monitoring the case related to the real estate company after many homebuyers approached alleging malpractices and non-delivery of homes or flats.
In June 2019, Monty Chadha, promoter of the Wave Group, was arrested from Delhi airport while traveling with his family to Phuket in Thailand for a vacation. It was connected with a case in which the homebuyers had complained of non-refund of money of about Rs 100 crore.
The company had agreed to refund the money with the Supreme Court-mandated interest rate, lower than the demand, causing a delay in the refund. Both sides agreed to settle the case amicably.
Another builder, Laxman Bhagtani from Mumbai, who fled the country after being booked in nine cases of cheating for not delivering flats after collecting money, was detained in the UAE by Interpol in 2020.
Bhagtani, director of JVPD Properties Ltd, had collected Rs 427 crore from around 2,500 people promising flats in his nine projects in the suburbs and Mira Road, police said.
A red-corner notice was issued against him in November 2018.
Kabul Chawla who founded BPTP groups is said to have fled India.