At 33, Bharat Singh checked another “must-have” off his list when he bought an apartment in a Unitech Ltd project in Noida in 2010. Now 43, Singh lives in Bengaluru, pays a monthly rent of Rs 50,000 and also an EMI of Rs 3.5 lakh to a private lender for his 4,500 sq ft Noida apartment that he is still waiting for.
Singh’s nightmare is being lived by 15,000 Unitech homebuyers in the National Capital Region (NCR), left in the lurch by the Delhi-based developer’s failure to complete and hand over their apartments, spread over 74 projects, by 2014 deadline.
“I was stuck between the financier and the builder. I decided to liquidate most of my investments to pay up my loan and reduce my EMI,” he told Moneycontrol over the phone. Singh pays his EMI at a hefty 12 percent interest rate even though home loan rates are at an all-time low.
The nightmare began to unfold in 2014, when Singh went to a bank to transfer his loan, struggling to pay the high interest charged by his private lender.
The bank refused, saying the land on which the project was to come up did not have a clear title and a loan could not be extended against the property.
“It was around 2014 that 10 of us got together and filed an application in NCDRC against the builder,” he said, referring to the National Consumer Disputes Redressal Commission, the country’s top forum for protection of buyers’ rights.
The experience has worn him out and he has sworn off the property market. “If I had invested all my money in a bank in 2010, I would have been richer by Rs 10 crore but today, I have nothing. I am a mere spectator and can only hope that the new resolution plan gets me my home,” he said.
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The resolution plan that Singh is talking about has been submitted to the Supreme Court by the seven-member reconstituted board of Unitech, which was overtaken by the government early this year. The court on July 31 said the plan should be put on its website to invite suggestions.
The board, which has bankers and retired civil servants as its members, has promised to complete all Unitech projects and hand over apartments to 15,000 buyers like Singh staggered over four years.
“I am hoping I will get my property finally after four years and I can hopefully relocate to Delhi,” Singh said. “Even if it takes four years, so be it. The state that we are in, we buyers cannot be choosers,” he added.
The Unitech story
Unitech started off as a soil investigation company and was founded by in 1972 Ramesh Chandra, whose sons, Sanjay and Ajay, are the promoters now.
It was among the biggest players in the Indian real estate space that was booming in early 2000, with a rapidly growing IT industry and services sector fuelling demand for houses and office space around Delhi.
This was also the time when India’s telecom sector was picking pace. And Unitech decided to take the plunge and that is when things started going south.
In 2009, its deal with Norway's Telenor for a joint telecom company, Uninor, got botched. Two years later, Managing Director Sanjay Chandra was arrested for his alleged involvement in the Rs 1.85 lakh-crore 2G spectrum case. A Delhi court in 2017 acquitted all the accused in the case, a decision that has been challenged by CBI and the Enforcement Directorate.
Unitech continued to expand aggressively, launching real estate projects and buying land parcels. The business soon ran into trouble. Sanjay and Ajay were arrested in 2017 for allegedly siphoning off homebuyers’ money.
Sanjay was recently granted bail for a month to take care of his unwell parents. Ajay continues to be lodged in Delhi’s high-security Tihar jail.
The arrests came on a criminal case lodged against the company in 2015 by 158 homebuyers of Unitech’s Wild Flower Country and Anthea projects in Gurugram.
A Supreme Court-ordered forensic audit in 2018 found that Unitech had collected Rs 14,270 crore from homebuyers between 2006 and 2014 and Rs 1,805 crore from six financial institutions for 74 projects.
Around Rs 5,063 crore of homebuyers' money and Rs 763 crore of financial institution funds were diverted to off-shore tax-havens, the auditor found.
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The new plan
Submitting the resolution plan last week, the board said it would take four years and Rs 5,000 crore to complete the units. The board can begin work within six months of the Supreme Court approving the plan.
“…possession of flats can thereafter be delivered as per the following tentative schedule: (i) within 1st 12 months: up to 2,500 units to be delivered; (ii)within 12 - 24 months: up to 6,500 additional units; (iii) Within 24 - 36 months: up to 5,000 additional units; (iv) Within 36-48 months: balance units to be delivered,” the board said.
Not everyone wants to wait for four years. “Lifts have already been installed. The amount of work left to be completed is negligible. All it will take is six to nine months—four years is not fair,” said Shikha Puri.
Puri, who has an apartment in The Residences project in Gurugram’s Sector 33, has bigger worries. In the last few weeks, NCR has been rocked by a series of low-intensity earthquakes. The residential towers stand next to an incomplete basement that posed a risk to the blocks, she said.
The work can be completed in four months and Unitech should evaluate the risks and complete the project on priority.
She said the buyers had collected up to Rs 2 crore each and would give it to the government to start the work.
The board says funds will be raised by using additional FAR, disposing of some land and homebuyers will be asked to pay the remaining amount. The board is also looking to tap a government-backed fund for completing stalled housing projects, banks and financial institutions.
It wants a Rs 5,000-crore interest and penalty waiver from the Noida Authority and banks.
According to estimates, Unitech owes the Noida Authority around Rs 8,000 crore, of which Rs 5,000 crore is in interest and penalties. Banks have to be paid around Rs 5,000 crore, with interest accounting for 40 percent of the amount.
The embattled firm has an unsold inventory worth Rs 3,000 crore and another Rs 6,000 crore worth of land, sources say.
Homebuyers will have to pay the remaining amount according to a schedule that will be put up online within 90 days of the plan being approved.
There is no provision of a refund or compensation in the plan.
“I believe that the proposal is a step in the right direction since it gives buyers some hope of having their homes eventually,” Vaibhav Gaggar, Managing Partner, Gaggar & Associates, said.
Though another four years could be demoralising that’s best homebuyers can get out of a hopeless situation, he said.
“If you were to expose a potential developer with the additional risk that he may have to pay a refund for old properties, you will never get anybody to complete the projects,” said Ajay Khandelwal, who has an apartment in Unitech Golf And Country Club in Noida.
The road ahead
The resolution will take some doing. It will depend on several knots coming undone, say legal experts.
Supreme Court advocate Ashwarya Sinha, who appeared for a group of homebuyers, said courts, banks and financial institutes would have to accede to several requests, including waivers, for the work to commence.
“The courts will have to weigh in the balance as to why these privileges should be given only to Unitech buyers and not others Also, why should banks write off loans? This may have a cascading effect,” he said.
Eight years ago, most buyers were in a good financial position but some may not have funds to spare as the coronavirus pandemic has devastated the economy and caused job losses, he said.
Instilling confidence in homebuyers and getting them to pay the remaining amount could be a challenge, especially when they have another four years to wait.
But it’s a start
It is the first time in 10 years that a concrete plan is in place for Unitech buyers. The outcome will also set a precedent for all such cases.
It is also a warning to all real estate companies. All the three cases – Amrapali, Jaypee and Unitech –spell out clearly how far courts can go to arrive at a resolution, say legal experts
The Supreme Court has asked the government’s construction arm NBCC to complete 42,000 Amrapali homes. NBCC’s offered to do the same for 20,000 Jaypee Infratech buyers in Noida and Greater but the National Company Law Tribunal made changes to the plan, which the construction company has challenged in the National Company Law Appellate Tribunal.
Owning a home is a dream of most middle-class families. For some, it is a symbol of success, for others, a sense of security.
Among Unitech buyers are people who invested their lives’ savings in the hope of living off a rental income with dignity.
“I am hoping against hope but I wonder if I will ever see that day,” said an 86-year-old buyer, who did not wish to be named. Not just him but hopes of 15,000 buyers are riding on that resolution plan.