Homebuyers have written to Prime Minister Narendra Modi, asking him to send a clear message to the real estate industry, that the government will have a “zero tolerance policy” towards malpractices or delay in project execution.
Stating that around five lakh homebuyers are stuck with incomplete housing projects, mostly due to diversion of funds by builders, homebuyers have also urged the prime minister to order a forensic audit for all projects pending for over three years.
Alleging that this is a “large scale organized cheating committed by promoters of real estate projects with all other constituents being partner in their crime,” homebuyers have appealed PM Modi to clean-up the sector off all bad elements.
A “clear message” needs to be sent out “to (the) real estate industry that from here-on, your government will have zero tolerance policy towards any kind of malpractice or even delay in execution as prevailing in the real estate sector,” homebuyers said in the letter.
The Forum for People's Collective Efforts (FPCE) has also demanded that a task force should be created under the Ministry of Housing and Urban Affairs (MOHUA) to identify stuck housing projects and a Public Sector Undertaking (PSU) should be nominated to complete these homes.
The forum has proposed that this task force should have representations from homebuyers, state governments, financial institutions and industry experts (other than builders) to ensure deliveries of delayed projects, starting with those nearing completion.
It should be ensured that no builder is a part of this body “since the entire exercise will be primarily against their misdeeds and hence they may use their influence to derail the whole process,” the letter says.
The homebuyers have written to the prime minister in the backdrop of the recent order by the Supreme Court of India (SC) in the Amrapali case. The apex court had observed that “it is shocking and surprising that so many projects have remained incomplete. Several lakhs of home buyers have been cheated. As if there is no machinery of law left to take care of such situation and no fear left with the promoters/builders that such acts are not perceivable in a civilised society.”
In the same order, the top court had directed the Centre and the state governments to take appropriate steps in a time-bound manner to ensure that buyers are provided houses.
“The sheer magnitude and duration of this perpetual crime also raises equally serious concern of impression amongst the public that governance has failed in our country especially with regard to builders since they are getting away unscathed with heinous crime they have committed continuously,” homebuyers have said in the letter.
“This also raises questions on the justice delivery mechanism which in case of builders appears to be only on paper thereby strongly suggesting and creating impression that India has turned into a banana republic,” the homebuyers’ letter says. Copies of this letter have been sent to the Housing and Urban Affairs Minister and all Chief Ministers.
“As head of the Government, and also being most popular leader who has come back with huge majority, it is incumbent upon you to rise up to the expectations of not only the apex court but also to the millions of stuck homebuyers by taking effective steps to resolve the present issue and also by ensuring that in future such situation doesn’t arise,” homebuyers have appealed to the prime minister.
Forensic audit for all projects delays by over three years
Similar to the Amrapali case, where a forensic audit has been ordered due to large-scale wrongdoing and fund diversion, it is essential that a “forensic audit should be ordered for all such projects which are delayed by more than 3 years,” the forum has suggested to PM Modi.
After the forensic audit report, action should be initiated against auditors and also other persons who failed in his duty or were part of collusion with builders, they said.
Creation of a task force and separate cell in MOHUA
A separate cell within MOHUA should be created to coordinate and pursue matters relating to delayed projects across India, with all concerned stakeholders including state governments, builders, authorities, banks and homebuyers.
It should initiate the process to identify all real estate projects delayed by over a year, including their promoters with the help of state governments within a month, the letter says.
After this exercise, a task force under MOHUA should be constituted to identify projects that are nearing completion. Those projects should be taken up first.
The task force should estimate the seed capital needed for completion of all such delayed projects for which a separate stress fund may be created and its utilization should be strictly monitored by the task force. Promoters of projects which shall be completed from this ‘stress fund’ should be stripped of all their assets, including personal and company’s assets, to realise the entire funding utilised for completion of those projects, the homebuyers have said.
The task force should, in consultation with state governments and other agencies, identify officers and banks who colluded with promoters, it adds.
RERA has failed to protect homebuyers' rights due to tardy implementation
Homebuyers have also highlighted tardy implementation of the Central real estate regulatory Act by state governments.
The letter notes that the meeting of the Central Advisory Council (CAC) has not taken place for over a year.
Besides the states diluting the rules, the biggest issue is the execution of orders passed by RERA regulators. “Orders have become mere pieces of paper for complainants. These are not getting executed even in years’ time leading to chaos and frustration among homebuyers,” homebuyers have said.
They have claimed that many states have not appointed adjudicating officers. Several web portals set up by states are also not in conformity with RERA provisions.
“A proper audit of all State RERA website needs to be conducted by an independent committee which may be formed in consultation with state governments for which Mo/HUA needs to take the lead,” homebuyers have suggested in the letter.
Of unregistered projects, fraudulent OCs and illegal construction
Many developers have not got their projects registered leading to dismissal of complaints filed by allottees of such projects. “In this regard, a uniform policy needs to be formulated for which again lead should be taken by MoHUA,” the letter says.
There have been cases where the promoters have taken OC/CC fraudulently by colluding with authorities and have thus forced allottees to take possession of incomplete units. “This malpractice is still continuing despite RERA,” it says.
There have also been cases where homebuyers are stuck with illegal construction. “There is need to enact a new law with capital punishment for all promoters resorting to such illegal construction. However, in the interim, Mo/HUA may come out with guidelines involving State Governments, RERA Authorities, and Development Authorities to curb such activity and to ensure that no homebuyers gets stuck in such projects.”
There have also been issues with regard to the quality of construction which is very poor. “There has to be uniform policy with regard to quality control and strict punishment to promoters for substandard construction. Again, Mo/HUA needs to take lead and initiate process to formulate guidelines for such quality control,” it firstname.lastname@example.org