Builders fleece buyers of lakhs, delay possession but demand additional charges for farmer compensation

  • Vandana Ramnani, None, Noida
  • Updated: Jun 09, 2015 16:43 IST

People in Noida Extension, who thought their trials and tribulations had ended after the land acquisition issue was settled in 2012, find no end to their sufferings even today. Many of them are now receiving offers of possession demanding additional payments in lakhs for ‘labour welfare’, water connection and farmer acquisition charges. In some cases, even after paying their builders the money, the homebuyers are waiting for physical possession of their apartments.

Surinder Singh, an IT professional paying an EMI of Rs 6,000 per month for a 1BHK apartment in Noida Extension in 2010 and a rent of Rs. 15,000 for a house in Crossings Republik, received an offer of possession letter in December last year. Not only had the apartment area been increased from 550 sq ft to 598 sq ft (almost 11%) from what was committed in the builder-buyer agreement (BBA), he was also sent a list of additional charges that he had to pay before he could move into the apartment. The letter raised a demand for 24% interest for six months as penalty. “This was unfair as after paying the mandatory 10% booking amount in 2010, I had made the second payment of 30% only after I received the BBA – almost after six months. While the BBA had mentioned that this amount had to be paid after 60 days of the booking, this was not communicated to me before I received my BBA,” Singh says.

“I was also asked to pay Rs. 25,000 as water connection charge. My BBA does not mention it as a separate charge. Besides, a labour cess of Rs. 20 per sq ft and a farmers’ compensation charge of Rs. 50 per sq ft was the additional burden. This again was unfair as buyers who had paid up for their apartments some years ago were promised that they would not have to pay anything extra as they had stood by the builders throughout the Noida Extension controversy,” he adds.

Singh eventually did pay up an additional amount of around Rs. 2 lakh but not after emailing the builder that he was doing so ‘in protest.’ Subsequently, he received a call from the builder’s office, promising a ‘settlement’. He was told that instead of 24% interest, he would be charged only 12% and the labour cess would be reduced from Rs. 20 per sq ft to Rs. 10 per sq ft. In return, however, Singh was told that he would have to sign a letter of consent/ no objection, stating that he had no problem with the builder constructing additional units.

Another buyer who had bought a 1,000 sq ft apartment in the area in 2010 has paid up Rs. 3.5 lakh extra for labour, maintenance etc. The offer of possession also included a demand for advance payment for maintenance facilities for two years though he had not moved into the apartment. If a buyer has to pay 24% interest as penalty for not paying 30% amount within 60 days of booking the flat to the builder, he has every right to demand a penalty from the builder for delaying possession of the units by almost two years even after the Noida Extension issue was settled in 2012.

“My BBA clearly mentions that the builder will have to pay a penalty at the rate of Rs 5 per sq ft in case he delays possession. But I have neither received physical possession of the house nor any penalty,” he says.
Even though the farmer compensation charge was something that buyers in Noida Extension had expected as the UP government had approved an additional 64.7% compensation to farmers, they were unprepared for the additional charges for labour cess, water connection and advance maintenance.

The builders have passed on this liability to the buyers. “This in unfair as it has all along being said that old buyers who have been with the builders all through the land acquisition row shall not be burdened with additional charges and that the extra amount will be recovered from the additional FAR being allotted to builders,” says Indrish Gupta, co-founder, Noida Extension Flatowners Welfare Association (NEFOWA).

According to Supreme Court advocate SK Pal, all these builders have been given additional FAR to make good the losses incurred due to the land acquisition issue in Noida Extension. Imposing an additional burden of almost 15% to 18% on the buyers, therefore, was not fair because they had suffered the most during the litigation over the land acquisition issue and had to be protected. Are the builders penalising buyers for having stood by them for five years?

Complaints received against some builders: Rama Raman

Noida, Greater Noida and Yamuna Authority chairman Rama Raman had recently convened a meeting with the Confederation of Real Estate Developers Association of India (Credai), homebuyers and builders to discuss problems of homebuyers.

These included delay in physical possession of units even after issuing the offer of possession to buyers, 24% interest being levied for late payment etc.

“We have received complaints against five to six builders and are talking to them. They have been warned that if the homebuyers’ problems are not solved within 45 days, we may have to cancel their lease deeds. Credai has also been asked to look into the problems and is planning to circulate model guidelines to all members and asking them to be reasonable to homebuyers,” says Rama Raman.

The Noida and Greater Noida Authorities have to cough up an additional compensation of around Rs 10,000 crore to farmers after the Supreme Court order on May 14 this year dismissed petitions challenging the UP government’s decision to acquire land for construction of residential clusters by private builders.

About 25,000 farmers have to be paid an enhanced compensation of 64.7% in Greater Noida and about 350 hectares of land has to be allotted to them as developed plots.

When asked if the burden would be passed on to homebuyers who have invested in the area, Rama Raman said 80% of the compensation had already been distributed. “We have loaded the amount to our allottees that include both group housing allottees (builders) and institutional.

There was no other option to raise funds from allottees. Recovery of funds from the additional FAR given to builders also was not fully successful. As far as the labour cess is concerned, under the Apartment Act the district administration has to collect 1% as basic welfare fund.”

The recent Supreme Court order states that “the petitioners shall be entitled for payment of additional compensation to the extent of the same ratio (ie 64.70%) as paid for village Patwari in addition to the compensation received by them under 1997 rules/award for which payment shall be endured by the Authority at an early date. It may be open for Authority to take a decision as to what proportion of additional compensation will be asked to be paid by allottees…”

“Only farmer compensation charges can be recovered from buyers. We have fixed this at Rs 50 per sq ft. No other charges unless they are mentioned in the BBA signed between the buyer and the builder can be imposed on homebuyers. We will also be sending all our members model guidelines soon,” says Manoj Gaur, president, Credai – Western UP.

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