Kolkata : At least 136 people who had bought homes at Kolkata West International City—a 390-acre condominium that was to be built by Indonesia’s Salim and Ciputra groups jointly with their India representative Prasoon Mukherjee’s Universal Success Enterprises Ltd (USE)—are preparing to approach a court to seek redressal against a delay in construction.
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Around 800 people have bought homes in Kolkata West, priced between Rs 20 lakh and Rs 1 crore. They claim to have so far paid at least 80% of the price while some claim they have paid the full amount. Only 169 row houses have been offered for possession to purchasers compared with the builder’s promise to deliver 900 such homes two years ago.
But before moving court, the aggrieved homebuyers have lodged a formal complaint with Mamata Banerjee, who on Friday took over as the state’s chief minister. While seeking her intervention, they expressed “disappointment” over USE chairman Mukherjee being invited to the swearing-in ceremony at Raj Bhavan, the official residence of governor M.K. Narayanan.
Announced in July 2004 amid much fanfare, Kolkata West was to be India’s first housing project to receive foreign direct investment. It marked the entry of Indonesia’s Salim Group into West Bengal, which till now has had a chequered journey in the state. The Ciputra Group has exited from Kolkata West and hasn’t pursued other investment opportunities in West Bengal.
Citing “public purpose”, the state government, through the Kolkata Metropolitan Development Authority (KMDA), rapidly acquired from private owners 390 acres in Kolkata’s adjoining Howrah district, and transferred the plot to the developers on a lease of 999 years.
According to Mukherjee, the state government has transferred on lease only 150 acres so far, though the developers were allowed to possess and develop the entire 390-acre plot. “I have been pushing the state government for the rest of the land, but they did nothing,” he said. “Yet, we began construction and have so far spent some Rs 650 crore on the project.”
Also, the project received clearance from the environment department only in 2008 after waiting for almost two-and-a-half years, Mukherjee said, adding, “All real estate projects have been delayed since 2008 because of the credit crunch. It’s not just Kolkata West—all projects are trailing behind schedule.”
Because the state government didn’t lease out the remaining 240 acres, it became even more difficult for USE and the Salim Group to raise resources for the project. “Typically, developers would raise cash using the land as security; we didn’t have the land at all,” Mukherjee said.
Bookings began in 2006 and continued till 2009. The integrated township was to be completed in phases over five years. It was to include over 6,000 row houses, four residential towers, three information technology parks, a 200-bed hospital, two schools, shopping malls and a 13-acre club, according to the original plan.
But only 169 row houses were offered for possession in June 2010, and only 12 families have so far moved in, according to Abhay Upadhyay, president of the association of homebuyers who are now planning to move court.
“Kolkata West International City Pvt. Ltd has claimed in filings with the registrar of companies that 100 more bungalows are ready as of March last year, but the civic authorities haven’t yet granted completion certificate,” he said. “So, after June last year, no more letters of possession were issued. Going at this pace, it could take up to 25 years to complete the first phase alone.”
Besides seeking the intervention of the newly elected state government, the Kolkata West International City Buyers’ Welfare Association, the one that Updhyay heads, has obtained legal opinion from law firm Amarchand and Mangaldas and Suresh A. Shroff and Co., and consent from all 136 members to move court.
Beginning Thursday, the people under Upadhyay’s association sent emails to Banerjee and her Trinamool Congress party alleging USE’s Mukherjee of having “duped (them) of a few hundred crore of rupees” and describing Kolkata West’s progress so far. They continued to send mails even as she and her party’s top leaders were sworn in at Raj Bhavan on Friday.
“I only want to tell these people that we have received from bookings only around Rs 200 crore, whereas we have spent Rs 650 crore on the project,” Mukherjee said. “The bungalows that are ready are worth at least Rs 70 crore, and the rest of the bungalows are at least 70% ready.”
Meanwhile, another group of 24 people who were given letters of possession moved the consumer court late last month alleging that the developer was refusing to grant possession unless they paid Rs 1.5-5 lakh over and above the initially agreed price.
“Citing its architect, USE is claiming on completion of construction of our bungalows that the built-up area has increased by 10%,” said Anjan Mazumdar, an independent management consultant and a former partner at PricewaterhouseCoopers, who is leading these 24 people. “This is absurd—we don’t see any change at all in the floor plan given to us at the time of booking.”
That apart, the people who have moved the consumer court have also alleged that the infrastructure isn’t ready, making the row houses offered for possession completely uninhabitable. “Though we are being asked to pay a maintenance fee of Rs 1.76 per sq. ft per month, the developer isn’t willing to sign an agreement saying what it would offer,” Mazumdar said.
The homebuyers had earlier sought the intervention of KMDA, which leased out the land to the developers. They met its chief executive officer Vivek Bharadwaj in November last year, who promised to inquire into this and take necessary action, according to Upadhyay.
Bharadwaj, who is now looking to leave KMDA and the West Bengal government as reported in Mint earlier, refused to comment on Kolkata West.
However, erstwhile minister for urban development Asok Bhattacharya said the state government had spoken to USE to understand why the project was delayed. “While the developers cited economic slowdown as the reason for the delay, we felt their intention was to complete the project as fast as possible,” he added. “Anyhow, they are to compensate the homebuyers for the delay.”
Also, it has recently come to light that there is a “technical problem” in the lease agreement between the KMDA and the developers because of which homebuyers will not be able to register their names in the state government’s official records as beneficial homeowners, according to Bhattacharya. “This needs to be corrected,” he said.
The erstwhile state government under the Left Front had, of late, distanced itself from Mukherjee and the Salim Group.
It even sent a notice threatening to terminate an omnibus 2006 agreement under which it was to build several industrial projects in the state, including a chemical hub and a deep sea port. But Mukherjee moved the Calcutta high court and obtained a stay on the state government’s notice.