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New Delhi: Builders facing buyers’ demands to refund money for the flats they failed to deliver on time are trying to shift them to other projects or litigating further as they fear conceding to the demand will encourage more such requests which they will not be able to meet in a scenario of heavy debt and limited cash flow.

The Supreme Court on 17 August directed real estate firm Unitech Ltd to deposit Rs15 crore principal amount by September-end to pay back investors who had bought flats in its Vista project in Sector 70, Gurgaon, but did not get possession on time.

A set of 14 buyers have also approached the Supreme court for refund from Noida-based developer Supertech Ltd as two towers at its Emerald Court project in Noida are stuck in litigation.

“There are some developers who are not refunding anything as it may open a kind of Pandora’s box and everybody may just queue up for refunds then," said Vineet Relia, managing director, SARE Homes.

Supertech and Unitech did not respond to questions from Mint.

“Sales for developers have come down, and therefore, there is a huge amount of funding gap, which is why they are reluctant to fund through cash, but they are willing to shift them to other projects," Sudip Sural, senior director for corporate and infrastructure ratings at Crisil Ratings said.

Property consultant Liases Foras said in May 2016 that the National Capital Region has witnessed a rise in unsold inventory by almost 14% to hit a high of 267,000 units by the end of March 2016, which will take about six years to clear.

Supertech and DLF Ltd have shifted certain buyers to other projects in case of cancellations.

In the June quarter, Rs270 crore worth of DLF’s legacy bookings were cancelled, Mint reported on 23 September.

“Any large scale requests for refund cannot be entertained since they will make the entire project unviable. Further, if a company receives constant demand for refunds across projects, it has the potential to derail cash flows for the entire organisation and will end up hurting day to day operations," a DLF spokesperson said in a statement.

India’s top 25 developers, which account for about 95% of the market capitalization of the sector, face high refinancing risk for debt obligations worth Rs30,000 crore, according to a Crisil report from November 2015.

Total debt for top 25 realtors has risen to about Rs90,000 crore in fiscal 2016 from about Rs80,000 crore in fiscal 2015, according to Crisil. “Banks will have serious concern here (regarding refunds)… they are a big stakeholder in the project," said Relia.

The Delhi high court has directed Unitech to open escrow accounts in its delayed residential projects and a court-appointed commissioner to monitor the same, the company had said on 5 September.

“Builders like Unitech have money to pay a few investors and buyers, but they fear that if they pay one person, then it will set a precedent for the entire market and they would not be in a position to pay later," said Ashwin Jain, partner at Gurgaon-based property advisory N.K. Jain & Co.

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