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Need to Demolish Nexus, Bribe & Corruption

Aarti Aarti
05 Sep 2022
Demolition of the twin towers in Noida might have put an end to the decade long battle between Supertech and the residents around the erstwhile twin towers

On 28 August, as the two tall buildings came crashing down in Noida, the social media, while on one hand, exploded with hilarious memes and dark humour, Supertech’s promoter reportedly stated that this particular project now reduced to rubble has incurred an overall loss of around Rs 500 Crore but reiterated the construction of both these structures was in accordance with the proposal which was approved by the authorities. So, primarily, there existed no violation of norms. If there was no violation of norms, then what went wrong and why the demolition?

Briefly put, in 2004, Supertech proposed to build the Emerald Court housing society in Noida’s Sector 93A and the Noida Authority (NOIDA) sanctioned the building plan in 2005 that showed 14 towers and nine floors. Supertech revised the building plan later and in 2012, NOIDA reviewed the new plan after which the height of the twin towers was fixed at 40 floors. The Emerald Court Residents’ Welfare Association (RWA) of the society moved to Allahabad High Court in 2012 alleging the construction was illegal. On 11 April 2014, the High Court directed NOIDA to demolish the twin towers at the expense of Supertech within four months from the date of the order.

As such, the entire case pertained to the approval and construction of the two towers which was in complete violation of provisions of the law of the land and the Division Bench of the High Court minced no words as it observed that Supertech, in collusion with NOIDA managed to obtain sanction of layout map in violation of mandatory spaces between building blocks and clear space, but for these violations the additional FAR purchased by the respondent company in 2011, could not have been executed on the ground/site. The stand of both the Supertech and NOIDA that constructions are being carried out, strictly as per sanction is untenable, as the sanction itself grossly violates the Building Regulations. Further, under the Uttar Pradesh Fire Prevention and Fire Safety Act, 2005 and the rules framed thereunder, the mandatory distance between building blocks as well as clear space of 7.5 metres for fire tenders had been violated while sanctioning the map in the year 2012. Noting that the then official of NOIDA have not acted bona fide in discharge of their duties, the Court ordered for (i) the demolition of the twin towers 16 and 17 (Apex and Ceyane), (ii) issue of sanction by the Competent Authority for the prosecution of the officers of NOIDA and (iii) refund of the consideration received by Supertech from the private parties, who had booked apartments in Apex and Ceyane along with 14 percent interest compounded annually.  In terms of the said Order, all actions were to have been taken between three and four months from the date of filing of certified copy.

What happened thereafter? Supertech immediately challenged the High Court Order in the Supreme Court. On 31 August 2021, while upholding the High Court’s decision the Apex Court listed down several instances that showed “complicity of Noida” officials in the violations. For instance, the revised plans for the project were sanctioned in breach of building regulations. NOIDA had refused to share the sanctioned plans with the RWA, after Supertech’s objection to it. They did not respond to the Chief Fire Officer’s concerns on violation of the minimum distance requirements. The construction of the two disputed towers began in July 2009, five months before the sanction was granted by NOIDA in November 2009, but NOIDA did not take any action on this. The Division Bench held that there was collusion between the developer and the planning authority. Asserting that a breach by the planning authority of its obligation to ensure compliance with building regulations is actionable at the instance of residents whose rights are infringed by the violation of law, the Supreme Court affirmed the order passed by the Allahabad High Court for the demolition of the twin towers Apex and Ceyane within three months.

The demolition of the twin towers in Noida might have put an end to the decade long battle between Supertech and the residents around the erstwhile twin towers, but it needs to be appreciated that the strong message sent out by the Judiciary is that any builder who violates the building codes will meet the same fate.

Why are building codes important? 

Remember the devastating earthquake that struck Gujarat killing and injuring thousands of people as the nation was observing the Republic Day on 26 January 2001? The disaster reportedly caused a massive loss, amounting to Rs. 144 billion in monetary terms and another Rs. 106 billion was spent on reconstruction. To lay focus on structural safety of buildings across the country in the aftermath of this powerful earthquake, the Union Ministry of Urban Development prepared Draft Model Building Byelaws in 2003 and circulated the same for the guidance of State Governments. The intent was to put in place standards with a view to protect buildings against fire, earthquake, noise, structural failures and other hazards besides regulate the construction aspects of buildings thereof, so as to achieve orderly development of an area. Based on the above, State Governments, Urban Local Bodies have formulated their own building rules (that are periodically revised) which need to be mandatorily followed by builders/developers in order to obtain requisite regulatory approvals.

Therefore, the need for structural safety of buildings, especially high-rise ones.

Now that the illegal towers have been brought down, will home buyers who had invested in the razed twin towers get their money back as Supertech is under Corporate Insolvency Resolution Process as per the provisions of the Insolvency and Bankruptcy Code, 2016? Well, the three-member Supreme Court bench, in its order of 26 August 2022, has already directed the Interim Resolution Professional (IRP), appointed by the New Delhi Bench of the National Company Law Tribunal, under the provisions of the above referred Code, to deposit an amount of Rs one Crore in its Registry on or before 30 September 2022. The IRP and Mr. Gaurav Agrawal, amicus curiae, are to jointly work out the outstanding dues of the home buyers and submit the details before the Court on the next date of listing.
Against the backdrop of the Supertech case, it would be worthwhile for a quick revisit into the highlights of the Performance Audit Report of the Comptroller and Auditor General of India (CAG) with regard to land acquisition and allotment of properties in Noida for the period 2005-06 to 2017-18.

The CAG Report which was tabled in the UP Assembly last December, reportedly, is replete with instances of contravention, misuse, flouting of extant rules and orders, wilful concealment of facts and exercise of power beyond the remit of NOIDA. The nexus between the land promoters, builders and officials in NOIDA caused government losses to the tune of Rs 55,000 Crore. CAG found that NOIDA, without verification, allotted plots to companies which were not even incorporated.

That NOIDA’s land acquisition process suffered from irregularities on many counts and its failure to exercise due diligence resulted in substantial avoidable payments and over-payments is disconcerting. In the absence of any guidelines for pricing of the properties, there was no streamlined method of pricing. Importantly, it was not consistent across the years and prices were fixed arbitrarily without consideration of all input costs.

In the allotments made by NOIDA to the Group Housing allottees during 2005 to 2018, plots were allotted to a number of ineligible allottees, along with subsequent permission to transfer, mortgage or exit from the project. As on 31 March 2020, dues of over Rs 18,000 Crore of NOIDA were pending against Group Housing allottees. During 2005 to 2018, 1,30,005 flats were sanctioned for construction but only 72,697 flats were completed as on 31 March 2020.

In the Commercial category, systematic failures and repeated violations ended with outstanding dues of over Rs 14,000 Crore. Surprisingly enough, NOIDA allotted land essentially to three companies - Wave, Three C and Logix. CAG observed that all the three entities violated terms and conditions with acquiescence of NOIDA’s officials.

Although development of sports was not included in any of the functions mandated to NOIDA under the Act, the scheme of Sports City envisaged creation of such infrastructure spanning over 559 acres of land within the 798 acres earmarked for the four plots for Sports City. Except giving approval for and development of residential/group housing projects, CAG found that no sports facility had been developed in these Sports City plots even after eight years of roll-out of the initial scheme. To top it all, NOIDA granted undue benefits of over Rs 9,000 crore to the allottees of Sports City plots, to the corresponding detriment of NOIDA.

NOIDA incurred substantial losses in allotments made by it to entities of commercial nature like Private offices/Corporate offices under the Institutional category due to the differential in allotment price of plots under these categories. CAG observed that only eight per cent of the Institutional allotments made during the Audit period are functional and the large number of plots were also found to have been transferred defeating the very purpose of allotments under the category.

The policy for allotment of farm house plots rolled out by NOIDA in 2009 was ab-initio in contravention of the Regional Plan/Sub Regional Plan/Master Plan. No approval was obtained from the State Government prior to its roll out for launching the scheme on agricultural land for uses other than those permitted. Farm house plots were allotted under institutional category wherein the applicant was required to have a paying capacity of at least Rs three Crore (apart from project cost). Apart from violation of brochure conditions, in a number of cases, entities with extremely low net worth were also allotted plots.

Failure of NOIDA to check the use of industrial plots for commercial purposes without payment of appropriate charges has not only resulted in loss to NOIDA but also extended undue favour to allottees.

A cause for serious concern is the heart of the CAG Performance Audit of NOIDA which pointed out that the internal control system in NOIDA was found to be extremely deficient, which resulted in exercise of powers beyond the remit of NOIDA, as also blatant misuse and flouting of extant rules and orders. “All of these translated in failure to achieve the objectives of NOIDA, distress for end use stakeholders like home buyers who invested their life savings in schemes of NOIDA and losses to NOIDA and Government involving tens of thousands of Crores of rupees. There is clear evidence of failure in the governance framework in NOIDA”.

As it is said, the past, no matter how bad it was, does not define future holds good for NOIDA. According to news reports, the Special Investigation Team (SIT) formed by the Uttar Pradesh government in connection with the Supertech case has found the involvement of 26 NOIDA officials in different periods of time and FIRs have been lodged against all of them. Therefore, the swift prosecution of NOIDA Officers for their “complicity”, merits consideration. More so because, evidently, the certainty of punishment, which is far more convincing and consistent than for its severity, would serve as a deterrent and surely drive home the message amongst the concerned that they exist because of the organisation and not vice versa.

It is heartening that regulatory clearances in Uttar Pradesh are presently granted through the single window Portal ‘Nivesh Mitra’, which is time bound. Since its launch in February 2018, over four lakh clearances have been issued up to August last year, helping the State reach the second position from the 12th rank to in ease of doing business in India.

With ample success stories available clearly portraying how E-Governance initiatives have brought transparency in the government system by creating an unfavourable situation for corruption, there is an imperative need to institutionalise the same at all levels and for all public services.

Since bribe and corruption, the main concerns across the globe, are considered as the biggest hurdle for the development of society, it needs to be dealt with a heavy hand. Also, as one bad apple spoils the bunch, it is time to weed them out in the right earnest by those in the higher echelons of power.

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