MUMBAI: Middle-class and low-income families are not the only victims of stalled real estate projects in Mumbai. Around Rs 1,300 crore paid by high net worth individuals to the builder of India’s tallest under-construction residential tower, 294-metre high Palais Royale at Worli Naka, is stuck for a decade.
The project has been mired in a series of litigations, leaving dozens of doctors, builders, fund managers, stock brokers, corporate honchos and NRIs high and dry. Aggrieved purchasers, who have formed the Palais Royale Members’ Association, have already paid 20% to 100% for their homes, each measuring between 4,000 sq ft and 8,000 sq ft. Some of the larger flats were sold for over Rs 50 crore each. Of the 162 apartments, 77 have been booked since 2009. One of the earliest buyers was promised possession of flat by May 31, 2010.
Worse, the developer, Shree Ram Urban Infrastructure Ltd, is currently under liquidation after it failed to repay loans to its lenders.
“We have come together, and through a proposed Palais Royale Society, have moved and intervened in various court cases to protect our rights,” said a representative of the flat buyers. “Based on the court’s verdict, we will further decide our options; whether to take over the project and complete the building. We paid the booking amounts several years ago and have suffered due to this huge delay, and for no fault of ours,’’ he said.
Another buyer who has paid 70% for his Rs 30 crore apartment, said, “Our life savings are stuck. Many of us took huge loans. We purchased the flats based on sanctioned plans and the builder’s representations about clear title.”
Last year, one of the purchasers filed a case in the Maharashtra Real Estate Regulatory Authority over delayed possession. The developer was ordered to pay back the booking amount with 10.05% annual interest. However, the buyer has still not got his money back as the firm has gone into liquidation.
“If the company is wound up it will severely hurt our interests,’’ said a purchaser. The builder has defaulted on an Rs 900-crore construction loan from Indiabulls Housing Finance Ltd (IBHFL). IBHFL said, “The first instalment of Rs 200 crore has already been received in January 2019. The account was classified as NPA early on and the resolution of the case has come about after pursuing a litigation process in courts for two years.”
But there could finally light at the end of the tunnel. The SC has reserved its order on the skyscraper; the order is expected any day now. The SC will decide on the areas declared illegal in the tower as well as an adjoining 15-storey public parking tower on which BMC has levied an Rs 162 crore penalty on the builder.
Work on the Rs 3,500 crore Palais Royale project commenced in 2009, but it was soon embroiled in litigation following allegations of building violations by NGO Janhit Manch. Refuge areas, passages, swimming pools and structural columns were not included in the floor space index (FSI) when its plans were approved by the BMC almost a decade ago. In 2013, following a directive from the Bombay HC, the then civic chief S J Kunte reviewed the project and ordered that areas exempted from the building’s FSI be now counted as part of it. FSI is a ratio that determines how much can be built on a plot.
Kunte’s report observed, “The builder tried to install the project, at times in defiance of regulations. This act of defiance was evident in the construction of 44th to 56th floors when BMC permission was only up to the 43th floor. This is a very serious matter… The project proponent needs to eschew temptation to take recourse to defiance and then to present a fait accompli to the planning authority.’’
In 2016, Kunte’s successor Ajoy Mehta ordered the developer to seal or rupture four fire refuge floors and large refuge areas outside each apartment so that they cannot be misused. The commissioner in his report, prepared following a directive from the high court, also ordered that large refuge areas outside the entrance of each apartment in the 56-storeyed tower would have to be blocked. This was to prevent the flat owner from illegally amalgamating the refuge area and making it part of the apartment. These areas are adjoining the bedroom and drawing room of the flats.