similar flat in a comparative location or a compensation that takes into account the market price in that locality,” said Sunil Agarwal, adjunct professor at the RICS School of Built Environment and MD, Black Olive Ventures.
The key question is the compensation itself, which is hovering around current interest rates. “The existing buyers of Supertech would be compensated only for principal investment with interest at the rate of 14 per cent per annum. This compensation does not take into consideration the return on investment that would have accrued to the flat owners,” said Aditya Tiwari, managing partner, Prudentius Legal Advocates.
Market observers say that properties in that region have risen at least four-fold over the last six years (the time buyers bought into the project) and those seeking a refund should do so being fully aware that it would take a great deal more to acquire a new property in the region or in other sectors of Noida.
“Exit generally is not easy, as the developer has already invested significantly on the construction of the project. And refund process itself might take some months, as it involves processing through various departments and the lending banks,” said Devina Ghildial, deputy MD, RICS South Asia, a certification body for the real estate sector.
Buyers do have the option of appeal before the Supreme Court, and this development would be keenly watched as any ruling by the apex court would be a settled question of law.
Need for a regulator
This episode once again brings out the dire need for a regulator for the real estate sector. The developers’ association Credai-NCR states that there is overlapping of rules that is creating confusion among developers and has called upon the government to provide clarification on the overlapping rules in the Act to avoid such incidents in future.
“With miscommunication, lack of approvals, delayed delivery of projects becoming a constant problem in this industry, there definitely needs to be some sort of discipline that needs to be instilled,” said Manpreet Grewal, regional director, Re/Max India, a brokerage firm.
Ghildiyal added that a regulator is necessary to remove the discrepancies prevalent in the market. “The regulator, as envisaged, will sanction the construction of a project only when the developer has fulfilled all the requirements relating to the project specifications.”
- Sandeep Singh & L Ramakrishnan
(With inputs from Timsy Jaipuria)