There is a correction at the end of this report.
Call it the DLF effect. Weeks after anti-competitive practices watchdog Competition Commission of India (CCI) slapped a Rs 600-crore penalty on real estate developer DLF, it will consider a similar complaint against Kolkata West International City (KWIC) Pvt Ltd, the mega township project of Indonesian conglomerate Salim Group in West Bengal.
KWIC customers filed a petition before CCI on Friday, seeking immediate action against the project promoters for failing to deliver more than 6,000 residential units and inserting abusive clauses in the allotment letters three years after the scheduled completion date.
The international satellite township, planned in Howrah district, off Kona Expressway, is a joint venture involving the Salim Group, Indonesia-based Ciputra Group and Singapore-based Prasoon Mukherjee of the Universal Success Group. Kolkata Metropolitan Development Authority (KMDA), which leased out 390 acres of land to KWIC to build 6,100 bungalows, three information technology parks, and other amenities such as schools, hospitals and shopping malls, has also been made a respondent.
Of the 6,100 bungalows commissioned, 800 were slated to be delivered in Phase-I by the end of 2008. Of these, just 170-odd bungalows are complete, but without any infrastructure development at the site.
By June 2010, after getting the completion certificate from KMDA, KWICPL issued letters to take possession of about 169 units of the 800, slated to be completed in Phase-I. “However, there were no infrastructure and facilities in place,” said Abhay Upadhyay, the president of KWIC Buyers’ Welfare Association.
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According to Upadhyay, who is also the petitioner, the company abused its dominant position by imposing highly arbitrary, unfair and unreasonable conditions on the allottees. Citing the recent CCI verdict on DLF, the petitioner said most of the clauses of KWICPL were similarly abusive and unfair as those of DLF’s.
Customers said the government endorsement (former West Bengal chief minister Buddhadeb Bhattacharjee launched the project in 2006) and the participation of KMDA had given credibility to the project.
“With a promise to complete the project by 2008, the company started collecting money from customers from 2006 itself. By July 2008, 80 to 100 per cent of payments were collected, though not a single brick was laid by that time,” said M L Lahoty, the petitioners’ counsel.
Lahoty, who had also represented the petitioners in the DLF case, said the agreements drafted by KWICPL had exempted and excluded the company from any liability under the agreement, while all liabilities and consequences were foisted on the allottees.
The agreement allows the company to change all the specifications of the residential blocks and the use of common areas without the allottees' consent. When contacted, company officials said they had no information of any notice yet. “We have no intimation of any kind of a notice filed to the competition commission,” said Prasun Sengupta, CEO of NKID (New Kolkata International Development), the holding company of KWICPL.
The company said the delays were attributable to the slowdown and efforts were on to complete the project in time.
“260 bungalows have been completed and the owners have started taking possession. Work is on for the completion of the rest,” said a company spokesperson.
The petitioners have now sought an interim ruling from CCI to immediately restrain the company from selling off its assets and appoint an independent committee to oversee the project's completion. The petitioners also wanted the payments made by them to be moved to an escrow account to be utilised for the specific purpose.
The KWIC management sent a letter to the members of the buyers’ association on June 6, 2011, stating that Punj Lloyd had been engaged to complete the major part of the unfinished bungalows. “On June 6, KWICPL informed us it had appointed Punj Lloyd Ltd to complete a major part of the unfinished units and that construction would resume on July 15, 2011 after full mobilisation of labour, equipment and material. However on visiting the site, I found there were still no more than 200-odd workers there,” a buyer said. According to estimates, at least 1,500 workers are required at the site to complete the project without further delay.
Hailed as the first foreign direct investment project in the Indian housing sector, the project cost of KWIC was pegged at Rs 2,500 crore six years ago.
KWIC had roped in real estate player Unitech as its marketing partner in 2007, though the Delhi-based company disassociated itself with the project later.
Correction
The headline of this report had earlier referred to the Kolkata project as one belonging to DLF. We regret the error.