It took just nine seconds to blast the 40-storey Supertech twin towers in NOIDA to 80,000 tonnes of rubble in a controlled demolition. A nine-year court battle set the stage for this hugely watched spectacle on a lazy Sunday afternoon on 28th August. Has justice been served? Will the wildly expensive demolition have a powerful deterrent effect on wrongdoers? Or is this just the beginning of a string of court-ordered demolitions as cases slowly wind their way to the apex court after decades?
Mere demolition does not right a wrong; but, in this case, it has not gone beyond the satisfaction of watching the culmination of a gruelling, decade-long legal battle with the symbol of corruption crumbling dramatically before our eyes. Some facts should put things in perspective.
Residents of Supertech Emerald Court, which originally had 14 towers of nine storeys each and a garden, discovered the illegal revision of plans way back in 2009. An additional tower was built on a patch shown as a garden in the original plans, without the consent or knowledge of the original buyers and more floors were permitted to the original ones.
In 2014, the Allahabad High Court (HC) had already ordered the demolition of the Supertech Towers. The HC decision was upheld by the Supreme Court (SC) bench of justices DY Chandrachud and MR Shah on 31 August 2021, which also ruled that home-buyers would be refunded their booking amount with 12% interest, plus a Rs2 crore payment to the Resident Welfare Association (RWA) which fought the battle.
However, Zee News also reports that one particular set of 59 (out of the 711) home-buyers, who invested in Supertech, have still not been paid. SC has directed the resolution professional handling the bankruptcy to deposit Rs1 crore by 30th September to ensure some interim relief to them out of a claim of Rs5.15 crore. All other claims from its other projects and bankers are in the process of being filed.
In March 2022, within months of the SC judgement, Supertech Ltd (that was set up in 1988 and went public in 1995), which boasted large construction and hotel projects around the world, defaulted on loans of over Rs430 crore and was admitted for bankruptcy proceedings. Now, investors and home-buyers in all those projects face a long and excruciating battle to file claims and fight to salvage at least some of their investments. A quick look at its smart website will reveal how wide the damage is: https://www.supertechlimited.com/
While these home-buyers may not even get their money back, look at the cost of flattening the two towers. RK Arora, the discredited chairman of Supertech, has said that he spent Rs500 crore on the towers, including the cost of land, permissions, paying back investors along with 12% interest (as per the court order) and about Rs20 crore on the demolition itself. This is for the two towers alone.
The damage from the bankruptcy of Supertech Ltd will be much higher. Since the bankruptcy application is recent, we have no details of the hit to investors and lenders (a dozen or more public and private sector banks and finance companies) in the resolution process. This link at Zaubacorp provides a long list of charges/borrowings by the company and who financed it: https://www.zaubacorp.com/company/ SUPERTECH-LIMITED/U74899DL1995PLC074422
There are at least nine other companies listed by Zaubacorp at the very same address as Supertech Ltd; so it is not clear if the bankruptcy and demolition of Supertech Ltd will affect the founder group in a big way or if they will manage to keep their wealth intact.
No Deterrence
The key concern about SC’s demolition order is that it stops with the dramatic spectacle and does nothing to nail those who facilitated the brazen actions of the realty group by granting illegal permissions and financing the ongoing construction. This only means that those who can fix the system will get away with illegality and a few who face determined action/litigation may get demolition orders every few years.
Remember, this media spectacle has come less than two years after a rather low-key but equally high-tech, court-ordered demolition of four buildings at Kochi (Kerala) in January 2020 for violating coastal regulations. This was nearly 30 years after the illegal top eight floors of the controversial Pratibha Apartments in Mumbai were demolished in 1989, and the entire 28-storeyed structure was eventually razed in 2019.
Meanwhile, the illegality at Campa Cola Compound (https://en.wikipedia.org/wiki/ Campa_Cola_Compound_Case) and several others were condoned in a compromise because the only ones hurt by the long-delayed action would have been the owners of these apartments, who may or may not have been aware of the violation in rules at the time of purchase.
Another scandalous construction, involving top politicians and bureaucrats usurping land belonging to the Indian Navy, remains in suspended animation. In this case, SC stayed a demolition order in 2016 and asked the Navy to take possession of the building. Real estate experts in Mumbai hope that this time around, the tower will be gifted to the Navy to house its senior officials, instead of another expensive demolition.
Corruption Unpunished
The biggest problem with the Supertech demolition is that it failed to punish government officials who colluded with the builders. The SC order says, “The record of this case is replete with instances which highlight the collusion between the officers of NOIDA with the appellant and its management. The case has revealed a nefarious complicity of the planning authority in the violation by the developer of the provisions of law.” And, yet, none of the officials at the Noida Planning Authority involved in the decision has been identified or punished. Remember, this collusion did not stop with dubious permits but was compounded by refusing to act on complaints or to stop construction even after the matter went to court.
Similarly, lenders and financiers, especially those who funded the two towers, remained mute spectators, instead of pulling the plug and reducing the damage, at least after the home-buyers had highlighted the illegality and filed litigation. For far too long, bankers and lenders have gotten away by colluding with over-leveraged realty companies breaking the rules. They have not only failed in their fiduciary duties but have ruthlessly tried to use the law to make scapegoats out of home-buyers.
This time too, bankers and lenders, as secured creditors, will head the queue of those expecting a share of the sale/liquidation proceeds from the Supertech resolution. This is unfair. Lenders cannot turn a blind eye to illegality in the belief that the builder will ‘fix’ things or be considered too big to ‘fell’ and then exert their rights as secured creditors who enjoy primacy under the Insolvency and Bankruptcy Code (IBC).
In legacy cases, filed before the Real Estate (Regulation and Development) Act (RERA) of 2016, only the apex court can ensure a just application of the bankruptcy law in the many large realty defaults making their way up from the appellate tribunal and the National Company Law Tribunal (NCLT). Millions of home-owners have their hopes pinned on the apex court coming to their rescue; but serious losses are almost inevitable.
Unless the courts ensure that those with fiduciary (lenders) or regulatory (government and municipal officers) responsibility pay a price for their lapses, merely tightening RERA will not work. It will only shift the epicentre of corrupt practices elsewhere. A highly regarded realty expert, discussing the Supertech case, tells me about a commissioner who cleared 30 dodgy cases in favour of builders before completing his term. If this is allowed to continue, future demolitions will not be celebrated benignly in a carnival-like environment but could lead to protests and unrest.
It is time court orders also move on from symbolism and tackle the root of the problem.
Rera act toothless regarding builders refund, compensation, interest etc to homebuyers due to unethical trade practices inspite of Rera authorities orders. Union Home minister not sincere in solving the issue inspite of Apex court orders to solve the problem. Minister doing only hero worship of his mentor.
Deterrent part of law should be brought in to force the promoters and abettors including Govt servants and authorities should be awarded life sentences for wasting national resources
At least begining has been ther is some fear in the mind s o f buyers if structure is not legal lobbying and voting byPOPI may not succeed and putting fear of financial pain in the minds of builders . otherwise de attitude was does not matter it will be regularized at the time of elections as Revdi from Revdiwals
Yes, that could've been done. But, why it was not done in the case of the Adarsh CHS, Mumbai and several other buildings? Even the RERA is silent about it. Political will. Obviously, the law makers' quid pro quo will be disturbed if the law is made fool-proof! The courts pretend unaware of it!
To my knowledge, all the existing flat owners have been ordered to repay their entire amount of booking with interest thereon, and that's a kind of penalty only on the builder. And apart from that, the towers have also been razed to the ground dealing a big blow to the builder. The original order to ground the towers was given by Allahabad High Court in 2014 and it has been dragged for the last 8 years by the builder.
Very well written article. Why the judiciary does not go to and strike mercilessly on the root is a very valid question. In Borivali alone, one builder, with the connivance of Registrar, BMC officials and politicians, has taken over some 70+ societies which has vacant R/G land and now constructing buildings on those R/G plots by taking loans from public sector banks against the 'land bank' so created. The bank is blindly giving loan against such land by ignoring the fact that there are building situated on the same land since last 30 years and they are true owners of the land! The flat owners are novice or lazy enough to not seek conveyance for 30 years and are now being compelled or coerced by this builder to get the society redeveloped from him as he has the conveyance obtained through 'grabbing' the society by other means.
It should be possible to make it mandatory for every builder to notify a certificate from the Regulatory authorities periodically(during the process of construction ,till Flats are allotted), that the work is progressing as per plans approved.
This way at-least the authorities would have some fear that they will be caught one day,if things are not as per plan.
In the absence of it, as it has happened in this case ,they take decades to fix up the contractor ,another few decades to fix the Authorities ,by that time they would have retired and counting last days ,mercy will any how endow on them .
One advantage of this arrangement is at least a few genuine officers will record sensible findings. I am sure not all are corrupted . Corruption actually stems from Govt of the day and democratically percolates down.
one point to be noted is at least the association (Buyers)should have made it public much earlier or they are also bought ?
Symbolism should end and a right way to tackle the root cause of corruption should be formulated and implemented. Despite Allahabad High court judgement in 2014, the whole process took 7-8 years to complete and that too, with fractured outcome in the sense that none of the government officers have been booked for the offences committed by them.
Any how, some good beginning has been made which should act as a deterrent for others.
The pressure that the complainants would have faced is something that can only be understood if you know some of them. Being summoned to Lucknow join the enquiry was just one of them.
You are absolutely right. The most guilty are the corrupt officials who go scot free every time! When will we have perspective? When will we learn? Will we ever?
Excellent article. if only the bankers that financed the project of this construction had stopped further disbursement immediately after being aware of the residents having filed cases against the builder over the illegality. Considering the \"reputation\" (read money and muscle power) of the powerful group, some of the bankers involved may have been surely benefitted in one way or other and decided to turn Nelson\'s eye. Now that the court order has been executed and there will be a bee-line of creditors for recoveries, investigations against the corrupt bankers followed by exemplary punishment should not be difficult. Decision makers for sanction of such huge loans cannot go scot free and must be made accountable even if they have retired as they were party to the wrong doing in a big way.
Why an alternate solution was not thought? Instead of demolition, the towers could have been saved. The government should have proposed demolition of those floors that are considered illegal. And the rest should have been saved and auctioned. Instead of demolishing 900+ flats, about 600 could have been saved. I am not aware whether this was proposed to the judiciary. I am not sure if the investors will get back their amount.
True. But the corruption is primarily created and fomented by Government and the Judiciary. As happens all over India, the inflation in financing costs, and input materials as well as delays, and the growing appetite of Government authorities for kick backs and pay off (aka corruption i.e.Extortion and Percentage) pushed the builders to exceed the officially sanctioned plans by a couple of stories per building. And this is fuelled by Judicial insouciance, bribe extortion and a tardiness that sets an example for your run of the mill glacier to live up to.
If you look deeper at the videos of people cheering the demolition of these illegal towers, then there is a message from voters in it for our elected & selected representatives, on whether the voters are for or against such demolitions. This was not "tamashgeen", tamashgeen emotions can be anything - sorrow, grief, anger, joy, etc - but this was more like early Dussehra.
Perception management also has a part. Both builders as well as buyers will exercise much more due diligence in future. The system can do only so much, considering how strong social media is now, any potential buyer or builder can find out the realities of what is going on before putting their money on the table.
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sale value on the builder?
This way at-least the authorities would have some fear that they will be caught one day,if things are not as per plan.
In the absence of it, as it has happened in this case ,they take decades to fix up the contractor ,another few decades to fix the Authorities ,by that time they would have retired and counting last days ,mercy will any how endow on them .
One advantage of this arrangement is at least a few genuine officers will record sensible findings. I am sure not all are corrupted . Corruption actually stems from Govt of the day and democratically percolates down.
one point to be noted is at least the association (Buyers)should have made it public much earlier or they are also bought ?
Any how, some good beginning has been made which should act as a deterrent for others.
Perception management also has a part. Both builders as well as buyers will exercise much more due diligence in future. The system can do only so much, considering how strong social media is now, any potential buyer or builder can find out the realities of what is going on before putting their money on the table.