The township ‘Madrid County’ was developed by Pacifica Companies, headquartered at Ahmedabad after forming a Special Purpose Vehicle (SPV) named Dharti Madrid County LLP (DMC) with the landowners, Chaital Bhatt and family. (Rerpesentational)The owners’ association of a luxury residential project in Vadodara has taken to the social media after an ongoing tussle between the land owners and a project developer over the share of profit from the receivables has left around 200 buyers in the lurch. As many as 42 individual case applications of buyers are pending before the Gujarat Real Estate Regulation Authority (RERA), 2016.
San Lucas, a project of seven wings in three high rise towers, with a total of 336 units, has 200 flats ranging from 2BHK to 4 BHK sold since 2014. According to the buyers, the project was due for completion in 2016.
The township ‘Madrid County’ was developed by Pacifica Companies, headquartered at Ahmedabad after forming a Special Purpose Vehicle (SPV) named Dharti Madrid County LLP (DMC) with the landowners, Chaital Bhatt and family. The project was incomplete when RERA was implemented in 2016 in Gujarat.
“The buyers purchased the flats at different times but the developers gave the expected date of possession as 30 months (ending in 2016) in the agreements. While the promotional activity was done by Pacifica, the agreements were signed by DMC… we made the payments to DMC. Many of us have bought flats either in buyback scheme or in a promotional 20:80 scheme at the time of booking, under which the developers promised to pay the interest on 80% loan amount. As construction stopped and the bank accounts frozen, this interest is not paid since April 2018,” says Nitin Bhatia, a member of the San Lucas Owners’ Association, who has individually petitioned RERA to intervene in the matter, seeking a refund of about Rs 38 lakh. Of the 200 buyers, some are investors of a buy-back scheme promoted by the developers — where the buyers would resell their flats to the developer for the prevailing market price at the time of possession.
In an appeal before the RERA Appellate Tribunal in October 2019, Chaital Bhatt said, “It was incumbent upon the developer partner of the LLP to ensure that the funds or receivables from the sale or allotment of units were managed in a manner so that the ratio of the land owner’s entitlement of sale consideration was maintained without any disruption… However, the developer partner failed in its obligation, mismanaged funds and made use of the receivables in direct violation of the terms of the Agreement to Sale.” He claimed that the delay since the inception of the project was due to the inability of the LLP to make timely payments to the landowners.
In the petition, Bhatt contended that the landowners have received only Rs 39 crore from the total recovery of receivables to the tune of Rs 234 crore made by the developer, which makes only 11% of the share, instead of the originally agreed 30% share from the receivables, amounting to Rs 84.83 crore.
In September 2019, RERA ordered Bhatt to “extend full cooperation in the project payments by signing all advices approved and signed by the RERA auditor as well as to immediately execute and sign the agreements for all the allottees of Madrid county and DMC LLP. The same order also directed Rakesh Israni, CEO of Pacifica, to “immediately infuse Rs 50 lakh in RERA account within a day and to further infuse Rs 4.5 crore within a fortnight” to restart the project work on-site, also laying down provisions for weekly monitoring of the project by the RERA auditors. However, the promoters and developers have not yet resumed work on the project.
Advocate Jagruti Dekavadiya, who is representing Pacifica before the RERA Tribunal, said, “RERA passed four orders in favour of the customers, ordering Chaital Bhatt to execute the sale deed but he is not signing it. All customers have signed consent to execute the remaining project through Pacifica Infraspace LLP and given it to RERA.” Dekavadiya said that the Bhatt family began demanding a hefty sum of money from Israni after the value of the land went up due to the project under Pacifica brand name.
Dr Amarjit Singh, Gujarat RERA chairman, told this newspaper, “We conducted hearings and sought a detailed forensic audit of the partnership firm, report of which was submitted to RERA just before the lockdown…We will be able to resolve this soon.”