The Rape of the Home-buyer

Contributed by another JP homebuyer…….

When I look back into the JIL saga, a few hard truths become obvious. The JAL-JIL marriage of convenience aside, the entire operation reeks of a mega-scam. If Jaypee ever had any intentions of honoring its commitments, it would not have conveniently caved in to the insolvency plea by IDBI. Having collected 90% of the costs of the projects, which included his profits, there is no reason why the projects are not 90% complete. Why JIL has accumulated a whopping debt from the bank if it had collected so much money from the buyers for building their homes will remain a mystery to most of us. Any which way you look at it, one thing is crystal clear – Jaypee has intentionally cheated its clients out of their lives’ savings. If it misspent the money on projects we had not paid for, it does tantamount to willful subterfuge, regardless of RERA coming into force  after Jaypee had launched its proverbial Rome. Frankly, if applicability of provisions of RERA to Jaypee is disputable, so are the provisions of the insolvency law because both became in-actable well after the crime had been committed. How come the home buyers can’t get relief under RERA but they can potentially lose large sums of money because of the insolvency law? Justice, many say, must not only be done but must be seen to be done. Where is the justice here when the life savings of tens of thousands of people have been squandered away and those responsible are not even sorry about it, forget being held accountable for it. Doctors are held responsible for criminal negligence in botched up cases even when almost always there is no mal-intent on their part.

Why is there a deafening silence from the so called authorities on how the home buyers’ are to be compensated? I mean beyond the platitudes like “home buyers’ interests will be protected”. Why can’t we hear something like “home buyers have nothing to fear, their money will not be lost”. This is the reassurance which all are seeking but alas, to no avail. All we hear is that the all efforts will be made to ensure the continuity of the project. Nothing is being said about the money lost by the people in interests and potential rent even if we presume that some day in the distant future we get our apartments. Do the math yourself – your money would have more than doubled in 7 years if you kept it in the most conservative financial instrument, the Fixed Deposit. Almost double after deducting 30% tax. A logical corollary to this is that Jaypee sat on a large pile of cash all this time, earning interest, since obviously this cash was not used for building our homes. Those among you who are businessmen will probably cringe at my argument, for businessmen do not sit on cash, they make it work, to earn more cash. So I am willing to concede the benefit of doubt to Jaypee, that it used our money for something other than it was intended. Brings me back to my previous contention that this was criminal subterfuge. I don’t care if Jaypee’s business decision went awry. He had no right to gamble with my money. He had plenty of his own to do that. He has not lost any of his personal wealth while the trusting public who fell for his glitzy marketing has lost almost everything. How many of us can afford to take a hit of 1 crore rupees I can’t tell, but I for sure, can’t. It will affect the rest of my life in a way that Jaypee, the IRP or the government cannot even begin to appreciate.

A strange narrative is in the process of being created – that it is in the best interest of all the home buyers that this project somehow be completed. That there will be a further delay but we will all get our homes. That the home buyers should reconcile to making the best out of a desperate situation. Have no doubts my friends, we are going to lose a lot of money, almost the same amount we have already paid to Jaypee. For what we have paid already is no longer there. Jaypee wouldn’t be facing bankruptcy if the money was there. Right? Which means, there is no money to give us any interest on our deposits with Jaypee. Don’t be surprised if in the restructuring process, we are asked to cough up some more to complete the project. Is our best interest really being served? Is justice being served? Expecting us to accept a compromise formula is like asking a rape victim to marry the rapist. To be fair, this is a classic dilemma. The math is not on our side. There is no way insolvency of JIL alone can in any way provide justice to all those who have been cheated. And as far as the rape analogy goes, nothing short of criminal prosecution of those responsible will meet the interest of justice.

Legal professionals and many others are not able to question the validity of a law itself, they are trained to think within the confines of the law. After all, a law once adopted, forms the basic fabric of society around which order is maintained. Common sense or interests of a small group alone cannot and should not determine the constitutionality of a law. But the institutions of law and justice do not operate in a vacuum. They operate in a social context. Our Constitution assures justice for all. The insolvency law per se may have its relevance in a complex, modern world where success of business is important for healthy progress. But the insolvency law as it applies to the Jaypee situation misses the entire social context which law is supposed to serve. Needless to emphasize on the emotional and financial aspects of thousands of shattered dreams built around one indisputable and fundamental truth of Indian society – to have our own homes. If the Interim Professional is not able to come out with a just solution, and the law takes its course, along with JIL our money and dreams would also be liquidated. The law is dispassionate, it has no special place for home buyers as a category. Even if it did, there is not enough money to compensate everybody. Wrap your heads around this fact – our money has been stolen! We have been raped. And from the initial silence of the law and its enforcers, it appears to me that it is the victims, not the rapists, who are facing the heat. Consider this, the law enforcement is not leaving any stone unturned to uncover the financial crimes committed by Lalu Yadav and his family, the quantum of which is peanuts compared to what Jaypee has stolen. The only way justice can be served is by recovering the millions from Jaypee, no matter what it takes. Unless an example is set, home buyers will never be safe in this country.

I am not a sucker for conspiracy theories. Around Jaypee they abound. Before I give in to the temptation, I would like to understand how thousands of crores have gone missing. For the home buyers there is little hope, the best they can manage is a home after further delay, the worst – a fraction of what they have paid Jaypee till now. I for one, have learnt my lesson in economics, the two fundamental properties of money – it has wings and it changes hands – thanks to Jaypee. Shouldn’t there be a lesson for Jaypee too in this saga?


Circus Circus – are we in Vegas?!!

Just a few days back there was this ruling by the honorable Supreme Court upholding our ‘right to privacy’ in the context of the use of Aadhar card by the government for some purposes. And I am wondering what is the hierarchy of our rights! What is that reasonably logical order in which we can put our various rights?  I feel the fundamental rights could safely be derived from the fundamental needs that should be met to ensure human existence. Those would be ‘food, clothes and shelter’ – ‘roti, kapda aur makaan’  a slogan rampantly used by our politicians too, when they solicit our votes. So my right to the ‘security’ and ‘privacy’ of my home should rank much higher than the need to my privacy from the prying eye of government into my social, commercial or financial activities. I am not questioning the importance of ‘right to privacy’ at all. No way. I am all for it. If we agree on this basic premise of ‘hierarchy of needs’ then why are so many legal hurdles there between me and my house that I paid for, in full, through crossed cheques/ bank transfers? Why are the JP home buyers being made to go through fire hoops to get their right to their home? Why are we even part of this circus at all?

We, and many like us, paid the full amount upfront, for a promised flat, by April 2012 itself. This means the builder not only got the full cost of everything he was going to spend to develop the entire project, but also booked his profit. It wasn’t even deferred profit, mind you, it was upfront. Money earns money. In businesses money doesn’t lie idle even for a day. It earns on a daily basis. The builder has already earned money with our money right from the day we paid up in full. He didn’t share that profit with us!! Whew! But we are generous enough to let him have it. Most other buyers had also payed to the extent of between 60-80% of the total cost around the same time. Where was the risk here? Are we in Vegas?!! No. We didn’t play roulette or black jack. We just bought homes. If buying a home does carry such big a risk, like it does when you buy shares, mutual funds or other similar products, why weren’t we so advised by the builder?

Our money was given for the specific purpose of building our homes and if it was used for some other purpose by the company without our knowledge, much less consent, it’s tantamount to ‘breach of trust’. Why should we be made to lose our homes for the builder’s misadventure? Also, we could look into the bank debts of the company. Was the amount loaned in one go to the company or in tranches? What were the liabilities between 2011 and 2014 which is when most completion and delivery was promised, at least for our project I know. If the company’s debts/liabilities weren’t too bad then, it establishes it had no intention to finish and deliver. It’s a fraud. This company doesn’t look like an honest debtor at all. Insolvency can’t be abused to cover fraud.

Now time to consider the ‘what if’. What if, we do go with the resolution plan and later IRP also comes to the conclusion, which it most likely will, that there aren’t enough resources with the company to build the projects to the promised standards, with delay fees and dues factored in, what do we do then? Is there a reset button we can press to get back to the factory settings and start all over again, where we can look into the accounts of JIL/JAL to find the money? Or we just let the home buyers’ dues wash down the bankruptcy drain while the bank and the company remain unaffected. Because once this insolvency ship sails, this one huge possibility of resolution i.e. looking into their wrong doings and recovering money from them, will be closed. All those possibilities have to be explored and analyzed now, before it goes into insolvency.

Oh, please, don’t even dare suggest that homes can be built but no money for delay fees! That’s not acceptable to us at all. We can’t afford to be that generous. We are mostly salaried people with very finite limited resources. Most of us in the services do not even have too many working years left, or are retired already. We’ve invested 15-20years worth of savings in this home. How do we replenish our retirement corpus? We won’t get 10 additional years to serve to recoup the loss. It just erases that many productive years from our lives. We have incurred the loss on our investment in terms of the possible capital gains from the promised date of delivery onwards as also the rental return from it since. It’s a lot of money for us. We won’t get to earn it back even if worked all 365 days 24 X 7 for the rest of our working years. We are in no position to absorb the loss. The bigger question – Why should we? Shouldn’t my ‘right to my home and my money” supersede all other laws?

PS – Circus Circus is the largest hotel in Las Vegas, the city for gamblers. It’s almost like a city within a hotel pretty much like wish town is a city within a city.

Hostages of Corporates

India at 70: Taking a test

India at 70 has to be better than it was a year or years before. Tomorrow should be better than today. Otherwise there is no purpose to human endeavor. But that’s not how home buyers at Jaypee wish town, who are being cheated out of their life time investment, are feeling right now. No, don’t feel smug if you are sitting in your living rooms sipping tea, thinking it has nothing to do with you. No, you aren’t done buying. Soon your children will be home buyers. And if we let these builders get away with this fraud, we are paving way for a truckload of bad practices by setting a dangerous precedent. By emboldening them. By telling them that it is all right to cheat, the law can be taken advantage of because custodians of law can’t see the forest for the trees, the spirit of the law for the letters. It’s a question of the rights of all consumers, present and future. Without their protective rights, consumers are just hostages to the corporates.

All my fellow citizens, take it as your battle too on behalf of all our children and youth who will soon make that mandatory trip to the builder’s office where they sell this dream of owning a pretty house by showing those glossy brochures. We are house proud people. We don’t make a trip to Antarctica or go skiing on Carpathian mountain slopes first thing with our money. We buy our dream home. It’s an aspiration of the entire middle class to improve their lives and a home plays a central part in this dream. So, nobody has immunity here. Nobody.

The Jaypee home buyers’ case is a test for all of us at 70 to see how strong our democratic institutions are: the legislature, the government, the judiciary, the law enforcers, the corporates, the banks, the resident citizenry and the Indian diaspora. It’s a test for legislators, whether they will amend the laws, if required, to protect the interests of vulnerable public or serve the corporates who fund their election campaigns. It’s test case for the government’s intention as to what kind of growth story they are going to write. Are they going to write this story with the amputated spirit of the hard working middle class from whom the money and homes are being snatched away to replenish the banks? Are they going to protect the interests of Indian consumers and hold them supreme or will they just look the other way and offer sympathies? Is it even a growth story of India at all? For what growth story could be complete that does not include all of us consumers as willing partners?

It’s a test case for the judiciary whether they are going to go with the principles of natural justice or just wrap us up in legal intricacies that may or may not be sufficient to protect our interests best. We are not the ones who draft the agreements. It’s the builders and big corporates with their battery of competent lawyers who choose every word carefully to protect them from all eventualities, including, like this one. We don’t get our agreements vetted by supreme court lawyers before signing them to buy a house. But now our documentation will be dissected word by word by them. Again the best lawyers will be hired by the builder to find grey areas that may help them. Most of us do not have legal literacy. Many of us, despite being fluent in English, can’t even understand a legal document, much less draft it. But then, point is, not knowing legal jargon is not a crime. Knowing it and using it to shield bad, greed driven decisions and duping people of their hard earned money is. We’ll see in the coming days whether the insolvency laws are for justice or an all-powerful instrument for the corporates to hide behind and dodge accountability and liability of penalties. We’ll see in the coming days whether NOIDA authority will own up why they kept clearing new projects for Jaypee Associates Ltd. and Jaypee Infratech Ltd. when work hadn’t even started on the older ones. We’ll see in the coming days whether JAL and JIL accounts are held to scrutiny by the law enforcers or wrong-doers allowed to flee the coop with the people’s money. What happens in this case will indicate what kind of nation are we building.

Look at the paradox. The company that’s going insolvent can still afford to hire the most expensive lawyers while the defrauded public that is actually on the verge of losing its life’s savings is scurrying around, collecting paltry contributions to find an affordable lawyer to represent them in court. And they are trying so hard to prove the obvious, that they have been cheated, that they are the victims. But, here’s the thing. If they go ahead with the insolvency proceedings, it will be equally hard for the courts and the government to convince the public how it is justified to declare a company insolvent, possibly bankrupt later, whose leadership continues to live in the lap of luxury and carry on with all its businesses as usual, without this financial catastrophe making any dent on their wealth and businesses while home buyers just go bust. The corporates will laugh all their way to the bank if the law helps them to shake off their liabilities. How does this exercise restore ‘public confidence’ in the system? And what about the other pillar of success of the insolvency law –  ‘business ethics’ or ‘commercial morality’? Won’t that take a nose dive too? Won’t this insolvency pave the way for other builders who have been stretching their businesses beyond sane limits and delaying delivery of homes all across the country?

It’s a test case for the Indian diaspora who still invest in Indian real estate – whether they will stand by the rest of us here or cash out and not look back.

And above all it’s a test case for the corporate leaders. We don’t disparage your wealth. We don’t hate you for being rich. We admire you. We aspire to be you, to be success stories. We have nothing but admiration for entrepreneurs whether some of us admit it or not. They are the risk takers who step out of the comfort zone to reach for the stars. They think differently, do differently. But here’s the thing. An entrepreneur also has the integrity to take responsibility for bad decisions that go awry and incur losses. An entrepreneur has the courage to take a hit, own it, stand up, brush the dirt off and rebuild. If you hide behind some loop holes in the law to dump losses incurred because of your bad decisions on the very people that reposed their faith in you, you are nothing but a cheat. That’s what sets an entrepreneur apart from a fraud. Both can make money, but frauds won’t get our admiration and respect. Lack of commercial morality will destroy public confidence in you and in the system you abused.

To cut a long story short, we have a situation here in which there is this company playing the hijacker, the home buyers are the hostages sitting in an airplane called a township, the implied ransom is shake off of penalties and dues liable to the buyers. The dire consequence is liquidation where hostages probably get nothing. The government can either negotiate with the hijackers or just offer sympathy saying it was a fly by night operator not a national carrier flight. But the court here is the commando team that can ambush the hijacker, bring him to book and ensure release of hostages, to restore order and public confidence. Fingers crossed!