Excelsior owners welfare association white paper

EXCELSIOR Owners Welfare Association

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Content Promise Vs Performance…………………………………………………… 3 Introduction……………………………………………………………………… 4 The Core Issue…………………………………………………………………… 6 Vox Pop…………………………………………………………………………….. 7 HC Ruling and CBI Report…………………………………………………. 10 Chronology of Development as it unfolded………………………. 11 Conclusion………………………………………………………………………… 17

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Introduction

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us….”

- A tale of two Cities, Charles Dickens

Dear Friends from the Media,

This dichotomy fits us so aptly - we, the owners of Excelsior, who today face a true Dickens situation of being caught in a crossfire between the Builder and the Government causing us hardships and immeasurable agony.

As you know, Excelsior is a joint project between the AP Government and Emaar MGF. It was promised to be a world-class community of 350 apartments overlooking a championship golf course. The bookings for apartments started in 2008 and the promised delivery was slated for June 2011.

The Current State

Now, seven years from the initial bookings and four years past the planned completion date, the project continues to be mired in controversy owing to conflict between the developers and the state government leaving the owners of apartments high and dry. There doesn't seem to be any clarity on the completion or delivery schedule.

The project seems to have slipped into a state of limbo with the owners having been left in the lurch notwithstanding the fact that the AP High Court and the CBI inquiry has given a largely clean chit to the Excelsior part of the project. It, therefore, defies the logic as to why Excelsior owners are being made to suffer.

Billed as the most reliable, modern and happening project that would add value to Brand Hyderabad and attract investments, Excelsior predominantly attracted professionals and NRIs (and many of them secured bank loans) to invest in this ‘safe’ project. Many have paid 100% of the apartment cost, but now, four years past the

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due date they are left with decaying skeletal structures.

NRI investors saw this project as a great "return-to-India" opportunity. But now they are left in disbelief as both the government and the builder seem to be apathetic to their situation. Today, NRI's are asking "why should we invest Hyderabad"? As a result, Brand Hyderabad too is taking a big hit.

What we demand

We demand that the 14 acres that represent the Excelsior Apartments be given to the rightful owners. The 14 acres are situated on the edge of the 535 acre Boulder Hills project and therefore, can be easily carved out. Even a separate entrance is available from a street adjacent to the Brahma Kumaris Institute in Gachibowli.

We are asking the responsible parties (the government and the builder) to step forward and work with the apartment owners to complete and deliver this 14 acres property as promised.

The Excelsior project represents only 2.6% of the total Boulder Hills project. 200 innocent buyers have been suffering for five years for no fault of theirs! The CBI has also reported that the 2.6% represented by the Excelsior apartments, were purchased transparently and with no wrong doing.

So we demand that those responsible relieve us of this suffering and unjust agony.

Representation by: Excelsior Owners Welfare Association

The Core Issue: Sandwiching of rightful owners

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The apartments block, known as Excelsior, sits on 14 acres within the 532 acre Boulder Hills project. There are about 206 apartments sold out of a total of 350 apartments that Emaar MGF was planning to build in phase 1. The apartment owners have largely paid up but the building complex, which was supposed to have been completed and handed over in 2011, has not been fully constructed except the basic building edifice which is now lying in a state of neglect.

Since April 2010, the project has been a subject of legal tussle between APIIC and Emaar MGF. The issue is around the villas that were supposedly sold below-par value on paper and the introduction of Emaar MGF into the project. The government claims lost revenue due to underhand dealings between the builder and the villa owners and due to a restructuring of ownership with the introduction of Emaar MGF. There was a CBI inquiry instituted at the Honorable HC’s instance into the whole matter. The Enquiry finally concluded in October 2012. With respect to the Excelsior part, the CBI gave a clear chit having observed nothing wrong in 206 apartments’ deals except one - which belongs to the builder’s MD.

Meantime, the government has put a ban on the registration of all properties in Boulder Hills including the apartments through its GO. As a result, even though the apartments are in no way connected with the villas in question, the Excelsior apartment owners are jammed in terms of registration. On top of this, the builder refuses to continue building the apartments claiming force majeure (until the registration ban is lifted).

The fact, on the contrary, is that nothing restricts the builder from completing the construction. But considering uncertainty and issues with their partnership with the Government , Excelsior owners suspect, the Builder probably does not want to risk any more capital deployment, no matter how grave the suffering of the apartments owners!

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VOX POP - Excelsior Owners

We chose Excelsior in Hyderabad to retire. We were then convinced that the Private- Public Partnership of the project would mean safe investment, and never realized that the Government would end up creating all this mess along with the builder! I have lost faith in our India systems.

- Manmeet Bedi, Dubai

As a US citizen, I always dreamt of owning a property in India. Given APIIC’s involvement, I felt safe to invest in Excelsior and took a loan from HDFC. All my hopes and dreams are dashed now and all the money has been stuck in this property since 2008. I paid the EMI’s for over 3 years, and then used my savings to pay off the loan. This has definitely soured my appetite for investments in India, especially Telangana.

-Satish Chandrasekaran, USA

My plans of retirement and love for the city, where I grew up has changed. It has made such a big difference in our thought process, I do not want to invest a single penny in India. I thought things have changed since I left Hyderabad for US when I was 17. But I guess not. It is still a sad story of all unjust activities. We started paying the initial payments in 2008. Now 7 years later still no outcome.

-Rashid Ali Khan, USA I bought a flat to live in retirement at Excelsior. I am close to retiring now and have no place to live on retirement. I bought the flat since the government was a partner and Emaar Dubai has a great reputation. If we can't trust the government whom can we trust?

-M. Sudhakar Reddy, Muscat

Was thinking of retiring in Hyderabad as we have family there. My brother-in-law from the UK also purchased an apartment with us at Excelsior. He and my husband had made grandiose retirement plans. Our hopes and plans have been shattered now and we live in a constant state of worry about the future.

- Gitanjali Bharath Reddy, Chennai

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This was my life time saving and hard earned money. Was very happy to own a decent place in my homeland. Now you cannot trust any builder however reliable they may appear and will never invest in Hyderabad.

- Mohammed Khalid, Riyadh

I invested in this project because my wife belongs to Hyderabad and we also felt that this is a good community living happening in Hyderabad and we can be part of it. Now we will think twice before investing in Hyderabad as this project has given lots of emotional trauma.

- Vedapuri Thachampattu, Saudi Arabia

Used all my savings to buy this apartment to use for my retirement. Total colossal failure. Lost faith in the system. Never invest anything that's involving government who is supporting all criminals.

- Dr. Srinivas Koneru, USA

Am Telugu speaking and wanted to participate in community living so purchased a flat in Excelsior. I am shocked that this sort of neglect can be meted out to genuine investors like us. Will surely not consider Hyderabad once again for investments due to the misery, agony and helplessness, I had to go thru with this project.

- NVSS Sarma, Dubai

We thought this would be a safe investment keeping in mind the brand name Emaar.....but now so disappointed. Now will think twice before investing in Hyderabad.

- Divya & Vikram, Dubai

After having such a horrible experience with this purchase, there is no chance to even think of buying any other property in Hyderabad. The Indian authorities always want to welcome NRI investment and then forget to care about them!!

- Ishu Rupani, Dubai

Even though I am from Tamilnadu, I chose Hyderabad because it has better infrastructure and quality of life than Chennai and Bangalore . Given EMMAR’s reputation and Govt’s involvement, we thought the project can't go wrong. Even now we have hope on Hyderabad's future.

- Dr. Lakshmi & Dr. Issac, TN

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The investment was made for quality life based on solid integrity of the promoters which turned out to be a big humbug. Discouraged for any future commitments even with public sector participation.

- Mohamed Banafa, Riyadh

I had taken a huge loan from a bank at a high interest rate. Irrespective of the situation, the Bank took all their money back with full interest. Indian authorities should really worry with their existing systems which provide no protection to the overseas investors. I wonder whether any one would ever do anything to resolve this issue. It's clearly visible to all BUT vested interests seem to rule!!!

- Sudhakar Murthy, USA

Lived in US for 15 years and returned with family to Hyderabad.Invested in Boulder Hills with our hard earned white money, after paying all taxes in US and India. Shocked and really disappointed at the turn of events.

-Sitaram Raju, Hyderabad

I am 76 years old, I came to India to establish an Investment Banking Subsidiary of our US based company about 15 years ago. I met several fellow Ex-Pats like me wanting to do something good and invest something back in the country of our origin. In spite of many obstacles we have been able to contribute positively to the State and Country. I decided to retire in Hyderabad to continue various civic activities.

I purchased a flat in Excelsior in Boulder Hills because it was in a good location and though it was higher priced, one could purchase the flat with "WHITE" money only. Also it was being developed by Emaar, which had a good reputation. I have paid the total amount. I am outraged to find that either due to corruption or incompetence, neither the bureaucracy, government nor Judiciary are able to do right by the people who invested in good faith in Hyderabad. This has taken more than 5 years and there seems to be no resolution to the situation.

How can the State and the Country expect more foreign investment to come when good investors are cheated like this? I for one will have to warn foreign investors who frequently solicit my advise to be extremely vigilant, i.e. Caveat Emptor.

- Sundar K. Sundaresan, USA

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HC Ruling and CBI Report Show the Owners as Innocent

As shown below, the Honourable AP High Court’s observations and that of the CBI report clearly establish the fact that the Excelsior owners are sandwiched in the conflict between the Developers and the state Government, and are made to suffer for no faults of theirs. Hence, their simple demand is completion of their part of project and handing over of the premises to them for which they have paid for and are the rightful owners.

HC Ruling

The AP High Court, on March 13, 2012, in the matter between Boulder Hills Villa Owners Association & Others (Petitioners) and Govt. of AP & Others (Respondents), observed:

“The principal argument advanced on behalf of the Government in support of the impugned G.O. is that the plots were sold at a highly unrealistic prices, …The CBI is investigating into certain aspects of the matter on the directions issued by this Court. The ultimate result of the same would tell upon the complicity or otherwise of some of the persons and agencies associated with the project, at certain stages…….. In case of the flats almost the entire consideration was paid. In the counter-affidavit it is not even mentioned that the considerations received for the flats is inadequate. It is only in respect of plots that doubt is expressed as to the adequacy of consideration, or allotment.”

The CBI Report

“Investigation also revealed that M/s EHTPL and M/s Emaar MGF Land Ltd sold the following apartments during the period 2008 -2010……

During the course of investigation, 14 apartment buyers or their representatives were examined and they have confirmed the rate mentioned in the document i.e. agreement to sell and construction agreement. All of them were found to be genuine buyers. However, it is pertinent to note that Shri Srikant Joshi, the then CEO of Emaar MGF Land Pvt. Ltd purchased an apartment in his name at Rs.3268 per sft whereas apartments were sold to other buyers between Rs. 4800 – Rs.9000 per sft.”

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Chronological EventsHere is chronological detail of how the issue built up over the years resulting in the current state.

The Project AnnouncementThe A.P Industrial Infrastructure Corporation (APIIC) through its GO no 359 of September 4, 2002 approved the proposal to set up an Integrated Township Project including Golf Course and multi-use land development at Manikonda, Ranga Reddy District in favour of Emaar Properties PJSC (“Emaar PJSC”) and conveyed the free hold to M/s. Emaar Hills Township Pvt. Ltd (JV between Emaar PJSC and APIIC)

The Development AgreementThe Owner executed a Development Agreement cum GPA dt.23-7-2007, in favour of M/s. Emaar MGF Land Ltd., the Developer Cum GPA, granting rights to develop the Project Land, for the Integrated Township “Boulder Hills” (Project) consisting of Information Technology Special Economic Zone, Multi-story Residential Apartments, Semi-Independent Houses, Villas, Hotels, Retail Malls, Golf and Country Club, Parks, Play Grounds, Open Spaces, and other Public Utilities, etc,.

The ExcelsiorA part of the Project Land admeasuring about 14.01 acres or thereabouts has been earmarked for the construction of Multistoried Apartments called Excelsior, Boulder Hills. Excelsior was started under the umbrella of “BOULDER HILLS GOLF AND COUNTRY CLUB which was advertised as “one of the ten most photographed golf courses in the world, you can count on it”.

The publicity materials claim: Boulder Hills Golf and Country Club is a world-class leisure and residential community spread out over approximately 531 sprawling acres (258.36 is outright owned by Emaar, the remaining 272 acres are a on a 99 year lease.). It has been envisioned as a complete, self-contained township spread around an 18 – hole championship golf course where every home is designed to the most demanding international standards. The estate is one of the most picturesque in the country with tree-lined streets and water bodies.

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Key Features of Excelsior (As advertised):

Located in the Gachibowli area, next to Nehru outer ring road.

30 minutes to the Rajiv Gandhi International Airport (Shamshabad)

Easy access to schools, restaurants, work areas, ATMs, supermarkets and

many leisure facilities.

Fully operational 18 – Hole Championship Golf Course.

Choice of 3 and 4 bedroom apartments.

Golf view/Green view premium apartments with views on 3 sides.

Premium amenities and finishes.

Good internal infrastructure – power generator back-up and sufficient

water supply.

Clubhouse with swimming pool and well-equipped gym.

Conveniences including restaurant and supermarket Clubhouse with Fitness Centre, Games Rooms and a swimming pool

Looking at the advertisement and brochure a number of people have purchased independent flats in Towers A to D and the number of flats for each tower are Tower “A” 52 Apartments, Tower “B” 101 apartments, Tower “C” 101 apartments and Tower “D” 101 apartments and the total number of flats that is 355 which have been categorized as 22 DIFFERENT flats depending on the size of each flat/apartment.

The Delivery PromiseBetween 2008 and 2010 numerous Construction Agreements and Also Agreements of Sales and for some registered sale deeds have been executed by in favour individual members by M/S.EMAAR HILLS TOWNSHIP PVT.LTD and M/S.EMAAR MGF LAND LTD.

The Promises made in the agreement“Commencement Date” is the 2nd day of July 2008 or the date on which the purchaser’s first installment of construction payment

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Article 4 –Construction Schedule

4.1. The developer cum GPA shall complete the construction of the Apartment within a period of thirty six (36) months from the Commencement Date with a grace period of six (6) months and subject to Clause 28.2 ‘Force Majeure’ of this Construction Agreement.

Article 11 – Developer Cum GPA Default

11.1 The Developer cum GPA undertakes that if they fail to comply with any rules and / or terms of license granted for development, or due to any act of omission or commission, any loss or harm is caused to the Purchaser then the Developer cum GPA shall be fully liable to bear such losses and / or damages. The Developer cum GPA shall keep the Purchaser fully indemnified in respect thereof. However, if as a result of nay legislative order or regulation or directions of the Government or any Public Authority, the Owner and / or Development cum GPA is unable to complete the construction of the Apartment, the only responsibility of the Owner and / or Developer cum GPA will be to return to the Purchaser the amount received from the Purchaser.

11.2. In the event of any delay in handing over possession beyond the time[including the grace period] stipulated in Article 4.1 hereinabove the Developer cum GPA shall pay the Purchaser as amount of Rs.5/- [Rupees Five Only] per square feet on total Built –Up area of the Apartment, for every month of delay or part thereof, subject to the Purchaser having paid without any default the Payments as per Article 5, and Exhibit III and Article 8 of this Agreement. The Purchaser agrees that the aforesaid amount shall be the only compensation payable to the Purchaser in the event of delay in handover of possession by the Developer cum GPA.

Article 18 – Completion Certificate and hand Over of Possession.

18.1. The developer cum GPA undertakes to provide the Purchaser physical possession along with Completion Certificate issued by the appropriate authority subject to the Purchaser having completed the payments as per Article 5, Exhibit III and Article 9 of this Agreement.

Article 19- Warranty and Defect Liability Period.

19.1. The Developer cum GPA and the Owner expressly agree to keep the Purchaser harmless and indemnified against all claims, litigation, courts decree, demands for damages, losses, costs and expenses which the Purchaser may sustain or incur by

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reason of any cause or causes whatsoever on account of the Developer cum GPA’s default under this Construction Agreement. The developer cum GPA shall carry out the construction of the Apartment with the same care and diligence they use in other similar projects and as per industry accepted standards.19.2. The defect liability period for the Apartment is a period of 12 [twelve] months from the date of issue of the Occupancy Certificate/ Completion Certificate by the Competent Authority. The Purchaser is required to give written intimation to the Developer cum GPA of any defects in the Apartment. The Developer shall rectify such defects, provided that the same has occurred or is due to defective workmanship or defective materials and the same is discovered and intimated within the Defect Liability Period.

The Reassurance On 17-9-2010 the Developers sent a letter to one of the customers wherein it has

been specifically stated that “we would like to reassure you that Emaar and Emaar MGF have all necessary approvals from relevant government authorities for development of the Integrated Project. The Development Agreement with Emaar MGF was also approved by APIIC, through its nominee Directors, about four years back. Parallely, we would like to apprise you on the development activity at the Boulder Hills Golf and Country Club. Gearing towards the committed possession in Mid 2011 we are in the process of completing the Sample apartments. These apartments would be ready for your visit in next 30 days.”

The Turning Point

In view of allegations flying thick about Villa pricing (nothing to do with Excelsior), On 8-10-2010 the Government of A.P has issued G.O.Ms.1279 dt.8-10-2010 wherein the Government of A.P hereby prohibit the Registration of the documents relating to the following properties allotted by the Andhra Pradesh Industrial Infrastructure Corporation Ltd, Hyderabad to M/s.Emaar Hills Townships Pvt.Ltd and Boulder Hills Leisure Pvt.Ltd. in the interest of the State Government.

The Excelsior Owners come together

On 21-5-2011 the Excelsior Owners Welfare Association got their association registered in the Office of the Registrar of Societies, Ranga Reddy District.

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The HC Stay & Reassurance by the developersOn 14-7-2011 e-mail was sent to one of the owners who is also the president of the Excelsior Owners Welfare Association wherein in the mail it has been stated that “we are glad to announce that the Hon’ble High Court of A.P, vide order dt.4-7-2011 has ordered stay on the operation of GOMs.1279 dt.8-10-2010 thereby enabling the registration of flats constructed i.e. your apartment. We sincerely appreciate your patience and support during these trying times. Construction at Excelsior in Boulder Hills will recommence shortly.” This stay actually came about because of a legal representation made by the owners association.

The Excelsior Owners Notice to the DevelopersOn 14-3-2012, as there was no proper response from the Developers with regard to the construction of their flats with no option left the owners got legal notice issued to the developers wherein it has been stated that the legal notice is being issued on behalf of Raghu Bathina and fifty six others.

That, under the agreements mentioned above, developers were to complete the construction of the flats by June, 2011 and deliver possession. That, in the event of your failure to complete construction, developers were to be given a further grace period of 6 months which expired on 31-12-2011. That, no construction activity has been carried out for these flats in the past one year. That, developers have failed to complete the construction and deliver the flats either by end of June, 2011 or under the further grace period ending on 31-11-2011. However, developers have wrongly invoked the force majeure clause to cover up your deficiencies and shortcomings.That, in view of the above situation, owners hereby call upon developers to furnish the dates on which the said flats would be completed and the compensation that would be paid by you for the delay in completion of the flats within 7 days from the receipt of this notice, failing which owners would be forced to initiate appropriate action under the appropriate provisions of law including filing of suits for specific performance of the agreements, filing of suits for compensation for the breach of contract and / or filing suits for recovery of payments made till now under the said agreements along with interest @ 24% per annum apart from claiming damages.

The Developers ResponseOn 30-3-2102 the developers sent their reply notice to the petitioners notice dt.14-3-2012 wherein it has been stated that “your clients (owners) are aware that the date of completion of construction of the flats was interalia subject to the fulfillment of other requirements of the agreements including time bound payments by your clients. The various incidents in the recent past involving various litigations with APIIC and the ramifications of G.O.Ms.No.1279 dt.8-10-2010 passed by the State

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Government prohibiting registration of documents relating to the properties in issue, in exercise of the powers conferred under Sec.22 A of the Registration Act,1908, has in effect triggered force majeure clause in regard to the project. All these facts are in public domain and your clients are well aware of the same. Further, all the files in the Company’s Hyderabad office pertaining to the project including the files of your client have been seized by CBI as a part of the ongoing investigation. Therefore, our client at this point in time would not be in a position to respond to your legal notice in details due to absence of records. Once our client’s records are restored, it would only be then and upon further instructions that we would be able to send a suitable reply to your legal notice. At this stage we are instructed to state that most of your clients have defaulted towards making payments in regard to their flat and the payments remain outstanding as of date and the annexure sent along with your notice evidence the same however, our client reserve their right to demand the outstanding amounts at appropriate time. Further, our client needs to address the notice sent by you on behalf of 57 clients individually and independently keeping in view that these 57 clients do not stand on the same footing on account of distinct facts and circumstances.We are instructed to bring to your notice and as your clients are aware that theArticles of the Agreement and Construction Agreement state thus:

Article 7.1 of Article 7 of Agreement:

“The owner and / or Developer cum GPA shall not incur any liability for failure to comply with this Agreement if the delay is due to reason of any force majeure condition viz by reason of any Act of God or Act of Government or any other reasons beyond the reasonable control of the Owner and / or Developer cum GPA”.

Article 28.2.4. of Article 28 of Construction

Agreement:

“During the operation of force majeure events, the obligations of Owner and Developer cum GPA hereunder shall be suspended until the termination of such force majeure events.”

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The Owners Estimation for Completion

On 12-3-2013 the owners got a valuation done for the unfinished work in all the four blocks (that is Blocks A to D). In summary the valuer found that the work could be completed in 9-10 months at a total cost of approximately Rs. 200cr.

In Conclusion

We call upon the new Government of Telangana and our visionary CM to take the initiative, work with the builder and owners to complete Excelsior and hand over the project and thereby also protect Brand Hyderabad.

Our appeal is that you carve out the 2.6% that is Excelsior and give immediate relief to 200 innocent buyers who are suffering for believing in Hyderabad.

For more information:1. Raghu Bathina (owners association) - [email protected]. Orion PR- [email protected]

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mailto:[email protected]

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Documents

Excelsior owners welfare association white paper