Pune Homebuyers Drag Tata Housing to Consumer Court

The past few years have been turbulent for the Tata group’s housing arm. Tata Housing Development Company Limited and its subsidiaries have been in the news for the wrong reasons across the country. Despite a management shake-up and a corporate restructuring that is in the works, several of the real estate developer’s projects are mired in controversy.

On November 5, 2019, a complaint against the company was filed before the country’s apex consumer court by 20 homeowners who have purchased flats in the Tata Housing developed “La Montana” township. This is one among more than 20 complaints listed on the website of the National Consumer Disputes Redressal Commission (NCDRC) from 2019 that are going on against this particular company.

Located in Maval taluka on the outskirts of Pune, Maharashtra, La Montana is a project developed by Tata Value Homes Limited – a Tata Housing subsidiary that is focussed on the “affordable housing” segment of the group’s real estate business. Tata Value Homes has denied the allegations made in the complaint. 

Described in an advertising brochure as “a home that gives you all of life’s pleasures,” La Montana was intended to be “an integrated township with all the amenities to live the life you always wanted” and “a township with a Mediterranean soul in its terraced layout and its architecture.” However, for homeowners in the complex, the reality has turned out to be nothing like what had been promised. 

Their complaint before the NCDRC relates to a number of issues including non-delivery of the promised infrastructure inside the housing complex, misleading advertisements and non-compliance with contractual terms. These homeowners have been locked in an escalating confrontation with the company for over three years now. NewsClick has spoken to multiple sources––all of whom requested anonymity, fearing that identifying them could jeopardise the proceedings before the commission––to learn about the homeowners’ substantive grievances against Tata Housing.

‘Misleading Advertising and Delayed Possession’

In 2010, Tata Housing started advertising the project to potential buyers of flats. While the first homes were supposed to be completed and delivered by December 2012, flatowners were given possession much later, starting from late-2015 till early-2016, implying a delay of three years.

The application form to book flats in the township is alleged to have had “one sided” terms and contained “misinformation.” One such condition is said to be a clause requiring the forfeiture of around 20% of the value of the flat if the booking was cancelled by the buyer after allotment, with a penalty of 18% per annum if the buyers defaulted on timely payment of instalments. 

Meanwhile, Tata Housing and its parent group retained sole discretion to change the terms and conditions in the application form as and when desired and no date was fixed for executing an Agreement for Sale. Allegedly, the buyers were allotted flats much after the stipulated period of 90 days (that had been specified in the application form).

Certain clauses in the Agreement for Sale are alleged to have put the homebuyers at “considerable disadvantage.” No date was fixed by which possession of the flats and amenities would be handed over to homebuyers, and in case of delay, the company would be liable for a total refund with only a 9% interest rate.

Regarding “misinformation,” it is alleged that the actual site of the township is around six kilometres away from where it had been specified in the brochure. While the brochure had promised that the township would be located in Talegaon, the actual township is not––a crucial change given the difference in the values of land and the attractiveness of the area for homebuyers.

‘Contractual Non-Compliance and Incomplete Delivery Of Services’

After the homebuyers belatedly took possession of their flats, it is alleged that the township was incomplete. It did not have a landscaped boulevard, a retail zone, a school, clubhouse, walking path, swimming pool and healthcare centre––as had been promised. What was supposed to be an “integrated township” had allegedly been bifurcated into multiple phases, and delivery of amenities had also been staggered in a manner that was different from the terms offered in the advertising brochure, the application form and in the Agreement for Sale.

Later, following extended negotiations and talks that moved back and forth among homebuyers, the developer allegedly replaced the promised healthcare centre with a single medical clinic. Work is reportedly yet to begin on the educational academy/school. Additionally, it is alleged that the clubhouse provided by the developer is much smaller in terms of floor area than what had been promised and paid for by the buyers. 

Homebuyers further alleged that the car parking space was inadequate as were the rainwater harvesting facilities. They claimed the electrical wiring system was faulty and resulted in electric shocks to some residents. One particular homebuyer, an electrical engineer by profession, said he had prepared a detailed report of the shortcomings in the wiring system.

Many of the buyers of “affordable housing” are retired persons or those close to retirement. Some said they were attracted to investing their hard-earned savings in this housing project because of the facilities that had been provided at a “reasonable price.” Speaking to Newsclick, one homeowner claimed that “it was because of our trust in the Tata name that we even went for this project in the first place.”

However, Tata Value Homes denied the allegations made against the company in the NCDRC complaint in an emailed statement sent through its communications partner, Adfactors PR. 

The statement reads: “The Company denies the allegations. Any issues are due to reasons beyond the control of the Company. As a reputed company, we take all necessary actions in the interest of its customers and in accordance with the applicable laws.

The La Montana project has been completed in phases and possession has been handed over to the customers in terms of the agreement with the customers. The Company has formed the Society of the residents and handed over the operation and management of the Project to the Society. The matter is currently subjudice.” 

Tata Housing’s Troubles

The La Montana complaint is the latest in a growing stack of problems Tata Housing’s various projects are facing. In 2017, one of these authors had reported on two projects by the company, in Chandigarh and in Bahadurgarh, Haryana, in which complications had arisen. While the environment clearance for the Chandigarh project was cancelled by the Punjab and Haryana High Court, the complaint by a whistleblower Nitya Nand Sinha, regarding the affordable housing project in Bahadurgarh, Haryana remains pending before multiple authorities––this story has been covered by Newsclick from time to time. 

The La Montana complaint is not the only instance of a Tata Housing project in Maharashtra that is facing problems. In July 2018, residents of the “Tata Amantra” complex in Kalyan, on the outskirts of Mumbai, had alleged that they had faced 30 hours of constant power cuts and malfunctioning waterlogging prevention systems, besides other complaints with the developer.                                                                                                                

In 2018, the Tata group executed a change in the top management of Tata Housing, with former chief executive officer Brotin Banerjee resigning and a real estate “veteran” Sanjay Dutt taking over. In the same year, the group also announced that it was merging Tata’s Housing, realty and infrastructure businesses in a corporate restructuring programme that had raised hopes that the complaints and allegations that had been made, would be addressed. To what extent, these hopes will be fulfilled remains to be seen.

The writers are independent journalists.