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Did Tata Value Homes Dupe Home-Buyers?

Nearly a year after a management shake-up, the Tata Group’s housing arm remains mired in controversy. A whistleblower, who exposed how group company Tata Value Homes allegedly misled property buyers in Haryana, has been silenced by defamation cases.
Tata Value Homes Dupe Home

An article published in the Economic and Political Weekly in July 2017 had detailed allegations of fraud against Tata group company, Tata Value Homes, which is setting up the ‘New Haven’ housing project in Bahadurgarh, Haryana. The allegations, which were first made by a former employee of the company, Nityanand Sinha, who was a senior engineer working on the project, was taken up for investigation by the Haryana government’s Town and Country Planning Department, and an inquiry is going on. Meanwhile, Sinha has been dragged to court in Mumbai and Gurgaon by the company on charges of defamation for having publicly aired his allegations on social media and was barred from speaking to the media by the Bombay High Court.

A year and a half down the line, the Haryana government’s inquiry, stymied by non-cooperation from the company, has seen little progress. Whistleblower Sinha remains under court orders that prevent him from speaking to journalists, while the defamation cases are pending. What has changed though in the interim, is those at the helm of Tata Value Homes.

In February 2018, the company went through a major shake-up in its top management. On February 5, the Economic Times reported that the Tata group was “putting its house in order.” Brotin Banerjee, chief executive officer and managing director, Tata Housing Development Company Limited and Tata Value Homes, was set to quit and the company’s promoter, Tata Sons, had directed an internal “special review.” The news report stated that 10 out of the 19 projects being executed by the company had come under scrutiny due to a range of problems. Angry home buyers had been sending complaints and even legal notices to the company’s directors. Within two days of the report, the company confirmed Banerjee’s resignation.

On March 1, 2018, Tata Sons announced that it was reorganising its realty and infrastructure businesses. Real-estate industry veteran Sanjay Dutt was brought in as managing director of Tata Realty and Infrastructure and it was announced that Tata Housing would merge with this company, with Dutt also overseeing its operations through the merger process. The merger is yet to be completed.

In July 2018, Tata Value Homes was pulled up by a district consumer redressal forum in Chennai and ordered to pay ₹8.9 lakh back to an aggrieved customer. Critical comments by other aggrieved consumers continue to appear from time to time on the company’s social media pages, with Newsclick having aggregated at least four such instances of complaints between March 2018 and October 2018 that are related to projects being set up by Tata Value Homes in Pune and Kolkata.

The changes in top management were clearly not enough to address the issues that had cropped up in Tata Housing and Tata Value Homes. In September 2018, Livemintreported that over a 100 employees had left Tata Housing since the merger with Tata Realty and Infrastructure was announced. Citing three unnamed sources, the news report added that “with tepid sales and with barely any fresh launches in the last one year...[the company] has come under pressure.”

It can be argued that Sinha’s revelations was the first domino to fall in a chain reaction that has led to the current mess in the company. He first attempted to highlight the irregularities through the company’s internal hierarchy in March 2015 when he discovered what he claims was a fraud being sought to be committed on customers. In September 2015, he first made his allegations public on social media after having been forced out of the company. Sinha was even allegedly “manhandled” by company representatives and in March 2016, he registered a complaint with the Economic Offences Wing of the Delhi Police.

Sinha had discovered that the company he worked for as a general manager – HL Promoters, in which Tata Value Homes owns a majority stake – was responsible for executing the New Haven project in Bahadurgarh, Haryana, and was allegedly arbitrarily inflating the saleable areas of the flats that it was offering for sale over the values calculated by architects in the approved plans for the project.

His allegation was that if the flats were sold at the rates calculated on the basis of the “inflated” saleable areas, the company would earn “undue gains” of ₹60 crore. After realising what was going on based on his examination of internal company documents and emails, Sinha attempted to escalate the issue within the company. However, his efforts came to nought and he was forced out of the company in June 2015.

After he posted his allegations on social media in September 2015 and sought to blow the whistle on his former employers, he was immediately slapped with two defamation cases by the company – one in the Bombay High Court and the other in the District and Sessions Court, Gurgaon. The Bombay High Court ordered him to take down his social media posts and gagged him from repeating his allegations to the media in an ad interim ex parte order – that is, before hearing the case on the merits – in October 2015.

Meanwhile, bookings for the project continued unhindered having started in May 2015. In a draft buyers’ agreement posted on the Tata Value Homes website, the company stated nearly identical saleable areas for the flats as Sinha had alleged that these were fraudulent and arbitrary.

In March 2016, in Sinha’s written complaint to the Economic Offences Wing of the Delhi Police, he adduced internal company email messages and other documentary “evidence.” He also sent copies of his complaint to the Haryana government (to the Chief Minister’s Office and to several other officials). While his police complaint did not result in any substantive action, the Haryana government took up examination of his complaint through the District Collectorate of Jhajjar district under whose jurisdiction the project in Bahadurgarh falls. The complaint was forwarded by the Deputy Commissioner, Jhajjar to the Jhajjar District Town and Country Planning Department to initiate an inquiry.

The District Town Planner, Jhajjar, wrote to HL Promoters in August 2016 first seeking documentation relating to the project from the company, including copies of the licence agreement, the plans, the detailed area statements of the flats on sale, and any other “relevant material” along with the department’s detailed comments on the complaint.

After several reminders, at a meeting in January 2017 where both Sinha’s representatives and the company’s representatives were present, the company was ordered to furnish approved plans and architectural drawings with the areas and calculations marked on them. The company responded the following month. While it had been directed to submit architectural plans with area calculations marked on it, the company instead sent in an excel file listing the area numbers and calculations.

Then, in a meeting in May 2017, the responsibility for taking forward the inquiry was handed to the Additional Deputy Commissioner, Jhajjar, and he was tasked with producing a report within three months. According to a report in the Hindi magazine Yugvarta, the company’s non-cooperation resulted in this deadline lapsing with no report in sight.

In another meeting held in December 2017, the Deputy Commissioner, Jhajjar, ordered that the report be completed in 15 days. Since this meeting, the Additional Deputy Commissioner has been periodically writing letters to the company, making the same demand over and over again, namely, that the approved plans with area calculations marked be submitted by the company.

Letters to this effect were sent on June 8, 2018, June 13, 2018, and August 6, 2018, but these were ignored by the company. Then the company was asked to send its representative before the Additional Deputy Commissioner on November 15, 2018. When the representative failed to appear, another letter was sent on November 21, 2018 demanding his presence.

Despite the management changes at Tata Housing which were under way by this point in time, the company has evidently not shown interest in co-operating with a government inquiry into one of its projects.

While reporting this article Newsclick wrote to the Principal Secretary, Town and Country Planning Department, Government of Haryana, seeking his comments, as well as to representatives of Tata Housing and Tata Sons, all of whom failed to respond. It is worth noting that international development finance agencies such as the UK government-owned CDC (formerly the Commonwealth Development Corporation) and the World Bank-owned International Finance Corporation have invested in the Tata group’s housing ventures. Representatives of both organisations also declined to respond to written questions regarding the complaints made.

Muzzled by the Bombay High Court and, therefore, unable to speak to the media, whistleblower Sinha remains out in the cold, as do buyers of flats in the New Haven project.

Response by Tata Realty

With reference to the news report titled ‘Did Tata Value Homes Dupe Home-Buyers?’ published on 21st January…. We would like to clarify that Tata Realty did not get any queries before publishing of this report.

Tata Realty would like to clarify that the allegations stated in the news article that there are issues in several projects are factually incorrect. Also, as a responsible developer, we have ensured that all the communications which have been received from the homebuyers/consumers, if any, have been duly responded to by the company.

Newsclick responds:

A detailed questionnaire was sent by Abir Dasgupta (who was part of the team of journalists from Newsclick that reported this article from his personal email address ([email protected]) on September 17, 2018 at 7.46 p.m to [email protected] and [email protected] seeking responses from Tata Sons, which is the promoter and parent/holding company of Tata Housing. 

We are in possession of documentary evidence to support each and every statement made in the article published. The allegations against the Tata Group company have not been made by us but by Nityanand Sinha to various authorities. Newsclick has reported the allegations made by him and has no comment to make on the legal disputes that are currently pending in various courts of law between him and companies in the Tata Group.

What we have faithfully reported is based on documents that are in the publicly domain. We have no comment to make on the Tata Group’s contentions and claims. We would have reported the views of the Tata Group had these been made before the article was published. We are now publishing the views of the Tata Group in the interests of fairness while reaffirming our contention that we did our due diligence and adhered to ethical journalistic norms while reporting the article.

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