Raheja of NAREDCO - The Man Who Would Be King

1 of 30

about:blank

Raheja of NAREDCO: The Man Who Would Be King - by Dr. Sanjay Sharma, MD, QuBREX, [email protected], www.Qubrex.com Disclaimer: We have done our best to collect and present accurate information, and if there are any changes/errors /suggestions we welcome them, and would be glad to incorporate them in the next version of this article. You can find the supporting documents for this article at https://www.box.com/s/0yna2lvac7ph2fjv0jgd This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. Mr Navin Raheja http://navinraheja.com/ is supposedly one of the most powerful men in Indian Real Estate today. As President of the NAREDCO (National Real Estate Development Council - Under the Aegis of Ministry of Housing & Urban Poverty Alleviation, Govt. of India http://naredco.in/) he has an oversize influence on the future Real Estate policy of our country. And, as some recent advertisements by his company claimed on Army Day, Jan 15, 2013, http://www.rahejabuilders.com/ images/print-ad/pa-jan13-big1.jpg he also heads one of the largest real estate development companies in India, Raheja Developers Ltd http://www.rahejabuilders.com/ with over 290 million sq.ft of delivered area, having projects all over India. Could all this be true? Here is the explosive story behind The Man Who Would Be King - Mr. Navin Raheja. What is Mr Raheja's path to success & riches. Who all have shared in the Raheja success story. What do the buyers in his projects have to say. What are the future trends in real estate, and what is to be made of the "Consumer Insurgency." And what does it all say about the Indian Real Estate sector. This is the story of Mr Navin Raheja's rise to power. It is, or will be, followed by almost every other real estate builder as they collectively dominate a sector that contributes, by some estimates, over 7% of our GDP and, indirectly have an influence on much more than that. This is the story of the network of investors, politicians, bureaucrats, brokers, and film stars that has come together in a nexus with the developers to change the future course of our society - for good or bad is the question. And in terms of influencing the culture of our society, their influence is much larger, esp in metro areas such as Gurgaon, which is where this story begins. The slut bit me! - Sean Connery in The Man Who Would Be King PATH TO INDIA's MOST AWARDED COMPANY Mirror Mirror on the Wall, Am I the Most Awarded Builder of Them All - with Apologies to Snow White & The Seven Dwarfs The Army Day Advertisement from Raheja screams "India's Most Awarded company with over 50 National & International Awards for Architectural Innovation & Quality," which are exhaustively detailed on the company website http://www. rahejabuilders.com/company-awards.asp One of the projects which has won numerous awards including CNBC AWAAZ real estate award, Zee Business-RICS Real Estate Award, CNBC-AWAAZ-CRISIL Real Estate Award, and even the Best Garden in the City Award from HUDA (Haryana Urban Development Authority) is the flagship residential project called "Raheja Atlantis" in Sector 31, Gurgaon. The story of "Raheja Atlantis" is a microcosm which illuminates the path taken by the company on its way to glory & supersuccess. The story of Atlantis is a harbinger of things to come in many ongoing projects of the company including Atharva, Navodaya, Vedaanta, and Revaanta. Mr Navin Raheja & Raheja Developers exert immense influence on the residents of Atlantis to this day, years after the project was ostensibly completed. PATH OF SUCCESS The Road to Hell is paved with good intentions - Ancient proverb. Every day the residents of Raheja Atlantis access their apartments passing not through common areas that are jointly owned by them, but passing every day through lobbies that are owned by Mr Navin Raheja & Raheja Developers. This is an highly unusual arrangement, and the residents are not very happy about it; understandably so. How Mr Raheja is able to hold on to the lobbies, and many more of the common areas in Atlanis, is the key to understanding the riches that Raheja Developers has been able to accumulate. UNCOMMON COMMON AREAS A guest is like rain: when he lingers on, he becomes a nuisance – Yiddish Proverb During out discussion with various residents of Atlantis we found out that Mr Raheja has not only retained control over

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

2 of 30

about:blank

the lobbies, but also the swimming pool, the commercial shopping complex, the club, common spaces on Ground Floor of Towers A & B, extra parking slots in the basement ... The residents are expected to pay to access these areas, to which they are vehemently objecting - with good reason. The reasoning is that after the Atlantis complex was "fully developed" the builder realized that he had constructed about 17,000 sq.ft of extra "super area." Instead of conveying it proportionately to the residents, in an highly mysterious manner Mr Navin Raheja decided to retain this extra "super area" for himself. And in an audacious exercise of cherrypicking, the builder decided that the extra "super area" would comprise of the swimming pool, the commercial shopping complex, the club, ... etc. All these are income generating areas which are supposed to be there for the residents so that their maintenance can be subsidized, but are now raking in the riches for Mr Raheja and Raheja Developers and will do so for perpetuity. The only problem with him retaining the "excess super area" is that is not only contrary to the spirit of the housing laws of Haryana, but probably also illegal. A recent order by the Competition Commission of India in the case of DLF Belaire http://cci.gov.in/May2011/OrderOfCommission/192010S.pdf unambigiously states in Section 7 (viii) on Page 7 that "Common areas of the plot of land on which the Group Housing Colony is developed, in fact, belong to and are meant for the common use of apartment owners and once the apartments are sold, all the common areas and facilities vest jointly in the apartment owners and are to be maintained by apartment owners by forming an association in terms of the laws laid down by Haryana Govt." In addition, the residents say that Mr Navin Raheja recently got permission to make a nursery school on their land which after their opposition was cancelled. And now, the residents say, Rahejas claim to have gotten permission to build and sell another tower in the complex which is again being resisted by the residents. Mr Raheja is like an unwelcome guest in Atlantis that just does not want to leave. TIME IS MONEY, SO DELAY LEADS TO RICHES There is one kind of robber whom the law does not strike at, and who steals what is most precious to men: time Napoleon Bonaparte Mr Raheja also charted his path to riches & success by leveraging the maxim that "time is money." There were all kinds of delay in the completion and handing over of the Atlantis project, and in addition to a small fortune that he must have collected from the "interest" levied at rate of 18% and 24% pa for buyers making late payments, there was money to play around with due to the absence of an escrow account devoted to Atlantis. Even the supposedly construction-linked payment plan is actually a time-linked plan initially where the builder takes about 35% of the payment with zero work on the ground, then a front-loaded construction linked plan wherein the builder collects 95% of the money while only 40% of the work is done generally of creating the skeleton structure. And after collecting 95% of the money the builders start delaying the interiors as the incentive of getting installments from the buyers is now no longer there. Time is money, and while the money sits in the builders account, he can collect interest or better still deploy the money elsewhere and make more money. Even if the buyers find out about this, they can do very little other than write letters of anguish or mild threats to the builders which are treated with the contempt they supposedly deserve. This is in stark violation of the terms and conditions of the license LC IV A of Haryana http://tcpharyana.gov.in/CIM/ HaryanaDevelopmentAndRegu.htm, stipulated in the act vide its section 1(j), "That the owner shall deposit 30% of the amount realized by him from flat holders from time to time within ten days of its realization in separate accounts to be maintained in the Scheduled bank and that this amount shall only be utilized by the owner towards meeting the cost of internal development works and the construction works in the colony" INSANE PRICE INCREASES Zimbabwe's peak month of inflation is estimated at 6.5 sextillion (6,500,000,000,000,000,000,000) percent in mid-November 2008 - Steve H Hanke, et al. Raheja Developers has increased prices of their properties by 250-300% in less than 5 years, and their consequent profit by many hundreds of percent. Atlantis which was launched at Rs 2150 psf in 2005 today is listed by the company at Rs 14,975. Atharva which was launched in 2007 at Rs 2750 psf is today listed by the company at Rs 8,675, Navodaya launched at Rs 2,275 is today 4,575, while Vedaanta launched at Rs 2375 psf is today listed at Rs 6,675 psf. What caused them to raise the prices so dramatically? Was it increase in cost of raw materials, or increase in cost of labour? It could not have be the cost of land as it was already priced in at the beginning of the project.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

3 of 30

about:blank

And herein is the question of whether the builders are driving the prices northward by artificially pumping up the prices and restricting supply, or are they just riding the wave of the booming property market. And what ever it is, it is very lucrative and alluring. “The forever-appreciating real estate prices and the certainty of creating money out of thin air is attracting politicians to this business,” an industry source said. “It seems like a no-risk business, except for the delay in getting licences in some cases.” http://bsl.business-standard.com/india/news/realtysafe-bet-for-politicians-to-park-blackmoney/500670/ As an interesting aside, as part of the terms and conditions of the licence the builders are not supposed to make these insane profits, but is limited to a maximum of 15%. In the LC IV A - section (o) sub-section c which the licence holder signs, it says that "the owner while determining the sale price of the flats in open market shall compute the net profit @ 15% and the details of which including the cost of acquisition of land shall be supplied to the Director as and when demanded by him. The total project shall mean a defined phase or a compact area of the colony, as approved by the Director." Any violation of ANY of the terms and conditions of the LC IVA agreement may lead to cancellation of the license under section 2, but all builders in Gurgaon, including Mr Raheja, have come to realize that the housing laws are not only blind but also toothless. The laws live only in the books and there is no govt or private agency to implement them. MODERN DAY ROBBER BARONS in El Dorado, Gurgaon You people should consider yourselves lucky that I'm granting you an audience tomorrow instead of 20 years from now Wizard of Oz A broken system with almost no checks & balances allows obscene wealth creation in the real estate sector, and if this sector is given the "industry status" that bodies like NAREDCO & CREDAI are clamoring for, the process of selective wealth creation will be further accelerated. There are sufficient laws on the books, but there is a failure to implement the laws. And there is almost no fear of punishment to the transgressors. The current times are reminiscent of the 19th century where the term "Robber Baron" was typically applied to American businessmen who used what were considered to be exploitative practices to amass their wealth. http://en.wikipedia.org/wiki /Robber_baron_(industrialist) These practices included exerting control over national resources, accruing high levels of government influence, paying extremely low wages, squashing competition by acquiring competitors in order to create monopolies and eventually raise prices, and schemes to sell stock at inflated prices to unsuspecting investors in a manner which would eventually destroy the company for which the stock was issued and impoverish investors. The term combines the sense of criminal ("robber") and illegitimate aristocracy ("baron"). The modern day robber barons who thrive in this system do so with elan. As CCI order said in context of DLF' operations in Gurgaon http://cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf, and which applies to many other builders, including Raheja Developers: "It appears from the above and other facts that DLF, at times, goes ahead with planning and execution of projects without first obtaining the necessary regulatory approvals from development and other authorities. Further, the deployment and use of funds, as also pricing of these products, also does not seem to be based on transparent principles or basis. Money deposited by allottees of one project may well be being used for other projects / purposes, since there is no system of keeping separate accounts or keeping the money in escrow accounts. Indeed, it appears that various deposits by allottees become part of a large pool of funds, which may be deployed for any purpose at the discretion of DLF, without necessarily having a linkage with the purpose for which the money was deposited. This fact assumes much greater significance in view of the huge land bank with DLF, and the large number of projects it takes across the country. The ability of DLF to launch projects without prior approvals, and make major changes midway through the projects, also raises a host of issues. It is not clear as to what is the basis of DLF’s confidence, and what gives them the risk-taking ability, to go ahead at will in anticipation of necessary approvals, and it would not be correct for the Commission to speculate on the reasons for this or take into account any unverified explanations in this regard. But it is appropriate that the concerned authorities give due consideration to these issues." The transgressions by Raheja Builders in their "flagship" project Atlantis are also manifold. ILLEGAL COMMERCIAL ACTIVITY in Residential Complex The residents of Atlantis say that construction & operation of commercial activities is being done by the Rahejas in their complex without the consent of the residents. http://articles.timesofindia.indiatimes.com/2012-05-05/ gurgaon/31585866_1_raheja-developers-maintenance-charges-pool

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

4 of 30

about:blank

Despite having offered the club for free to initial buyers (and mentioned in brochure), and later having charged Rs 50,000 per apartment as Club Charges, Rahejas continue to retain control over the Club in Atlantis. They are running a spa that caters to outsiders, which ought to be illegal. Rahejas have also illegally squatted on the shopping complex which does not even have an entrance that opens in the Atlantis complex, despite it being on the Atlantis project land. The shooping complex as currently operated by the builder is primarily meant for outsiders, and Atlantis residents have to first egress the complex, shop, and then reenter their own complex. This is despite the fact that the shopping complex sits on their land, and uses the same electricity connection that is provided for the residential project of Atlantis. Further, Raheja Developers insist on a double payment for usage of the swimming pool in Atlantis. Owners have clarified that they have already paid for the same within the common areas maintenance fee that the developer collects on a quarterly basis, but the developer insists on levying a steep fee over and above this. And of course, the residents say that Rahejas charge them exorbitant maintenance charges for the common areas.

PARKING SPACES SOLD ILLEGALLY Raheja Developers have sold parking despite the fact that it was mentioned in their building sanctioning plan, i.e. BB III that "the parking lots shall form part of the common areas and facilities" in the declaration." Furthermore, the Supreme Court Order explicitly saying parking cannot be sold http://www.gurgaonscoop.com/a-some-landmark-cases-that-havesought-to-pro. Even the CCI Supplementary order in case of DLF Belaire of Jan 03, 2013 makes it very clear that the ruling about parking areas applies to Haryana. (See Section 9 on Page 9 of the order here http://cci.gov.in/May2011/ OrderOfCommission/192010S.pdf) But Raheja has not only sold parking in Atlantis, and continues to sell it in all their ongoing projects (amounting to 10 million sq.ft as their Advertisements on Army Day claimed), but in Atlantis they has even held on to the excess parking spaces in the basement (after allotting 2 to every apartment), the future intention of which is unclear. VIOLATION OF SUPER AREA In addition to mystery of how Rahejas were able to demarcate and appropriate to themselves the approx 17,000 sq.ft of the income-generating "common areas" on basis of the excess "super area," the bigger mystery is how they were able to demarcate 7.2875 acres out of land of 10.2875 acres that the project is licensed for, and convey only that much to Atlantis residents. Raheja has in a "Deed of Declaration" of 2009 for Atlantis https://www.box.com/s/tvo6xgyqezreau92yu18 conveyed only 7.2875 to the residents of the 10.2875 acres for which the licence was given. You can have only a part of the construction conveyed, but this is a rare case of where exactly 3 acres (of undemarcated) land which is part of the licence but then is somehow not conveyed to the residents. There is only 1 license and the details of the 10.2875 acre land parcel are given for the owner "The Govt Employees Co-op Housing Building Society Ltd" here http://tcpharyana.gov.in/ Licences/PDF%202004/LC456.pdf , but Rahejas have constructed 2 distinct complexes in the project - where one is the Teachers Society (i.e. Govt Employees Cooperative House Building Society Ltd) and the other is Atlantis. And the best part is that all these internal hotch-potch arrangements were not disclosed to the Atlantis residents when they were buying - it is only later when the property had to be conveyed (registration) that the worms started tumbling out of the can. The single licence number 122 was issued on Sept 21, 2005 in the name of Raheja Developers for a Group Housing in Sector 32A to be called Govt Employees CHBS GUR-32A RGH. Such a thing happening, and that too in a Cooperative Housing Society, is unusual to say the least. Further, interestingly all the FSI of 72845 sq.mt, or area for which they were given permission to build, has been sold to Atlantis residents only. Though Atlantis residents are given only 7.2875 acres they have been made to pay for ALL the construction on 10.2875 acres (including that of Teachers Society). Teachers Society is ostensibly on 3 acres, while Atlantis on 7.2875 acres. And to top it all, even after all the FSI for sellingon the 10.2875 acres has been exhausted, according to residents in Atlantis Mr Raheja later claimed to have gotten additional permission to build a nursery school, and now claims to have permission to build an additional tower in the complex in exchange to surrendering the FSI permission to construct 4 villas. DEFICIENCY OF SERVICES & BROKEN AGREEMENTS

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

5 of 30

about:blank

Though not well known, the terms of the licence to build in Haryana as given in LC IV A include five years of free maintenance of the building, which has been violated by almost all builders including Rahejas in Atlantis. The developers claim that they want to handover the maintenance to the residents at the earliest, but the residents are wary of taking over the complex as many of terms of the licence have not been fulfilled. Rahejas have not yet fulfilled the terms of the Atlantis licence like installing a 500 KVA genset, providing a club house as the approved layout in the licence shows, missing squash court, lacking decent badminton & tennis courts. In addition there were lot of complaints about the quality of the apartment fixtures and finishes including that the modular kitchens, the flooring, and even down to the level of the quality of the CFLs. That the builders have made the maintenance of facilities itself a profit making enterprise into perpetuity is also on display as residents of a complex on Sohna Road recently staged a Dharna outside the builders office http://timesofindia. indiatimes.com/city/gurgaon/Flat-owners-set-to-agitate-over-hike-in-maintenance-fee/articleshow/18410985.cms They have now been able to wrest the maintenance from the builder like it happened in Unitech World Spa, and this is a developing story. The secret path to riches of Raheja Developers thus starts by holding on to the income-generating common areas, delivering much less than promised & required, delivering much later than expected & hoped for, and holding on the the rights of any increase in FAR so that the benefits of constructing more on the land of Atlantis & Govt Employees Cooperative Group Housing complex flows, not to the residents, but into the coffers of the builder. RAHEJA SPECIAL - THE ICEBERG DEAL The surest way to remain poor is to be an honest man - Napoleon Bonaparte Housing is a basic human necessity (Roti Kapada Aur Makaan) but in the hands of the mighty & powerful it has become their wishing well from which they extract untold riches. Mr Raheja after failing as a scooter dealer, continued his journey into chit fund, travel agency, agriculture, computer, power projects, automobile components, handicraft exports, color TV's, and manpower exports. http://navinraheja.com/person.asp?links=lk1 But, it is not until he got into real estate business did he strike the mother lode of riches. THE ICEBERG DEAL

Have The Powerful Lost Their Dharma In Pursuit Of Greed - Indian President Pranab Mukherjee The Raheja Special Or The Iceberg Deal is a deal in which is a conundrum packaged as a deal in which you are shown only a small part of the details; the rest of the details, like an iceberg, are hidden. Once the deal is unwrapped and the conundrum revealed, it is realized that the difficult problem can never be resolved - just mitigated through bargaining, and by compromises, because those problems are cleverly designed to emerge from competing interests. An example of this is the internal collaboration deal that Mr Raheja struck in the Atlantis project with the Govt Employees Co-op Housing Building Society Ltd, but was hidden from the owners when they were buying homes in the Atlantis project (Towers A through F), and now will be the perpetual source of problem for the residents in the residential complex called Atlantis. Mr Raheja's specialty is to create such Iceberg-deals in which the only real winner is the deal maker - which is him. The deal maker will eventually disappear, but the problem will be left behind forever. It is like the Cheshire cat in Lewis Carroll's "Alice in Wonderland" where Alice see the Cheshire cat. The Cat smiles and then disappears, but the smile is left behind. Kaanta To Phasao, Phir Dekhi Jayegi You can fool some of the people some of the time -- and that's enough to make a decent living.” ― W.C. Fields Rahejas know how to put through selective disclosure of information two or more parties in a soup from which there is no exit - just a compromise, sometimes uncomfortable compromise. And Raheja Developers did just that in the Raheja Atlantis deal. The Developer has shorted the Atlantis residents by selling them all the FSI for the 10.2875 acres project even though he has restricted the Atlantis residents to 7.2875 acres of the 10.2875 acres project. The people on 3 acres (Teachers Society, i.e. Govt Employees Co-op Housing Building Society) got 165 apartments for free and though he didn't "sell" it to them, he ostensibly built it for them. All this was not disclosed to the Atlantis buyers at the time of buying, and now has created a clash of civilizations and huge number of legal problems that they still have not been able to address.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

6 of 30

about:blank

During buying the Atlantis buyers were promised their own pool, club, squash courts, badminton courts, community hall, etc now find that the teachers society also wants access to those. There is a permanent bitterness between the residents of the Teachers Society and Atlantis residents. There is no solution or resolution to this problem because this 10.2875 acres has a single licence and the collaboration licence between Rahejas and the Teachers society, which was not disclosed to the Atlantis buyers, was a bad faith deal to create a problem that could not be resolved - but only mitigated by compromises. And the only real winner in this Iceberg Deal is Mr Raheja himself. This Iceberg deal where you can construct 2 or more projects on a single licence has now become Mr Raheja's trump card which he expanded to Atharva (later Shilas was added), Navodaya (where Sampada was added), and Vedaanta (where Vedas & Vedaanta Floors were added). In Navodaya which was marketed as a 17 acre project, was later reduced to about 9 acres. The buyers who had already been allotted units were forcibly shifted to other towers to accomodate this new project called "Sampada." People have filed cases about this http://groups.yahoo.com/group/ raheja_navodaya/message/285?l=1

LOADED CLAUSES WYSINWYG - What You See Is Not What You Get. The Raheja contracts are so cleverly constructed, and beautifully drafted, that unless you are a jaded super-skeptic by nature you would miss the actual import of them. Take for example two clauses that are far apart in the Raheja Atharva Application Form but work together. https://www.box.com/s/t6sjagu7hwzo7qbvznrn The first clause is No 31 (which is Clause 4.2 in the Builder Buyers Agreement for Raheja Atharva) which states that "If the Company (Raheja Developers) fails to complete the construction of the said building/ Apartment within thirty six (36) months from the date of execution of Flat Buyer Agreement and after providing necessary infrastructure in the sector by the government as aforesaid, then the Company shall pay to the Applicant(s)/ intending allottee(s) compensation @ Rs. 7/- sq. ft. of the super area per month for the entire period of such delay." Reasonable enough, except the operative line, "and after providing necessary infrastructure in the sector by the government," because even though the 36 months for Raheja to deliver are over for Atharva and the building is far from complete, but the Govt has also not provided the 24m road, the electricity connection, the sewerage facilities, thus absolving Raheja Developers from paying any penalty. So, if all this "necessary infrastructure" is not provided by the Govt for the next five years (which is likely in Sector 109) Rahejas would not have to pay a single rupee in penalty. And then the second clause about escalation provides the knock-out punch. As time goes by the cost of completing the Atharva project is going to be higher and higher, and so who will bear the burden of the escalated cost due to the builder not handing over as promised - the buyer of course!! As Clause 12 of the application says "The Prices of apartment(s) are free of escalation to the extent of increase in prices of inputs by 10% and the same would be absorbed by the company but in case the prices of input increases higher than 10%, the same shall be added to the cost of the apartment(s) as per the input price index of construction material on pro-rata basis. The decision of the company in this behalf shall be final, conclusive and binding on the applicant/ intending allottee." What a marvelous pair of clauses, where amongst the two clauses a perfect trap is set for the hapless buyer from which there is no escape. It really must be a special feeling to be in the club of Raheja (of Saket) Property Buyers.

GAG CLAUSE A lot of times we censor ourselves before the censor even gets there. Spike Lee If you are trapped in one of the deals with Mr Raheja, you are now also gagged to talk about it. Now there is even a gag clause in the latest Builder-Buyer Agreement that Rahejas require buyers to sign for their new project. Learning from the experiences of Atharva, a project in which the buyers went public with their allegations, he has now tried to preempt people from talking about their condition to "outsiders." You must drink the Kool-Aid being served without complaint. This Gag clause without any finesse, and probably illegally, states in the Raheja Revanta Builder-Buyers Agreement https://www.box.com/s/h1qbunfiya5inga2rh98 that "The Purchaser agrees, accepts and undertakes not to

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

7 of 30

about:blank

make or publish either by words spoken or intended to be read or by signs or visible representations via internet or any form of media any imputation/defamatory material concerning the Seller/Management/Projects, which harms the reputation and credibility of the Seller/project/Owners Association." It then tries to justify the transgression in right to free speech (which the United States has now explicitly stated is not illegal for the same reasons http://tinyurl.com/b4g49mp) in terms of profits as "The Purchaser understands and acknowledges that beyond and apart from him there are other Purchasers who have invested their hard earned money in this project and any defamation of this complex/project by web posting or creating Google groups/e-groups can undermine valuations or reputation of their investment in the project." And if the Raheja property buyers act like a secretive cult, it is probably because the price of speaking up against Rev. Raheja is very very heavy. As the Raheja's Buyers Agreement states, "Upon commission of any such act by the Purchaser the Seller (i.e Rahejas) shall without prejudice to any other remedies and rights available including termination, cancellation of agreement or allotment, claim liquidated damages which the Seller might have suffered due to such irresponsible acts of self defamation breach committed by the Purchaser." Amen. With computers it is WYSIWYG, with Raheja Iceberg-Deal making it is WYSINWYG - What You See Is Not What You Get. One of the reasons why this happens repeatedly is that no-one in the Raheja World, even if they know about it, can tell you what you are going to get into because they are all loyal soldiers to the company. THE RAHEJA WORLD If you wish to be a success in the world, promise everything, deliver nothing - Napoleon Bonaparte The loyal organization of Raheja Developers, or the Raheja World, has been spectacularly successful in created a money making machine that started in 2004 with almost nothing to today haiving "projects in hand exceeding Rs 100 billion," or Rs 10,000 crores, according to company claims. http://navinraheja.com/developer.asp?links=lk2 How did it all happen? REAL PROFITS FROM FALSE DEEDS A Constitution should be short and obscure - Napoleon Bonaparte The short and obscure "Deed of Declaration" filed by Raheja Developers in 2009 for Atlantis https://www.box.com/s/ tvo6xgyqezreau92yu18 gives an insight into how excessive profits can be earned from seemingly innocuous declarations. The Deed of declaration has no description of the property, no explanation for how & on what basis was the 10.2875 acres of land bifurcated into 7.2875 acre and 3 acre parcels out of which why only 7.2875 acres was conveyed, and it has no percentage ownership figures in the common areas and facilities, no percentage figures of voting rights etc. The "Deed of Declaration" thus is false, illegal & completely absurd, and makes interesting (and false) claims about the prices at which the Atlantis apartments were sold in the open market. In the deed of declaration Raheja Developers claim that "The approximate value for the Units in Tower A, B, C, D, E, F & Villas considered as Rs 2150/- per square foot." In actuality Rahejas sold just a few apartments in 2004-end at this price of Rs 2150 psf, and within weeks the price was increased to Rs 2450 psf, and within months to Rs 3250 psf. It then kept on climbing steadily and in Nov 2012 it was being sold by the Company at Rs 14,975. https://www.box.com/s/ 282651u0uylatzmivh2a Thus, the company declared the price at which it was selling the Atlantis apartments very low at Rs 2150 psf compared to what it was actually selling it at. Why? Because they were hiding from the authorities (and public exchequer) the excess profits that they were illegally making in violation of the license terms in Form LC IV A. The violation is so severe that it calls for cancellation of the licence given to Raheja under Section 2 of the LC IV A http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm which states that "Provided always and it is hereby agreed that if the owner commit any breach of the terms and conditions of this agreement or violate any provisions of the Act and rules, then and in any such case and notwithstanding the waiver or any previous clause or right, the Director, may cancel the licence granted to him." To understand how Raheja Developers made Atlantis into an ATM machine for withdrawing unlimited cash is to read two sections of the LC IV A together. Firstly, Section 1 (O) (c) which deals with how the builder is supposed to determine the price at which he should sell the apartments in the open market, and secondly Section 1 (O) which sets an upper limit to the price at which the builder can sell his apartments in the open market. Section 1 (O) (c) in Form LC IV A of the HARYANA DEVELOPMENT AND REGULATION OF URBAN AREAS ACT, 1975 http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm states that "the owner while

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

8 of 30

about:blank

determining the sale price of the flats in open market shall compute the net profit @ 15% and the details of which including the cost of acquisition of land shall be supplied to the Director as and when demanded by him. The total project shall mean a defined phase or a compact area of the colony, as approved by the Director." Section 1 (O) in Form LC IV A states "That the owner shall derive maximum net profit @ 15% of the total project cost of development of a colony after making provisions of statutory taxes. In case the net profit exceeds 15% after completion of the project period, surplus amount shall either be deposited within two months in the State Government Treasury by the owner or he shall spend this money on further amenities/facilities in his colony for the benefit of the residents therein." In plain words the Section 1 (O) stipulates that the builder shall make no more than 15% profit, and Section 1 (O) (c) states the builder's sales price in open market should be reported to the Authorities so that they can evaluate whether the profit being made by the builder is within the terms set in the law. So, there it is. A lie being told to the Govt of Haryana (and of India), wherein the builder is falsely stating the selling price of the apartment as much lower than what he is actually selling at to claim that he is making profits at less than 15% while the reality is that the profit being made by Raheja Developers was many many many more times that mandated by the law. And that is why, as Honore de Balzac said, "Behind every great fortune lies a great crime." This is what Raheja Developers hid from their declaration which was illegal, and which is behind their great (and expanding) fortune.

PUMPING PRICES AND BLACK MONEY "Black money" can be defined as assets or resources that have neither been reported to the public authorities at the time of their generation, nor disclosed at any point of time during their possession - Indian Finance Ministry's White Paper on Black Money Even though Raheja Developers reported to the Authorities that they were selling Atlantis apartments at Rs 2150 psf in the open market, in reality they were selling it at much higher prices. In fact the prices were increasing every few months by over a 1000 Rs psf. And with these frequent price increases they were helping pump crores of rupees of black money into the economy. The reason why Rahejas kept on increasing the listed prices (primary market) of Atlantis was to enable the early investors in their projects to exit with profits. For example, when the price was increased to Rs 3250 psf by Rahejas, the investors who had bought at Rs 2150 psf could sell in the resale market at around Rs 2800 psf and book profits. The buyer buying from the investor at Rs 2800 psf in secondary (resale) market would be saving Rs 450 psf (3250-2800 Rs psf) compared to buying from the Rahejas in primary market, while the investor selling would be profiting by Rs 650 psf (2800-2150 Rs psf). Thus, price increases by the builder create higher and higher price ceilings below which the investors can sell and exit in resale (secondary market). In addition to the investor benefiting by selling out, the builder also benefits. Many builders charge "transfer fees" to the tune of lakhs of rupees per apartment just to change the ownership of the apartment in their books, but most importantly the builder selling his remaining stock at a higher and higher price. As investors are in the market purely for maximizing profit, they are loath to surrender some of these profits as taxes. Thus, on a 2300 sq.ft apartment, the profit earned by the investor of Rs 15 lakhs (2300 sq.ft X 650 Rs per sq.ft) is taken by the investor in cash, and is called black money. If the buyer has black money then he just passes it on, and if the buyer has only white money then he has to convert it to black to make payment to the investor. This is how black money enters the economy. In a chain reaction, as the prices of apartments go higher the price of land in the surrounding areas increases, and then the landowners/ farmers demand higher prices. They get the higher prices but much of it is paid for in cash, and hence more black money enters the system. As builders seek licenses for building on the land purchased from farmers, many payments have to be made in cash and, hence, more black money enters the system. Seeing how builders are increasing prices and making money hand-over-fist many investors, babus, and politicians find it a convenient place to park their black money http://bsl.business-standard.com/india/news/realtysafe-bet-for-politiciansto-park-black-money/500670/ which in turn pumps in more black money into the system. If there ever was a perpetual motion machine http://en.wikipedia.org/wiki/Perpetual_motion this is it, and it manufactures black money. Black money is not generated by only illegitimate activities, but can generated from legitimate activities also. As the Indian Finance Ministry's White Paper on Black Money states "Such wealth may consist of income generated from legitimate activities or activities which are illegitimate per se, like smuggling, illicit trade in banned substances, counterfeit currency, arms trafficking, terrorism, and corruption." http://finmin.nic.in/reports/WhitePaper_

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

9 of 30

about:blank

BackMoney2012.pdf

BANGIA KO THANDA KAR DO You are going to become soldiers. A soldier does not think. He only obeys. Do you really think that if a soldier thought twice he'd give his life for queen and country? Not bloody likely. - Sean Connery in The Man Who Would Be King

In 2009 Mr Harinder Dhillon (GM of Marketing at Raheja Developers) was caught on record instructing others in his company to "Bangia ko thanda kar do," roughly translated as "Put Bangia in the cold storage." Bangia was Mr Surinder Bangia who had via RTI (Right To Information) dug out incriminating evidence against Rahejas in the Atharva project in Sector 109, Gurgaon. Mr Bangia then sued Rahejas for this threat to his life. The information that Mr Bangia unearthed led to many other lawsuits against the Raheja regarding the Atharva project. The case of Mr. Bangia is still on in the courts. THE CHECKERED HISTORY OF ATHARVA History is the version of past events that people have decided to agree upon - Napoleon Bonaparte In December 2007, a number of house seekers booked apartments in Raheja’s residential group housing project, Atharva, to be developed in Sector 109, Gurgaon. They paid around Rs 12 lakh as a booking amount, which included payments for the first and second installments for their apartments. But it was only six months later that the developer, in May 2008, bought the plots of land where the project was to be built and got it registered in its name. This was definitely not kosher as he has sold a project on a land that did not belong to him at the time of selling. Then, in September 2008, the developer wrote to all the buyers who had booked flats in the project saying that the building plans had been approved and the licence received from the Director, Town and Country Planning, (DTCP) Haryana. All buyers signed copies of "Agreement to Sell" with the developer, where Raheja Developers claimed (falsely) that the land and building plans had been duly sanctioned and approved by the concerned authorities. And the buyer then paid the third installment of Rs 3.76 lakh, plus 25 per cent of the preferred location charge (PLC). Many buyers had planned to take bank loans after paying the 1st three installments themselves, and so when the builder asked for the fourth installment several buyers asked the developer to provide copies of licence, title deeds, and approved building plan, as they needed these documents for getting their bank loans approved. The developer mysteriously communicated that the hard copy of the sanctioned plan was yet to be received from the authorities. In the absence of approval documents, no bank was willing to sanction loans to these buyers. But, the builder insisted on the fourth installment, and threatened to impose interest penalties if the payment was not made. Aggrieved by the developer’s conduct, a number of buyers then went to the law courts for relief against the developer. Advocate Rohit Puri, the advocate who was representing this aggrieved couple in the State Consumer Dispute Redressal Commission, told a reporter at that time that “Raheja Developers has misled several buyers by collecting money in the name of the project Atharva, even though they did not have all the governmental permissions such as Sanction Plan. In the absence of relevant papers, a majority of banks were not granting loans for the project while the builder was constantly demanding money from the customers. All queries by the customers were being met with false assurances by

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

10 of 30

about:blank

the developer. The latter kept insisting that it had all the permissions and that banks would soon start disbursing the loans. Meanwhile, for almost one year after the launch of the project, no construction activity had commenced at the site. Finally, in February 2009 a few aggrieved buyers approached the State Consumer Dispute Redressal Commission, Delhi.” Some of the other buyers in addition to Rashmi & Girish Gupta who also filed cases against the developer were Shailaz Nag (case no C- 9/40), Parul Adlakha (case no: C-9/39), Manik Nandan Singh (case no: C-9/41), Girish Minocha (case no: C-9/42), Harleen Sachdeva (case no: C-9/172), Rakesh Kohli (case no: C-9/217) and Subhash Rathi (case no: C-9/139). Many of the cases were settled out of court.

THE DREAM MERCHANTS

"He who permits himself to tell a lie once, finds it much easier to do it a second and a third time till at length it becomes habitual" - Thomas Jefferson How the Marketing team of Raheja Developers sells dreams is evident in their brochure for Vedaanta Floors. https://www.box.com/s/n0p56csjfah2f42inf7k

What is described as Najafgarh "Canal" in the brochure of Vedaanta Floors is actually Najafgarh Drain. In a report of TERI http://www.teriin.org/index.php (The Energy And Resources Institute) the Najafgarh "canal" is described as such: "Approximately 20 major drains find their way into River Yamuna in this stretch, of which the Najafgarh drain alone

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

11 of 30

about:blank

contributes to more than 50% of the total waste water being discharged into the River Yamuna. Today, the Najafgarh drain is the largest sewage carrying drain of the capital." http://www.teriin.org/upfiles/projects/ES/ES2002WM62.pdf And how does Raheja Developers describe the same "Green Belt & Water Bodies" ... "The area surrounding Vedaanta is sheer natural bliss. Very close by is the Najafgarh canal which is a major conclave of migratory birds. The scenic beauty and peace of the area is possibly unmatched in the entire NCR region. It is a scenario in which god's creation - nature - is in all its glory. At the same time, one is right next door to all worldly pleasures, luxuries and necessities as well. A heady combination !!" And it gets even better when describing the "neighborhood."

What is called as neighborhood to "Vedaanta" in its brochure is actually more than 7 kms away. The location of Raheja Vedaanta compared to the Spanish Court Shopping Mall, Chiranjeev Bharti School, and Columbia on the location map is as follows.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

12 of 30

about:blank

The marketing department of Rahejas probably got the idea about describing the neighborhood from our video on Raheja Atharva in Sector 109 (where we made millions of rupees doing original bookings for the project, but of which the Raheja's has not yet paid us a single rupee, which is a story for another day) http://www.youtube.com/watch? v=Po3Z7DxzZPM But they stretched that pitch beyond the breaking point for Vedaanta in Sector 108; it has now moved from the sublime to the ridiculous. And further calling the stinking Najafgarh Drain as "greens & water bodies" for selling Vedaanta Floors is plainly a lie. But the lies work. As PT Barnum said, "there's a sucker born every minute." The property prices have increased, and even though there is huge gap between the company's listed prices and the prices in the secondary market, there are some people who are buying the false dreams. If the money the Raheja owes us were ploughed back into the Atharva project, on paper our millions in outstanding commission would be now worth at least 20 million rupees. But it was not meant to be, because the Raheja World strikes out with vengeance against those they think have slighted them. And it seems that they also strike equally viciously out at those who trusted them and bought into the dream.

THE BLAME GAME A man can fail many times, but he isn't a failure until he begins to blame somebody else - John Burroughs The construction of Raheja Atharva (and short-lived project Shrishti) is one of the causes in the delay of the Dwarka

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

13 of 30

about:blank

Expressway (DXWay). Raheja was one of the earliest builders to get licences along the Dwarka Expressway in 2007. If the Expressway had been made to pass over the lands currently occupied by Raheja Atharva which were farmlands in 2007, rather than the habitated New Palam Vihar (NPV) Colony, it is possible that Dwarka Expressway would already be a reality by today. Many villagers blame builders like Raheja for influencing the Masterplan 2021 to divert the Dwarka Expressway over the NPV Colony rather than his then empty lands, and others blame this whole mess on the incompetence of the people who drafted the Masterplan. The delay in the construction of the Dwarka Expressway is now being blamed on the "govt and their agencies" by Mr Navin Raheja, and this excuse is being used by Raheja Developers to escape from having to pay any penalty to the buyers for delaying the completion of the Raheja projects. And, the added expense due to this delay will later be recovered from the buyers under the "escalation" clause, thus dealing a double whammy to the buyers for no fault of theirs. Not only the buyers in Raheja projects, but tens of thousands of other people are in trouble because of the issues of Dwarka Expressway - some of which can be traced to Raheja's early licenses and their urgency in starting to build those projects. Recently there was an interesting report that asserts on basis of RTIs (information provided under the Right To Information Act 2005) that the whole Gurgaon Manesar Urban Complex Master Plan of 2021 was created by just four people; and none of them had enough experience to undertake such a mammoth task. http://www.dwarkaexpresswayscanner.com/gurgaon-masterplanwas-cooked-up-by-just-4-of That is why it would be interesting to know the real reason why this team of four allowed areas like Sector 108, where Raheja Vedaanta is located, to be included in the R-Zone or Residential Zone of the Gurgaon Manesar Urban Complex Masterplan 2021. According to villagers in the vicinity, this region is the low lying flood zone of Gurgaon, and the ground water level is hardly 10-15 feet below the surface. With such high levels of ground water the structural integrity of high rise towers, and quality of life people residing here later in high density, is a big question mark. How are policy decisions framed? How much pressure do bodies like NAREDCO, CREDAI, ASSOCHAM, CII, FICCI, etc apply during the policy framing? And what kinds of people have come into leadership positions, and are dominating bodies like NAREDCO. THE RAHEJA PLANET I sincerely believe that like Caesar's wife, the Prime Minister should be above suspicion - Indian Prime Minister Dr. Manmohan Singh. If Prime Minister Dr. Manmohan Singh acknowledges that people in positions of power should not only have probity, but should be above even suspicion, it would not be wrong to expect the same from the President of a large body like NAREDCO. National Real Estate Development Council (i.e. NAREDCO) is under the Aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India. Is it so? NAREDCO WEBSITE - RAHEJA KI DUKAAN When you use a recognized authority to give your product or service credibility, you are tapping a fundamental aspect of human nature. There’s security in not having to trust your own judgment - Al Ries & Jack Trout After his stellar leadership in the World of Raheja Developers, Mr Navin Raheja has now turned his attention to leadership of NAREDCO, the National Real Estate Development Council. He was in Sept 2011 elected the President of NAREDCO. http://www.rahejabuilders.com/md-events-dtls.asp?id=105&prYear=2011 With an eminent cast of members and Shri Ajay Maken, the current Housing and Poverty Alleviation Minister of India, as the Chief Patron, it is one of the foremost platforms for the real estate sector. Even though the Council is under the Aegis of Ministry of "Housing & Urban Poverty Alleviation," and one of the stated aims of the Council is "to identify and strengthen industry's role in the economic development of the country," its deeds are anything but that. The interests of the country are abrogated in favour of real estate sector, and the interests of the real estate sector are abrogated in favour of Raheja Developers. It seems that they platform for NAREDCO has become the plaything in the hands of of Mr Navin Raheja to advance the interests of Raheja Developers. On the main page of http://NAREDCO.in, in the most prominent position is a "Property Search" form as if there were not enough magicbricks and 99acres in the world. And in a mind-boggling display of audacity, the only properties listed when searching for Gurgaon are that of Rahejas, CREDAI President Pradeep Jain of Parsvnath, and ABW (who have a big mess for themselves and their buyers in the 105 Acre ABW Aditya Niketan in Manesar http://www.hindustantimes.com/ India-news/Haryana/Gurgaon-buyers-protest-delay-in-possession/Article1-934227.aspx). Further, in majority of the

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

14 of 30

about:blank

micro-location listings the only name that appears in the results is Raheja Developers, and you can see some screen captures as taken on Feb 16, 2013 here https://www.box.com/s/p4bcelibmyrxbq96jy6k It is as if the NAREDCO website is also now a kiosk for selling the property of Raheja Developers at the expense of all the builder/developer members of NAREDCO who you can find listed here. https://www.box.com/s/20zjvbfyzrcpx8ed5tr2

ADVOCATING UNFAIR BUSINESS PRACTICES Great ambition is the passion of a great character. Those endowed with it may perform very good or very bad acts. All depends on the principles which direct them - Napoleon Bonaparte Even though the Govt is wanting to pass the Real Estate Regulator bill, and millions of buyers are looking up to it for some relief, Mr Raheja using the platform NAREDCO opposes it. https://www.box.com/s/e5wqoku3r70ajjju0q7t He has said that "we opposed the (Regulator ) bill ... as it is one sided, in favour of customers." Looking at the plight of many of the Raheja customers, it is easy to see why Mr Raheja opposes something that would give his long-suffering customers succor. It is easy to see why he would not want something that is in "favour of his customers." And the master stroke is to make sure that people are prevented from choosing the appropriate forum to challenge builders by herding them to a single point - the regulator that will get so choked with all and sundry complaints that nothing will really get done. For this the words of wisdom from Mr Raheja are "that all consumer complaints should be addressed to the proposed real estate regulator and no other authorities should attend to their complaints." And in an attempt to muddy the waters Mr Raheja, on behalf of NAREDCO, "has demanded that all stakeholders in the development of real estate should be bought under the ambit of this bill including government agencies which give clearance to this project." It means that instead of the erring realtors being penalized, they can now pass the blame all around to "all stakeholders" and ensure that nothing really changes.

ADVOCATING EXPLOITATIVE BUSINESS PRACTICES A man generally has two reasons for doing a thing. One that sounds good, and a real one. J. P. Morgan On other occasions Mr Raheja, as president of NAREDCO, has spoken against the land acquisition bill which tries to give fair compensation to the farmers for the lands being acquired by them by saying "While farmers’ compensation issue is taken care of, the government should have looked at the overall growth of the country. Unfortunately, that is not the case here.” http://www.thehindubusinessline.com/news/real-estate/housing-prices-to-go-up-after-land-acquisitionbill-approval/article4199757.ece And as Chairman of ASSOCHAM's Council for Real Estate reports are being released that propound the preposterous thesis that increase in land acquisition costs will result in prices of apartments by 50% http://www.assocham.org/prels/shownews-archive.php?id=3087 It would do well to remember that the prices that builders like Mr Raheja charge for the properties they sell is NOT based on the input costs (plus a maximum of 15% profit as Haryana Law requires), but on what maximum the builders can extract from the buyers in the open market. If the input costs were the only factors, of which land is one) then Raheja Atharva which was listed by the Rahejas at Rs 2750 psf in 2007 would not be offered by the Company at Rs 8675 psf in 2012. https://www.box.com/s/282651u0uylatzmivh2a Have the input costs increased so much that the prices of Atharva had to be increased 300% in 5 years? That the sky is falling for the "crores of people" looking for "affordable housing" is just a red herring being put by builders in powerful positions like that of NAREDCO and ASSOCHAM to extract more profits for their own private businesses. They seek to limit the costs at which they get inputs, but respect no limits on the upper prices at which they can sell their output.

Mis-LEADING BY EXAMPLE As for the men in power, they are so anxious to establish the myth of infallibility that they do their utmost to ignore truth - Boris Pasternak The President of NAREDCO, Mr Navin Raheja, is a powerful man. But does that mean he can break the law with impunity? Does it mean that he has to rub it in to the rest of us that he can break the law and get away with it.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

15 of 30

about:blank

For example, Mr Raheja continues to charge separately for car parking in all his projects even though there is a Supreme Court ruling (i.e from the highest court of the land) that says you can't do so.http://www.gurgaonscoop.com/asome-landmark-cases-that-have-sought-to-pro (Nahalchand Laloochand Private Ltd vs. Panchali Cooperative Housing Society Ltd) And in many other ways, big and small, the laws of the land are being broken deliberately everyday, but Mr Navin Raheja is still able to share the same dias with Shri Ajay Maken, and Hon'ble President Pranab Mukherjee. Even DLF has recently stopped charging for parking separately in their recent projects, but not Raheja Developers from Saket.

THE RAHEJA UNIVERSE There are only two forces that unite men - fear and interest. Napoleon Bonaparte To understand the path to riches for a builder/developer it is necessary to understand the nature & role of the major players which enable the builder or developer, like Mr Navin Raheja, to thrive in India. Business should be about trusting, and making agreements into the future regarding products & services - and, then delivering on those promises. But, business in India is not simply business. It is inextricable from the environment in which it exists which is the politics, babu licence raj, & selling via misleading pitches; all drenched in an atmosphere of mistrust. Is this how it is supposed to work, or are we just passing through an abberation - like the reign of the Robber Barons in the US during the late 1800's. http://en.wikipedia.org/wiki/Robber_baron_(industrialist) Sometimes it feels as if the people in authority, rather than being benevolent enablers, are like Bakasura in the story of Bhima. Or like Powaqqatsi (Powaq=sorcerer, Qatsi=life) which in Hopi Indian means an entity, a spirit which consumes life in order to further its own. http://www.metalasylum.com/ragingbull/movies/powaqqatsi.html

INVESTOR & END-USER One thing on psychology, which we've always known, is that every investor says they're long-term - and they are until the market takes a hit. Steve Forbes

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

16 of 30

about:blank

The ultimate source of all money in real estate is the buyer that buys the property offered by the builder/developer for investment or end-use. Housing is a basic human necessity (roti - kapda - makaan), and the options of housing are so restricted, limited, and regulated, that in urban areas many buyers have to commit to pay almost half their monthly salary, every month, for the next 20 years. There are two classes of buyers - the investor (sophisticated & unsophisticated), and the end-user (generally unsophisticated, and late to the party). On the shoulders of these buyers rests more that 7% of the entire Indian GDP. Even amongst the buyers, majority of the investors are in it for the money, and exit the property eventually selling out to the end-user. Thus, the source of all these riches in the real estate are eventually the end-users. The buck stops with the end-user, and till the property finally reaches in his or her hands what a ride it is. The buyer is the where money train starts which feeds the babu/bureaucrat, the farmer/land owner, the politician, the brokers, the lawyers, the advertisement hungry media, the interest demanding banks, and the insatiable builder/developer. And the builders/developers have figured out how to snare the investor by his/her greed, and the end-user by his/her desperate need.

THE BABU / THE BUREAUCRAT When knowledge is limited - it leads to folly... When knowledge exceeds a certain limit, it leads to exploitation. Abu Bakr Bureaucrats play a major role in permitting the builder/developer to launch a project, to monitor the construction, to ensure that the infrastructure around the construction is developed, and to ensure that the builders deliver as promised to them, and to the customers. But, they themselves are in a very unique position as most of them are provided with Govt accommodation rent- free or at subsidized rates. Hence, they are not in a situation where they desperately need a roof over their head. But it still falls on to imagine the desperation of the property buyer, even though they are not desperate themselves, and to act appropriately and accordingly. Unfortunately in Gurgaon, where Mr Raheja has a "strong presence," there is very little to show that the babus/bureaucrats have lived up to their task, and to deliver what society expects of them. Society foots their bills so that they can live like Angrezi Sahibs, but for most people in Gurgaon it seems that the Sahibs are asleep at the wheel. In an earlier article http://www.dwarkaexpresswayscanner.com/how-dlf-may-have-shot-itself-and-other-builde we have already discussed the pattern of commission & omission by the bureaucrats that the Hon'ble Competition Commission of India found in the case of DLF in their Supplementary Order of Jan 03, 2103, in the case of DLF Belaire, http://cci.gov.in /May2011/OrderOfCommission/182010S.pdf. The same holds for the actions of many other builders/developers including Raheja Developers. As Mr Navin Raheja is the President of NAREDCO, and the face of the builder community, in this story we focus on him. Specifically, the bureaucrats failed to scrutinize properly the "Deed of Declaration" that was submitted by Raheja Developers in Atlantis. The bureaucrats have failed to monitor the funds received and spent by Raheja Developers as mandated by law. See Section 1(j) and Section 1 (o) (a) & (c) of the Rule 11(1)(h) "Form LC-IVA," the Bilateral Agreement by owner of land intending to set up a Group Housing Colony, in the Haryana Development & Regulation of Urban Areas Act, 1975 http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm which state in Section 1 (j) That the owner shall deposit 30% of the amount realized by him from flat holders from time to time within ten days of its realization in a separate accounts to be maintained in the Scheduled bank and that this amount shall only be utilized by the owner towards meeting the cost of internal development works and the construction works in the colony. The bureaucrats did not monitor the payments made by buyers to Raheja to ensure that 30% of it was being deposited in the banks for internal development works. and Section 1 (o) That the owner shall derive maximum net profit @ 15% of the total project cost of development of a colony after making provisions of statutory taxes. In case the net profit exceeds 15% after completion of the project period, surplus amount shall either be deposited within two months in the State Government Treasury by

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

17 of 30

about:blank

the owner or he shall spend this money on further amenities/facilities in his colony for the benefit of the residents therein. The bureaucrats did not monitor the payments made by buyers to Raheja and the expenses incurred by Raheja to ensure that more than 15% profit was not extracted in the construction of Atlantis. And none of these procedures are being followed in the projects like Raheja Atharva, Raheja Navodaya, Raheja Vedaanta, Raheja Shilas, Raheja Sampada, Raheja Vedas, Raheja Vedaanta Floors, Raheja Revanta, etc. Further, to help the bureaucrats monitor the builder, the law has adequately empowered them. Section 26 (2) of the Haryana Development & Regulation of Urban Area Rules of 1976 http://tcpharyana.gov.in/CIM/HaryanaDevelopmentAndRegu.htm states that "The colonizer shall within a period of three months after the close of every financial year, submit to the director through registered post with acknowledgement due a statement of accounts indicating the amount realized from each plot-holders, the expenditure incurred on internal and external development works separately of the colony with details thereof together with the amount due from each plot holder indicating their postal address. This statement should be duly audited, certified and signed by a chartered accountant." So, if the bureaucrats were willing, the gross abuse of the law by Mr Raheja could have been prevented. and Section 1 (o) (c) the owner while determining the sale price of the flats in open market shall compute the net profit @ 15% and the details of which including the cost of acquisition of land shall be supplied to the Director as and when demanded by him. The total project shall mean a defined phase or a compact area of the colony, as approved by the Director; It is a travesty of law that Mr Raheja can understate in his Deed of Declaration 2009 https://www.box.com/s/tvo6xgyqezreau92yu18 that he sold Atlantis Apartments for average of Rs 2150 psf when a simple visit to the Raheja Developers website http://www.rahejabuilders.com or a call to their office at (011) 406 11111, or regular monitoring of Raheja's accounts as mandated by law could have shown this to be a lie. And this negligence by the bureaucrats had allowed Raheja Developers to make profit many many times over the 15% that the law mandates for providing the basic necessity of housing to citizens of India. The "Deed of Declaration" filed in 2009 for Atlantis has no description of property, how and on what basis did he bifurcate the 10.2875 acres land into 7.2875 and 3 acre parcels, it has no percentage ownership figures in the common areas and facilities, percentage of voting rights etc. How could the Authorities have slept over this? Further, a simple visit to the Atlantis Complex and talking to the residents, or looking at the maintenance contracts of Raheja with the residents in the Atlantis projects, would have revealed how Raheja Developers have illegally encroached on the common areas like lobbies, swimming pool, club/community center, convenient shopping/shopping complex etc. But, the bureaucrats did not do this. Another issue on which the bureaucrats have been indolent is the "super area." Builders get sanction of about 76,230 sq.ft per acre (FAR 1.75) in a Group Housing Society but sell in excess of 90,000 sq.ft, and this excess that they sell is variously called "Super Area." There is no set definition of "super area" and is just an invention at the convenience of each builder to suit his purpose. There is no sanctity of this number, and during possession the area is increased by another 5 to 10% by many builders thus bringing in another windfall. And via this insidious number they are also able to define (and not include in definition selectively) common areas thus maintaining their perpetual presence in the complex even though the law says they have to move out lock stock & barrel within a set time period. Not only are the babus ignoring this elephant in the room, they actually go ahead and register this excess area for the builder (which is much more than that they have sanctioned) without a murmur. Not only is there a gold rush in letting builders register more "super area" than they have sanction to build, there is a gold rush even is issuing licences. The situation is so grave that in many of the new sectors under the Master Plans of 2021, 2025 & 2031 almost whole sectors have been licensed to the private developers to develop. Nothing will be left for HUDA to acquire and then allot to the residents as part of affordable housing. And this story has been well covered in the Hindu newspaper. http://www.thehindu.com/news/national/behind-realty-rush-in-haryana-a-giltedged-licenceraj/article4375630.ece How could the bureaucrats overlooked the amount of development that private builders can do in a Sector? And the list could go on and on, but one last thing is the sale of parking area. It is settled issue that the builders cannot charge separately for parking, but the builder keeps on charging to this day, every day - but nothing in being done. Raheja Developers have even stated in their Deed of Declaration for Atlantis that "5 (ii) That the value of car parking has been taken @ Rs 2,00,000 per parking for Units for Towers A,B,C,D,E,F." By conservative estimates for 270 apartments this works out to be Rs 10.8 crores that have been illegally charged. How could the bureaucrats have let this pass their scrutiny.

POLICE & LAW ENFORCEMENT

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

18 of 30

about:blank

It is cruelty to the innocent not to punish the guilty - Publilius Syrus The Police forces generally get a bad rap, some unfairly as what they do is a thankless job. But sometimes there is reason for people to complain, as happened in a recent newspaper report - "Victims Allege Nexus Between Cops, Builders" http://www.hindustantimes.com/India-news/Gurgaon/Victims-allege-nexus-between-copsbuilders/Article1-997912.aspx Many times the victims refuse to complain or file an FIR which ties the hands of the police as it happened during a fire that broke out in Atlantis some years ago. The whole apartment E41 was gutted and here are some images and video of the same. https://www.box.com/s/wy3pvi9t4cd05ge5ar7o But, the Gurgaon police did not follow much on the FIR because as then Commissioner of Police, Gurgaon, S S Deswal, said "We have not received a formal complaint from the residents." http://www.indianexpress.com/news/minor-fire-breaks-out-at-gurgaon-housing-complex/492366/0 Generally the police are helpful and most of them are honest, but it would be prudent to incorporate lessons that the Americans are learning about their policing system. In a recent article Why Police Lie Under Oath in the New York Times http://www.nytimes.com/2013/02/03/opinion/sunday/why-policeofficers-lie-under-oath.html Michelle Alexander wrote that "The fact that our legal system has become so tolerant of police lying indicates how corrupted our criminal justice system has become." Michelle then went on to discuss whether we can always believe the police version. "But are police officers necessarily more trustworthy than alleged criminals? I think not. Not just because the police have a special inclination toward confabulation, but because, disturbingly, they have an incentive to lie," she wrote. We must also start asking such uncomfortable questions about our Indian police and see whether there is any truth in it. The Rahejas had caused a brief incident by filing a complaint against us, Qubrex, in misuse of their power when we stood up for some clients of ours in the Raheja Atharva case. But it was all resolved when a powerful clients of ours demanded answers from the police. https://www.box.com/s/c8j1lejtxzgkrltmzuss and https://www.box.com/s/ 8kvkqjloimqxzo9uhy33 So, all is not lost yet.

BROKERS, SUPER-BROKERS & DALALS It's difficult to get a man to understand something when his salary is dependent upon him not understanding it - Upton Sinclair At times doing brokerage for builders, i.e. selling their products which are still just glints in their eyes, feels like standing outside the windows of Amsterdam and saying anything to get the people in through the door. No wonder, real estate brokers are a reviled lot. Recent and persistent ads by IndiaHomes brokerage house are a case in point. They are promising 100% returns in 1 year, and 200% in 2 years, without any small print to give them an escape hatch of plausible deniability. See https://www.box.com/s/vgz8l2nh28npax8xhz7g and https://www.box.com/s/ilil4ou1imt5m88jsyo6 Unfortunately tactics like these of IndiaHomes work. What no one asks them is why don't the financial backers of IndiaHomes put their own money in these schemes that double or triple the money, rather than invest it in running this IndiaHomes business which probably fetches them a fraction of the 100% annual returns. But, no one questions them. Most brokers just toe the line, and join them in making these wild promises. If this is the case of the big brokers or super-brokers, you can just imagine the lot and behavior of the rest. Brokers & financiers also sometimes get into bed with the builders by under-writing their projects for the first right to sell. They underwrite the project by the builders, thus committing themselves to selling a huge bulk of the builders properties. http://www.indianexpress.com/news/artificial-sales-inflated-prices/541246/0 "The developers modus operandi is as follows. Instead of selling to end-users, most flats in these newly launched projects are booked by brokers, with the intention of offloading them at a premium later. This allows the developers to claim that their newly launched projects have got fully booked." Thus, the broker ends up becoming a part of the real estate food chain.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

19 of 30

about:blank

POLITICIANS You must understand that in politics, a day is not a day, week is not a week and month is not exactly a month, Ghulam Nabi Azad, Indian Politician In a recent article it was pointed out that “It’s commonplace for politicians to park funds in real estate companies, as it’s a safe avenue and fetches the highest return.” http://bsl.business-standard.com/india/news/realtysafe-bet-for-politiciansto-park-black-money/500670/ And, if politicians need builders to park funds, realtors are keen on linkages with politicians, both in power and out of power. “The politicians add value to any deal,” according to a consultant, who’s been tracking the sector for years. For instance, they could help speed projects and in some cases, get what is illegal converted into legal for clearances," according to the same news report. It thus helps to have friends in high places, and with his position as President of NAREDCO, Mr Raheja has no dearth of access to politicians & bureaucrats.

MEDIA OR THE FOURTH ESTATE The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function. - F Scott Fitzgerald The builder-babu-neta nexus is strong in India and essential for success, and we must accept it as as such. And as long as we have a fair Fourth Estate to keep checks on balances on the three centers of power - the legislature, the executive, and the judiciary, the balance of society can be maintained. In addition the mass media, the emerging social media where citizens can create and nurture their own social networks is also an important part of the Fourth Estate. There are many journalists doing an excellent job highlighting various aspects of the murky real estate sector, and much action and many results have also resulted from their work. In fact in 2009 there was an excellent series of weekly articles in Indian Express that tried to highlight what was wrong and what needed to be done in the real estate sector. In its short life, the "journalism of courage" touched upon

1. 2. 3. 4. 5. 6. 7. 8.

Unitech - SAGA OF BROKEN PROMISES http://www.indianexpress.com/news/saga-of-broken-promises/505380/ DLF - COMMERCIAL OVERREACH http://www.indianexpress.com/news/commercial-overreach/508515/ Omaxe - EXECUTION FAILURE http://www.indianexpress.com/news/execution-failure/513082/ Parsvnath - FELLED BY LIQUIDITY CRUNCH http://www.indianexpress.com/news/felled-by-liquiditycrunch/516118/ Emaar MGF - PERENNIAL WORKS-IN-PROGRESS http://www.indianexpress.com/news/perennialworksinprogress/518940/ Vatika - HOTELS FIRST, HOUSES LATER http://www.indianexpress.com/news/hotels-first-houses-later/522775/ Ansal - BROUGHT TO JUSTICE http://www.indianexpress.com/news/brought-to-justice/524381/ Assotech - A SAGA OF DELAYS http://www.indianexpress.com/news/a-saga-of-delays/527372/

and then as suddenly it was gone. The Saturday pages of Indian Express today are marketing platforms for builders with almost insipid content. And the ultimate irony is the advertisement of Raheja's that claimed "290 million sq.ft of delivered area" was the Front Jacket (page in front of the front page of the Indian Express) on Army Day Jan 15, 2013. Has "journalism of courage" learned to live right next to "journalism of compromise," even though they both seem to be opposed ideas? CREATING A MYTHICAL KINGDOM The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic - John F. Kennedy The media and other societal and political forces, and many institutions, help create the narrative of our lives. Even if their influence is not consistently or officially recognized, they are instrumental in defining how we see ourselves and our society. If they do their work well, we can have transparency, accountability and can pin responsibility for success and failures in our society, which is essential for us to progress as a civilization. But that is not how things play out most of the time. And it is these corrupted systems of the fourth estate that are most insidious as they help in sustaining and creating a lie if someone is inclined

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

20 of 30

about:blank

to do so.

CREATING A MYTH I dreamed a dream in time gone by, When hope was high - Fantine in Les Miserables

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

21 of 30

about:blank

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

22 of 30

about:blank

290 Million Sq. Ft Area Delivered to Customers in Residential, Commercial, Farm Houses & Hotels Deliveries Managed by Strategic Tie-Ups with Arabtec and ECC, Internationally Renowned Construction Firms This is what the advertisement that appeared on the Front Jacket of the Indian Express (Journalism of Courage) claims. It is not for the media to scrutinize the veracity of the ads they print or broadcast. And that is fine, as it would be impractical for them to check each and every advertisement. This lack of fact-checking of advertisements by the media that prints their ads is used by builders like Rahejas to create myths, and convey something that is not true. Before we look at the "290 million sq.ft area delivered" part, consider the "deliveries managed by ... Arabtec" part. It does not say deliveries TO BE managed for SOME projects by Arabtec, which would be closer to the truth. The contract with Arabtec was signed only in Nov 2011, and not a single project's delivery has so far been managed by Arabtec. http://articles.economictimes.indiatimes.com/2011-11-11/ news/30387009_1_raheja-phoenix-arabtec-construction-raheja-developers. Further, the role of Arabtec is only in a very small fraction of the "10 million square Area under construction." But, looking at the ads you would believe otherwise, and that is the myth being propagated.

The "290 Million Sq.ft Area Delivered" Myth People will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it - Goebbels On Page 7 of the corporate profile https://www.box.com/s/0fp188kx34vww19018vj for "Raheja Developers" the only projects that are delivered in the listed of "Completed/Ongoing Projects" are Raheja Square, Raheja Atlantis, R-Mall, Raheja Expo Mall, and Raisina (JV With Tata). How could these 5 projects amount to 290 million sq.ft delivered? For context, builders develop 1 lakh sq.ft on 1 acre of land in a Group Housing Society. Thus, 2,900 lakh sq.ft, if it were Group Housing Societies, would be spread over atleast 2,900 acres of land. To wit, a much bigger and better company than Raheja's (of Saket) is Sobha Developers which has completed 300 projects in 22 cities in 17 years, and that amounts to about 55 million sq.ft. http://www.equitybulls.com/ admin/news2006/news_det.asp?id=115528 Rahejas has done 290 million sq.ft ?? Then on Page 17 of the Corporate Profile https://www.box.com/s/yl1sspja9jvbw0gke9z1 are listed some additional projects which are Raheja Qutub Farms, Raheja Pine Gardens, Raheja Sohna Farms, Raheja Ridge Castle, and Raheja Arcade. We found out that Raheja Pine Gardens is a small 5 acres project in Nainital http://www.rahejabuilders.com/pdf/pine-e-brochure.pdf, and there was a recent court case http://www.indiankanoon.org/doc/1768598/ Raheja Ridge Castle is another small project on Lal Dora land in Mehrauli, Delhi. https://www.box.com/s/ qrt231bv5g65pt83y98a Raheja Arcade - There is a Raheja Arcade in Bangalore, and a Raheja Highway Arcade that is under construction in Dharuhera, http://www.rahejabuilders.com/pr-highwayarcade.asp but we have not been able to find any more information on the Raheja Arcade that Raheja Developers of Saket claims has been delivered. The company claims in its corporate profile that it lies in Sector 29, and was sold out in 2003. Raheja Sohna Farms - The company profile claims that it is 54 acres of land on which they developed and sold farmhouses in 1996-1997. No local brokers were able to help us track any of these "constructed farmhouses." Raheja Qutub Farms: The company profile claims that it is a 172 acres project in Tighra-Gurgaon that they sold as farmhouses and plotted development. Neither does Google maps have any information about these Raheja Qutub Farms nor was any local broker able to help us track down these farmhouses and their construction "delivered". Even if we were to add all the "Area delivered" in all these projects, how could it amount to 290 million sq.ft? Or 2,900 lakh sq.ft? Also, consider the fact that there is only 10 million sq.ft or 100 lakh sq.ft that is "currently under construction" according to

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

23 of 30

about:blank

the same advertisement. What is being implied by these 290 million and 10 million is that in Raheja's illustrious history they have already delivered 29 times more than they have going on right now ... We are completely baffled by this 290 million sq.ft claim. And that too on Army day. On the front jacket of a newspaper forged in the principles of Ramnath Goenka of "journalism of courage." Invoking in this ad the supreme sacrifice that many army men have made for the nation. Have you no sense of decency, Mr Raheja? At long last, have you left no sense of decency? How did the president of NAREDCO, chairman ASSOCHAM Council for Real Estate, executive member of FICCI and CII, & Chairman & MD of Raheja Developers (of Saket), Mr Navin Raheja, make this claim to "290 million sq.ft of Area delivered." It would be helpful if our reader could investigate all the claims made in the Raheja's Corporate Brochure https://www.box.com/s/wgib249w7e5ygp5jycy3 and share their feedback with us at [email protected] and help us understand as to why this "290 million sq.ft. delivered area" is not a false and mischievous claim.

"PROJECTS ALL OVER INDIA" MYTH Most people live in a myth and grow violently angry if anyone dares to tell them the truth about themselves - Robert Anton Wilson Brokers in their pitches for Raheja Properties claim that Raheja Developers "has made its position as one of the largest companies in Real Estate Industry today with projects all over India." https://www.box.com/s/itq6twionntvcbx4h7vq That would be true if Haryana is the only State In India because, except for a small project in Nainital, all their projects are either located in Haryana or Delhi. How could someone claim, or someone on behalf of Raheja claim, "projects all over India" when they have projects in only 2 states out of 28, and in 1 union territory out of 7? There is reason to believe that so many different brokers would not be repeating exactly the same line "has made its position as one of the largest companies in Real Estate Industry today with projects all over India" unless it originated from the company. But we have not been able to track it down so far on the company's official website. http://www. rahejabuilders Instead we found it on Mr Navin Raheja's personal website which says "Today, my company is one of the largest in the real estate Industry with projects all over India." http://navinraheja.com/person.asp?links=lk1 Of course, this is a lie, but why would such a myth be propagated in the first place. In the Raheja Universe, Rahejas often get confused with Raheja Universal. Raheja Universal are accomplished builders and they could lay claim to many "delivered projects" http://www.rahejauniversal.com/Residential_Completed_ project/Completed_project.html - many times more than those delivered by Rahejas of Saket. In fact, one buyer in Raheja Vedaanta filed a case in Mumbai courts accusing Jones Lang LaSalle (and Rahejas of Saket) of misrepresenting to him and other buyers in Mumbai that the project Vedaanta (in Gurgaon) was being done by Raheja Universal, rather than Rahejas from Saket. And for the record, Raheja Universal has made a Raheja Atlantis too, but in Mumbai ! So, there might be more than meets the eye to Rahejas of Saket making big claims, because to most people only the name Rahejas would ring - and few would differentiate between Raheja of Saket & Raheja Universal allowing another myth to persist.

"PREMIUM PRICES" MYTH Your premium brand had better be delivering something special, or it's not going to get the business - Warren Buffett

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

24 of 30

about:blank

Another myth is that the Raheja properties are selling at premium prices. Atlantis is listed by the Company at Rs 14,975, Atharva at 8675 psf, Navodaya at 4,575 psf etc. https://www.box.com/s/282651u0uylatzmivh2a But the reality is that the company hardly has anything left for selling in Atlantis and they might as well price it at 24,975 psf. Atharva in resale has almost no takers at even Rs 5,500 psf, and Navodaya has almost no takers in resale at Rs 3,800 psf. Generally the difference between the primary (listed price or original booking price) and secondary market (resale market) for properties is not more than a few hundred rupees per sq.ft. Raheja's position is actually pretty weak in the market as their products are selling at discounts of thousands of rupees psf in the resale market compared to their officially listed prices. So, it is just a myth that is being created by the company that they have premium properties just because they have high listed prices.

WHITEWASHED & GAGGED SOCIAL MEDIA Four hostile newspapers are more to be feared than a thousand bayonets - Napoleon Bonaparte In addition to the mass media where ads dominate the message, Rahejas have started creating myths on the web & social media. On their own Facebook page falsehoods like the Army Day Ad of Jan 15, 2013 are trumpeted https://www.facebook.com/RahejaDevelopers but actual buyers are gagged from speaking up by onerous clauses in Agreements like shown here https://www.box.com/s/h1qbunfiya5inga2rh98. And for buyers who bought property from Rahejas before this "Gag Clause" was added to the standard buyers agreement, steps have been taken to prevent even their discussion from spoiling any of the myth that is being created. For example, in the Raheja Atharva Google group which was formed much before the "Gag Clause" came into being, a disclaimer is being added to every post of their discussion which states "Important Disclaimer- The views shared over the group are individual expressions. The information shared over group shall is only for members to exchange information and communicate among members who are registered allotee with Raheja Projects. Any email or information shared over this group should not be used for any quote/unquote or legal solicitations/reference. The member shall not change or reproduce or publish the information shared over group in any form."

NO COUNTRY FOR HONEST MEN I'm crazy, but I'm not stupid - Jackie Chan

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

25 of 30

about:blank

The DNA of lies and myth seems to have seeped deeply into our national psyche. Before starting QuBREX (QuBit Real Estate eXchange), we were a predominantly technology company. One of the big contracts that we had was that of the Commonwealth Games 2010. We ran the Commonwealth Games Website during the bidding process http://web.archive.org/web/20031130035329/http://www.cwgdelhi2010.com/ and even after India won the bid to host the Games. We ran the website for some more years http://web.archive.org/web/20060407073334/http://www. cwgdelhi2010.com/- and http://web.archive.org/web/20071214210002/http://www.cwgdelhi2010.com/ . Then greed took over the top Management, and it was taken out of our hands from 2008 to 2010, and what happened is all very well known. Mr Suresh Kalmadi, with whom we worked closely, is today the face of corruption with his trail going on in a fast-track court. http://www.bbc.co.uk/news/world-asia-india-21318759 Now the domainwww.cwgdelhi2010.com is back in our hands http://web.archive.org/web/20110708214422/http://www.cwgdelhi2010.com/ The experience of loosing the work for Commonwealth Games Website by deceit was something we hoped to put behind us. All we wanted, and still want, is to do an honest day's work and get paid accordingly. We moved into a different field and started real estate brokerage hoping that we could make an honest day's living here. But, it was just our luck that we ran into Mr Navin Raheja and fell out of the pot and into the fire. It seems almost impossible to stay honest and still survive. Sometimes it seems that the fabric that binds our society itself has been corrupted beyond repair. It has begun to feel that the only successful developer is one who forces the consumers to stick to their promises, without having to stick to his own promises. And to achieve this it helps to have a loyal organization that makes promises on his behalf. Once he decides not to honor the promise, he can easily disown the person who made the promise on his behalf and, hence, theoretically he and his organization are now free from having to deliver on that promise. Or for that matter on any promise. And this works not only for developers, but for all kinds businesses in India. Life as War: Naqoyqatsi When small men attempt great enterprises, they always end by reducing them to the level of their mediocrity - Napoleon Bonaparte It is only so long that you can isolate yourself in a bubble, before reality intrudes to puncture the illusion. And the worst of it is the sinking feeling, the realization that you have been had. What seemed profound and real turns to be just a game of Trivial Pursuit, Risk & Monopoly for the builders. What seemed like sincere concern of the broker & the company sales executive, turns out to be just an act after all. When you thought the bank was prudent before advancing loans to the builder, it turns out the loans were given to you; and all the bank cares is getting their EMI from you. When you thought your tax rupees were paying to keep the bureaucrats at the wheel, you realize that they were either asleep or chose to turn a blind eye. When you thought the daily papers would raise the issue, you remembered the President of Editor's Guild of India plaintively complaining that "Any linkage between advertising and editorial content, positive or negative, and whether by private corporations or by governments, is an assault on the freedom of the press." http://timesofindia.indiatimes.com/india/Editors-agree-with-Markandey-Katju-slam-govt-blackmail/ articleshow/18374823.cms An assault it is, in this life as war. Naqoyqatsi is a Hopi word meaning "life as war." The chances of things going bad was very small, but as luck would have it you became that small statistic. It is as if your chances of having to take the cartload of food to Bakasura were very small because the village was large; but as luck would have it your turn has now come. HUNGRY IS BAKASURA And the cannibal demon gobbled up both the man and the food - From the Legend of Bhima Baksura was a demon who had killed many people from the village. So one day the village headman went to demon. He requested him to not kill the villagers and promised to send a cartload of food and one person for him every week. The demon agreed to this request. Since then, someone from the village had been taking a cartload of food to the demon every week. And the cannibal demon gobbled up both the man and the food. http://en.wikipedia.org/wiki/Bakasura The systems in which we are immersed, and those that run our lives, are like Bakasuras that have to be fed. The

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

26 of 30

about:blank

systems could be the government, or the public and private entities that exert power over our lives and our way of living. The small village, one of many, that is attracting the Bakasuras is Real Estate.

VILLAGE AND THE GOLDEN EGGS Price is what you pay. Value is what you get. - Warren Buffett The returns in real estate are fabulous and riches galore. In so much as that Godrej Group, a major player in consumer durables and fast moving consumer goods sector, is investing heavily in the property sector and expects that realty would be the biggest contributor to the company's business 10 years ahead. http://www.dnaindia.com/money/ report_realty-to-be-our-largest-business-in-10-years-godrej-group_1793621 The attraction of high returns is so much that many industrialists are not reinvesting their profits into their own industry but into real estate. With returns so high why work hard in your industry when you can invest in real estate, go on a vacation and come back to a huge pile of money. Additionally real estate is a great place, and probably the only place, where you can park large amounts of black money. All this money chasing real estate is leading to a situation of "Andheri nagri Chaupat raja; takeh ser bhaji, takeh ser khaja". There is one fixed price for spinach and dates and everything and, thus, the denizens lack intelligent discriminating abilities. This is very true in the Real Estate Sector where people seem to have lost the ability to look at the value they are getting for the price they pay, and look only at the price that they can sell compared to the price they pay. As Oscar Wilde would have said, "Nowadays people know the price of everything and the value of nothing."

KILLING THE GOOSE Opportunity makes a thief - Francis Bacon When everyone starts thinking that their cheating is not going to be noticed, the system reaches a breaking point. Then daal main kaala nahi, daal hi kaali hai happens. There is a children's story about a kingdom which was engaged in a war. The king placed large barrels across the villages to collect milk for the military, and ordered everyone to contribute a pot full of milk each. The next morning when the soldiers came to collect the milk they found all barrels full of water. Every villager had poured in a pot of water in the barrel thinking that their cheating would not be noticed. And it wouldn't have been noticed if others had poured in milk. But when everyone was cheating there was nothing but water in the barrels - and no milk for the soldiers on the war front. The real estate sector in urban areas like Gurgaon is soon reaching such a breaking point.

NOTHING TO LOSE BUT YOUR METAL CAGES I have a perfect horror of words that are not backed up by deeds - Theodore Roosevelt Despite all the talk in NAREDCO about "affordable housing" we may soon end up in a situation like that of Hong Kong and the cage people. http://www.ndtv.com/article/world/in-wealthy-hong-kong-the-poorest-live-in-metal-cages328090 The soaring costs are putting decent homes out of reach of a large portion of the population. Many people live in wire mesh cages resembling rabbit hutches crammed into dilapidated apartments in gritty, working-class neighborhoods like West Kowloon neighborhood. The cages, stacked on top of each other, measure 1.5 square meters (16 square feet). Housing costs have been fueled by easy credit and by money flooding in from mainland Chinese and foreign investors looking for higher returns. This is stoking resentment of the government, which controls all land for development, and a coterie of wealthy property developers.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

27 of 30

about:blank

Forced by skyrocketing housing prices to live in cramped, dirty and unsafe conditions, and their plight also highlights one of the biggest headaches facing Hong Kong's unpopular Beijing-backed leadership. There is growing public rage over the city's housing crisis, and anger over housing prices is a common theme in increasingly frequent anti-government protests.

WATCH OUT FOR THE CONSUMERS Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government - Milton Friedman Alan Blinder, a former vice chairman of the Federal Reserve of United States, in an article on the lessons learnt from the global financial meltdown of 2008-2009 http://tinyurl.com/finepreda says, "Watch out for the consumers." "What we learned in the crisis is that failure to protect unsophisticated consumers from financial predators can undermine the whole economy. That surprising lesson mustn't be forgotten."

CONSUMER INSURGENCY People who say it cannot be done should not interrupt those who are doing it - George Bernard Shaw "We don't usually think of consumers as a threat to business. But thanks to social and mobile technologies, consumers are now "hyper-connected and super-empowered," to use Thomas Friedman's memorable phrase. No longer passive audiences, they can organize to overturn even the most strategic initiatives. The result is a fundamental change that has put executive teams and board directors on high alert. This new dynamic is called customer insurgency." http://tinyurl.com/custinsur ENOUGH IS ENOUGH, BAKASURA There's only so far you can go before you say enough is enough - Jennifer Granholm Villagers can't afford to send more of their kin to Bakasura. Bakasuras are so hungry now, and demanding so much more, that if the villagers met all the demands and sent a cartload of food and a person every time, the village would soon be decimated with no more villagers to send.

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

28 of 30

about:blank

Generation of buyers is getting younger and younger; will not accept what the previous generation took lying down. The social media has also proven to be a fertile rallying ground for many issues, and soon it shall touch upon the real estate also. Even the political parties and governments have realized the power of social media and are scrambling to cope with it. And now most people in urban areas like Gurgaon have phones and are hyper-connected. HYPER CONNECTED CONSUMERS & INSURGENCY Much of the time, groups of people end up thinking and doing things that group members would never think or do on their own. Cass R. Sunstein "While the term "consumer insurgency" may seem a bit dramatic, we don't use it lightly or without experience," say Mark Bonchek & Chris Fussell. http://tinyurl.com/custinsur "By definition, an insurgency consists of a small and less-powerful force seeking to overturn the leadership of a much larger and more powerful institution. We normally think of insurgency in a political context, but today's digital technologies are creating a similar dynamic in business. It is a simple matter of the big and strong (but often too slow) being unable to manage, or even see, the small and weaker (but fast and agile) threat." MOBILE PHONE AND DOCUMENTATION “Everything is theoretically impossible, until it is done.” - Robert A. Heinlein MOBILE phones can be used for recording video, audio, and taking photos. Illegalities, lies, and promises can be captured by recording and documenting on the mobile phone itself. They could be internet enabled and function like a police walkie-talkies. For example, if you hear some promises from Raheja's GM of Marketing, do not believe it till you can record it. If he prevents you from recording then he is not truthful. And that way you can prevent promise after promise from being broken. Today many recordings you make may not be admissible in court of law, esp. if done surreptitiously, but soon the laws will catch up and it will all be legal. And as it is, they can be used in the peoples court, and hold the other person to his or her deeds and promises. Just as "status updates" in social media have become a fact of life to the point of overwhelming us, so shall soon be the recording of the minutes of our life. The battle has to start in peoples court, and must be waged by us as no Bhima will come to save us from Bakasura. We have to fight ourselves, and fight using the tools of transparency, accountability, and concentrated responsibility. From across the border is an inspiring example of how mobile phones are being used to curb corruption; surely, we can do better. An enterprising group of Pakistani officials is cracking down on the culture of graft with an innovative program that harnesses technology to identify corruption hot spots in the country's most populous province, Punjab. The initiative, which leverages the ubiquitous presence of cell phones, relies on the simple concept of asking citizens about their experience. Under the program, government clerks are required to log the cell phone numbers of citizens with whom they do business. The citizens then receive a robocall from Punjab's top official, Shahbaz Sharif. The recorded call informs them that they will receive a text message asking if they had to pay a bribe, or whether they have any complaints. Their responses are logged into a computer database. Call center agents also contact citizens who don't respond in case they weren't able to read the text message, a common problem in a country where the literacy rate is near 50 percent. http://www.ndtv.com/article/world/pakistan-tries-new-way-of-tackling-corruption-326134 QuBREX - BAPTISM BY FIRE I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live by the light that I have. I must stand with anybody that stands right, and stand with him while he is right, and part with him when he goes wrong - Abraham Lincoln After Baptism by fire in an earlier clash with Raheja Developers, QuBREX decided to do its best to make an impact in our small corner of the world. We have made many contributions big and small, and the biggest proabaly is the report "Data, Models, And Estimation of Market Share of Builders Operating in the Luxury (High End) Residential Segment of Gurgaon" that we contributed in the CCI vs DLF Case that led to the famous penalty of Rs 630 crore

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

29 of 30

about:blank

regarding DLF Belaire & Park Place. http://news.qubrex.com/qubrex-submits-expert-report-to-competition-c OUR RIGHT TO INFORMATION, 2005 Don't fight forces, use them. R. Buckminster Fuller The fairy tale spun by Mr Raheja started unraveling for the Atharva project when Mr Surinder Bangia started filing RTI's only to discover missing approvals that the builder claimed to have. One of the best tools in the hands of an consumer is the Right To information (RTI) Act of 2005 which can be used to get information from the Govt agencies and many public bodies. In fact, this concept could be taken further and RTI pooling can be done to get data regularly and proactively from govt bodies. If there is fear of retribution, then services like RTI Anonymous can be used. http://getup4change.org/rti/ RTI Anonymous is an online service, through which, any Indian citizen can File Right to Information (RTI) Applications Anonymously. They do not have to reveal their identity. The RTI Anonymous Community files those RTI Applications in their name and uploads the documents obtained as a reply on this website. The original requester will get an email when this happens. The original requester just has to draft the RTI Application as much as he/she can and the RTI Anonymous community will take care of the rest. In the future we at QuBREX hope to create a mechanism like RTI Anonymous or Wikileaks so that information can be shared with privacy & anonymously by those seeking to do so - for which we need support from all of you in words & deeds. What we are trying to do is to create a stone soup, where this article is the stone that we are contributing into the pot. If all of you add something to the pot, that is within your capacity, we all might soon be able to treat ourselves to a stone soup. http://en.wikipedia.org/wiki/Stone_soup

THE SYSTEM STRIKES BACK Ten people who speak make more noise than ten thousand who are silent - Napoleon Bonaparte There are good people in the system, but they are not heard from often. And because the majority does not rise in support of the ones who speak, with time the ones who speak are also silenced. A good example is the case of our Comptroller and Auditor General of India Shri Vinod Rai. Another great deed has been done by the Competition Commission of India under the Chairmanship of Shri Dhanendra Kumar. The landmark order of August 12, 2011 http://cci.gov.in/May2011/OrderOfCommission/DLFMainOrder110811.pdf is what made people believe that even the gods of real estate were not infallible. This was followed up by the bold Supplementary Order by the Commission on Jan 03, 2012 http://cci.gov.in/May2011/OrderOfCommission/192010S.pdf which not only showed what DLF was doing was abusive, but also that DLF and many other builders in Gurgaon (like Raheja Developers) were indulging in illegal activity. The laws of the land were being flaunted with impunity. This supplementary order was under the chairmanship of Shri Ashok Chawla, but the work is not yetcomplete. The case has to be defended in COMPAT and also the Executive and Judiciary has to be prodded to take to case to its moral & logical conclusion. Unfortunately, the gains and the victory of the consumer at this moment seems to be in danger of getting marginalized as the case winds its way through COMPAT to the Supreme Court. Most people outside the investor class and the system of the babu-builder-politician would welcome a transparent real estate system, and if price for it would be to pay the full stamp duty for buying, selling or leasing, they would be willing to pay it. But, then the system must apply equally to everyone. As long as the system is perpetuating the way it is, everyone feels they would be foolish if only they were honest while everyone else was gaming the system. It is just a small percentage of the players that are gaming and perpetuating the system which has to now stop, and the system itself has to make those corrections. If we continue on the current course and allow the wheeling & dealings of the real estate sector to spread other parts of the economy, it will completely corrupt our social fabric. It will create, and sustain increasing inequalities that history says cannot be settled peacefully. All must have opportunity for fortunes to rise similarly, and when there is a gap between the rate of rise in fortunes of the real-estate nexus and everyone else, it can't be sustained too long. The authorities and political class must understand this, and take concerted and pro-active steps to ameliorate the situation. Never be haughty to the humble or humble to the haughty - Jefferson Davis

Mini-DLF & NAREDCO

2/18/2013 10:58 AM

Raheja of NAREDCO - The Man Who Would Be King

30 of 30

about:blank

"Eeeee!" - Verne Troyer As President of NAREDCO Mr Navin Raheja is the face of the developers association & the Ministry of Housing & Urban Poverty Alleviation. It is amazing that the public face of NAREDCO is a poster boy of everything that is wrong with real estate in India. Raheja Developers have even more punitive clauses in the Builder-Buyer Agreements than DLF itself, including the Gag Clause, Delay Penalty Clause, Common Areas Clause, and the Escalation Clause. Does Mr Raheja's way of conducting his private business reflect the nature of the other builders and members of NAREDCO? After all, Abraham Lincoln said that "No man is good enough to govern another man without that other's consent." If the other members of NAREDCO have given consent for him to be the President, they should also put him to test to see if like Ceaser's wife he can rise above suspicion. As the allegations against him are widespread Mr Raheja must be subjected to a wide-ranging investigation. They say the blow of a hammer shatters glass, but it strengthens steel - let us see whether Mr Raheja & Raheja Developers are made of glass or steel. Some possible agencies where an investigation could be initiated are the DTCP, HUDA, EOW, CAG, CVC, Ministry of Urban Affairs, state & national consumer courts, and the civil courts. Let him be subjected to similar tests that the United States leaders and politicians are subjected to, and let him emerge stronger from the baptism. Lincoln was able to learn and grow amid great calamity. His story, like no other, demonstrates that leaders do not just make the moment; they meet it and, in the process, are changed by it. http://www.nytimes.com/2013/01/27/business/abraham-lincolnas-management-guru.html And in the process we will find out what Mr Navin Raheja is made of, and we will also discover what we are made of ourselves. Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened - Sir Winston Churchill Every noble work is at first impossible. - Thomas Carlyle The best time to plant a tree was 20 years ago. But the second best time is today - Chinese Proverb

2/18/2013 10:58 AM