Lok Sabha Question No. 3838 (UNSTARRED), answered on 2017-08-09
Subject: Housing and Urban Development Corporation
Ministry: HOUSING AND URBAN AFFAIRS
Asked by: KRUPAL BALAJI TUMANE

## GOVERNMENT OF INDIA

## MINISTRY OF HOUSING AND URBAN AFFAIRS LOK SABHA

## UNSTARRED QUESTION NO. 3838

## TO BE ANSWERED ON AUGUST 09, 2017 HOUSING AND URBAN DEVELOPMENT CORPORATION

No.  3838

SHRI KRUPAL BALAJI TUMANE:

## Will the MINISTER OF HOUSING AND AFFAIRS be pleased to state:

- (a) whether  the  Housing  and  Urban  Development  Corporation (HUDCO)  had  sanctioned  a  loan  of  Rs.  32.30  crore  for  a company, RDPL as financial assistance for the development of any project in Nagpur City named Ramnath City and if so, the details thereof;
- (b) whether  as  per  the  overall  project  development  parameters, HUDCO  was  monitoring  this  project  and  requisite  Escrow Account  was  also  opened  in  the  joint  names  of  HUDCO  and RDPL and if so, the details thereof;
- (c) whether the builder is not executing the sale deed in favour of the buyers of the homes at Ramnath City on the ground that HUDCO is not issuing the Release letter and if so, the details thereof and the reasons therefor; and
- (d) whether  many  persons  who  purchased  the  housing  units  in this project are facing difficulties as they are being denied the right  of  execution  of  their  sale  deeds  and  if  so,  the  details thereof and the corrective action being taken in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF HOUSING AND

## AFFAIRS

(RAO INDERJIT SINGH)

- (a) Yes Madam, HUDCO had sanctioned a total amount of Rs.32.30 crore [Rs.19.80 crore for Phase-I & Rs.12.50 crore for Phase-II] to  M/s  Ramnath  Developers  Pvt.  Ltd.    for  construction  of

'Ramnath  City'  Phase-I  and  Phase-II  at  Koradi  Road,  Nagpur,

Maharashtra.

Phase-I :

Sanctioned units: 112 villas / rowhouses

Sanctioned loan : Rs. 19.80 crore

Released loan    : Rs. 19.55 crore

Phase-II :

Sanctioned units: 136 Flats (2 & 3 BHK)

Sanctioned loan : Rs. 12.50 crore

Released loan    : Rs. 11.80 crore

- (b) Yes Madam, HUDCO was monitoring this project. The Escrow Accounts for Phases I & II were not opened in the joint names of  HUDCO and Ramnath Developers, but the Escrow Account opened by the developer was  designated 'M/s. HUDCO Loan Account Ramnath Developers Pvt. Ltd.' Further, the powers to operate  the  escrow  accounts  are  vested  with  M/s  Ramnath Developers Pvt. Ltd. only.

The Escrow Account No. 458101010036328 was opened with Union Bank of India, Katol Road Branch, Nagpur for Phase - I project (Scheme No.19683).

The Escrow Account No. 458101010036355 with Union Bank of India, Katol Road Branch, Nagpur- 440 010, Maharashtra was opened for Phase - II  project (Scheme No.19860).

- (c) As per terms of the loan, M/s Ramnath Developers Pvt. Ltd. are required  to  obtain  prior  written  'No  Objection  Certificate (NOC)' from HUDCO before executing any Agreement to Sell / Sale Deed in respect of any flat sold to buyers. Apart from 'No Objection Certificate (NOC)' issued for 17 dwelling units, the builder  has  been  executing  the  sale  deed  for  certain  units without HUDCO's consent, in breach of the loan agreement.

The builder is not legally entitled to execute the Sale Deed in favour  of  buyers,  as  the  entire  project  property  has  been mortgaged  in  favour  of  HUDCO  as  security  against  the  loan availed  from  HUDCO.    HUDCO  still  holds  the  charge  on  the

project  property  on  account  of  non  payment  of  dues  by  M/s RDPL.  Further, the borrower M/s RDPL  has  defaulted in payment  of  HUDCO  dues  and  the  matter  is  subjudice  as  the claim  for  the  entire  dues  filed  by  HUDCO  before  the  Debt Recovery Tribunal (DRT) is pending. Therefore, NOC  for execution of the Sale Deed has not been issued by HUDCO, in the  absence  of  which  the  builder  cannot  legally  execute  the Sale Deed in favour of buyer.

- (d) The purchasers were fully aware of the fact that the project was financed by HUDCO and the entire property was mortgaged  to  HUDCO  prior  to  their  purchase.  Any  difficulty faced  by  the  purchasers  is  on  account  of  failure  of  the developer to repay HUDCO Loan in accordance with the loan agreement and get the property discharged from mortgage.

However,  the  builder  sold  out  certain  units  of  the  project without  obtaining  NOC  from  HUDCO,  for  which  HUDCO  has already initiated the process of lodging FIR against the builder under various sections of the Indian Penal Code. Since the developers M/s RDPL  have  been  defaulting  in payment  of  HUDCO's  dues,  HUDCO  has  initiated  recovery proceedings  and  the  matter  is  subjudice.  DRT  Mumbai  has passed  an  interim  decree  for  the  amount  of  Rs  24.45  crore, duly  admitted  by  M/s  RDPL  as  due  to  HUDCO.    Even  this amount however has not been paid to HUDCO. The corrective action in this regard can only be taken by the builder i.e.  M/s. Ramnath Developers Pvt. Ltd. by making the payment  of  entire  outstanding  dues  to  HUDCO.    This  would enable  HUDCO  to  relinquish  its  charge  from  the  project property,  which  will  enable  the  builder  to  execute  the  Sale deed in favour of the purchasers, in accordance with law.

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