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Private Sector | Uttar Pradesh - India | PID: 171167
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Construction at some stalled projects of The 3C group under the 'Lotus' brand is set to begin with contractors forming consortiums with financiers to hasten completion of thousands of flats in Noida and Gurgaon
Straight Edge Contracts Pvt Ltd, a sister concern of Gulshan Homz, and Gold Star, a consortium of financier and a contractor, are working towards completion of the pending apartments of The 3C developer. A number of other developers, too, is looking at similar arrangements to complete their projects
As hardly any construction work is going on, buyers have stopped paying their dues. At the same time, developers are saying that as they don't have money, they can't start construction unless the buyers pay their dues. Therefore, the contractors are forming consortiums with financiers to arrange for seed money to start construction so that buyers start paying their dues
The two projects which Straight Edge has taken up for completion are Lotus Zing at Sector 168 in Noida and Greenopolis in Sector 89, Gurgaon. Gold Star is likely to take up the construction of Lotus Panache. It is learnt that the company is talking to some other contractors for another of its project, Lotus 300 at sector 107, where construction is yet to begin
Rajiv Nagpal, who heads Straight Edge Contracts, said the company has worked out a mechanism under which all the receivables of the projects will come to an escrow account which will be operated by his company and the developer and the fund collected will go first to settle the dues of the contractor
He said his company will bring in seed money to start construction. As construction begins, buyers should come forward to clear their outstanding dues. With the cash flow thus generated, Nagpal said construction can be completed as the total dues of the buyers are sufficient to complete the project.
Nagpal said that to lower his risk, he has taken some land parcel of 3C as collateral and any sale proceeds or income from that land will go to the escrow account opened for the construction of Zing.
A similar arrangement has been made for Greenopolis in Gurgaon. Nagpal clarified that if a homebuyer wants refund of his or her money, 3C will be responsible for that. Money collected in the escrow account to complete the construction of the project will not be used for refunding money to buyers, he said
An office bearer of Lotus Zing's buyers' association, Sunel Kant Sharma, said his association had already worked with the developer using the escrow account mechanism to complete 4 towers whose possession have also been offered to buyers. It has to complete another 12 towers
Sharma said under the new mechanism also, representatives of buyers' association will continue to be signatory to the escrow account to monitor how the money is used. Buyers will pay only if the money is used for construction
Around Rs 100 crore will be required to complete the Lotus Zing project, which could be met through the receivables from buyers. But the developer will also need to clear Rs 150-crore dues to Noida Authority against the land price. Till that's settled, Noida Authority will not issue a completion certificate, without which homebuyers will not be able to register their flats
In Lotus Panache, around 2,900 apartments across 19 towers have yet to be finished. The total money required to complete the construction is around Rs 250 crore, which can be met through receivables from buyers. Here, too, buyers' representatives will be one of the signatories to the escrow account. Office bearer of Lotus Panache Welfare Association, Amit Chauhan, said the modalities are being worked out to complete the project
He said that in the present circumstances, completion of the projects is the best possible solution for homebuyers. He said around 800 members of his association have decided not to ask for any refund. But the developer has agreed to pay the penalty to buyers as per the sales agreement.
In Panache, the contractor Gold Star will start construction with its seed money and complete the project tower wise. This will expedite the cash flow and help in completing the project. It is learnt that the contractor has taken a parcel of land of 3C in Noida's Sector 79 to protect its seed money. Despite several attempts, The 3C management could not be reached for comment
| Updated on: 11 - Dec - 2017
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