Last month, more than a dozen investors dragged DLF to court, accusing it of hurting their investments in an east Delhi mall by converting it into an office complex.
Two months earlier, hundreds of home buyers in DLF's project in Chennai collectively moved to the Competition Commission of India (CCI) accusing the company of extracting additional money under the garb of taxes.
A year after the CCI, in a landmark judgment, slapped DLF with a Rs 630-crore anti-competition fine— which the company is contesting in a higher body—more such cases are piling up against the developer for a wide range of unfair business practices.
Rajeev Talwar, group executive director of DLF, says the very premise of the DLF Garden City (Chennai) buyers approaching the CCI is wrong as the issue pertains to a consumer case.
"Please take it to an appropriate forum like a consumer court...," Talwar says, adding his company 'honours' its clients. "I must restore confidence of my customers and it is my duty to satisfy my customers first and not the media," he says, adding some people are 'litigant minded' and are trying to find issues in the project even as the overall value of the apartments in the Garden City township has doubled to Rs 3,600 per sq ft over the years, from its launch price of Rs 1,850 per sq ft.
Many of the home buyers counter Talwar's claim, saying the rate per sq ft was never below Rs 2,500. In 2005, partly lured by the hype of modern retailing that was touted as the next sunrise sector and party enticed by the rosy picture painted by DLF, Naveen Aggarwal invested Rs 1 crore in buying shops at an upcoming mall in Delhi's Mayur Vihar.
Finally, after years of delay, when the DLF Galleria mall was ready to be opened, the slowdown hit the retailing business. As a result, DLF could not find appropriate tenants for the building, and it leased the space as office. This is now being objected to by the investors who had bought shops there.
"After five years of wait, there was no anchor tenant, no foodcourt as promised," says Aggarwal, adding that DLF had promised supermarket Sabka Bazaar as the lead retailer in the mall. "It was nothing more than a concrete structure and we could not find tenants because of that."
Now, Aggarwal along with 56 other investors, who bought outlets of various sizes, have dragged DLF to court, accusing the country's largest developer for converting a mall into an office complex. Talwar of DLF says it is a reality today that many of the retail projects did not take off due to tough economic conditions post the 2008 downturn. For example, DLF's plans to construct the country's biggest mall in Gurgaon, The Mall of India, has been postponed several times due to the prevailing slump, he says.
The buyers of DLF Galleria, he says, need to lease their space on their own and stop blaming DLF. "We are trying to find an anchor tenant and other retailers but the market is tough. We are exploring how to maximise footfalls into the mall," he adds.
In another case, DLF had sold offices at Okhla in Delhi to investors in 2008 on the promise that the land use will be changed from industrial to commercial. The realtor even promised to return the money to investors with interest if it was unable to change land use in 12 months. "The project was sold to us as commercial and we were promised that the industrial land use will be changed to commercial but that has not been done yet," says HNI investor Sandeep Madan, who is part of association of 109 investor who have come together to file a case against DLF.
DLF says that under the law, it is not allowed to change the land use in an industrial estate but the building can be legally used for commercial purposes after paying all conversion charges that the company has already paid. In January 2008, even before DLF's first township project in Chennai was launched, hundreds of home buyers jostled for space to pay the initial booking amounts.
Later that year, the slowdown hit India and scores of real estate projects in India were crippled by slowing demands and drying of funds. DLF's Chennai development was one such victim of the downturn. As large as its size is, DLF was also left saddled with a huge Rs 23,000-crore debt.
Four-and-half years later, even as most of the buyers are still waiting for possession of their apartments, DLF has made demand for an additional amount of Rs 241 per sq ft, the buyers say.
ML Lahoty, the lawyer representing the home buyers of Chennai, said most of his clients were primarily drawn to buy apartments in the DLF Garden City because of the reputation of the country's largest real estate developer.
"We invested mainly because of the three-letters of the DLF brand," echoes MS Vasan, who, in early 2011, paid 95% for a 1,938 sq ft flat in the Chennai township that cost him around Rs 80 lakhs. "We had only heard the successful DLF story and had not felt it. Now, when we have, it is a very bitter feeling."