Noida Twin Towers Demolition — Hold Govt Agencies Accountable Too

If ‘collusion’ between authorities and the builder is the issue, compensation must be shared in much the same way.

SC has ordered a refund with an interest payment of 12 per cent per annum by Supertech to flat buyers hit by the demolition.

(Photo altered by The Quint)

The Supreme Court’s verdict earlier this week in ordering the demolition of a ‘twin towers’ project in Noida seems to have raised some questions alongside answers, even as it is rightly hailed as a landmark judgment in which builder Supertech and officials of Noida Authority are sought to be punished.

This is because customers of Emerald Court, who paid for apartments in the 40-storey complex, or future customers in similar situations, may be shortchanged or harassed if the issue is not taken to a proper closure. A review of the judgment is coming up even as at least one official of Noida Authority has been suspended in a clean-up within the Uttar Pradesh government's ambit.

The top court has ordered a refund with an interest payment of 12 per cent per annum by Supertech to flat buyers hit by the demolition and its terms.

The Noida Verdict Sets a Precedent

That brings us to a tricky place in society. An official approval may be illegal when it comes up for judicial review. Something legal, in fact, may be unconstitutional if the Supreme Court considers it otherwise. The Noida verdict is special because it may — and probably should — set a precedent for both the real estate industry as well as consumer rights in general.

What is a customer supposed to do when she pays for something approved by government authorities but which violates consumer or environmental rights, and the punished builder or manufacturer is not in a financial position to pay? My contention would be that in such cases, the citizen seeking justice has equal rights as a “consumer of governance”. And so, the State (government of the day) must bear the charges for not administering the law properly.

In the Supertech case, the company seems to be financially solvent enough to bear the cost of compensation to adversely affected customers, though it advanced specious arguments against the Resident Welfare Association (RWA) that fought for customers.

But what if the builder in such a situation is on the verge of bankruptcy or worse, as it has been seen in some cases?

A Consumer Right is State's Responsibility Too

We have also seen a case involving the Jain Coral Cave and other apartment blocks in an Ernakulam waterfront complex that were demolished on Supreme Court orders last year after it was found to violate coastal regulation norms. While apartment owners have been compensated by the builder with government intervention, there are horror stories of apartment owners thrown out of their homes and going through emotional distress after the court order last year. There is more to this than refunds and demolitions.

In the Supertech case, authorities in Noida — and indirectly, the government of Uttar Pradesh — are partially responsible for ensuring that those who paid for a property under certain specifications (be it the number of square feet, the safety area or the greenery or accessories) are compensated for the losses they have borne.

It is important to note that if ‘collusion’ between the authorities and the builder is the key issue, compensation must be shared in much the same way.

The subtext for this is that government agencies are not just regulators or administrators, but also service providers of what one would in a lay person’s language call “fair play”. There can be no denying that a consumer right is at least partially a state agency’s responsibility, where it has failed in its duty. Punishing erring officials is perhaps not enough.

Redefine the State

In the Noida case, which might set the precedent for hundreds of cases involving cheated/shortchanged customers, there is a need to redefine the state as a service provider. This must be a new normal for India as both democracy and market economy take root.

There was a time when state-owned services, such as telephony, were such that its officials treated paying customers as if they were obedient subjects. Economic reforms introduced the idea of the citizen as a consumer who must enjoy the rights of one.

It is time to also consider the idea of a “citizen consumer” more explicitly. Yes, this may result in the taxpayer indirectly bearing the burden for the excesses of government officials, but in an era when both vigilant media and fiscally strapped governments worry about tax pennies, this would make government agencies more accountable. We may then consider a taxpayer charge as fees paid for making the government more accountable.

Politics is such that the Uttar Pradesh government may blame a previous administration for violation of norms by bureaucrats, much like how the NDA government is blaming the UPA for oil bonds for a rise in fuel prices. However, in democracies, new governments inherit both duties and privileges left by a previous one. If you can take credit for the inauguration of a bridge or the launch of a rocket built by your predecessor, you must also take the rap for the mistakes he did.

As for how a government can compensate customers, it must be borne in mind that there are significant levers still available with a government to acquire properties left by bankrupt or financially strapped companies. They can also crack down on the ill-gotten wealth of corrupt officials. Some active thinking can find a solution.

Over to the honourable judges, who must, in the public interest, consider a government agency to be a service provider.

(The writer is a senior journalist who has covered economics and politics for Reuters, The Economic Times, Business Standard and Hindustan Times. He tweets @madversity. This is an opinion piece, and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)