Amid Complaints in India, a Real Estate Deal in Manhattan
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Neeraj Jagga bought this apartment in a 4,000-unit complex near New Delhi but said construction had barely progressed in three years. The developer, Kabul Chawla, has been the subject of numerous consumer complaints.CreditGraham Crouch for The New York Times
Last Sept. 28, a group of retired military officers demonstrated at Jantar Mantar, a historic site in New Delhi. “Though we are old veterans, we still have the strength to challenge your atrocity,” read the placard of one protester, who was leaning on a cane.
Their animus was directed at one of the New Delhi area’s biggest residential builders, Kabul Chawla. In 2008, nearly 200 military officers had put down deposits on apartments at Park Serene, a high-rise apartment complex Mr. Chawla was developing. In addition to a swimming pool, a community center and special prices for members of India’s military, a big drawing card was the prospect that the officers could live together in retirement.
More than six years later, the protesters say that Mr. Chawla’s company has collected almost 100 percent of the price of the Park Serene apartments from 400 buyers, payments the protesters estimate at more than $35 million. But the company has not completed the units. “They put their life savings in it,” said Brajesh Kumar, a retired Army major general and spokesman for the protesting officers, who have taken their grievances to a national consumer commission. “They thought that after their retirement they would move in. It’s not a happy situation for a large number of consumers.”
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A 2014 protest in New Delhi against Mr. Chawla’s development company, BPTP. The firm is one of the New Delhi area’s biggest residential builders. CreditGraham Crouch for The New York Times
As complaints mount against Mr. Chawla, developer of two dozen other major residential complexes near New Delhi, many of the veterans are struggling to find a place to live.
Mr. Chawla does not appear to have that problem. Even when he is more than 7,000 miles away in New York, he enjoys the comforts of a 4,050-square-foot condominium in the Time Warner Center that has five bedrooms, a media/playroom, soaring ceilings and Central Park views.
Although Mr. Chawla denies owning the apartment, saying that he stays there but that it belongs to his cousin, The New York Times has unearthed correspondence among real estate brokers involved in the apartment’s purchase, as well as other sources, tying the condo to Mr. Chawla.
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Kabul ChawlaCreditIllustration by Michael HoewelerThe ownership of the unit on the 68th floor of the Time Warner Center’s south tower is obscured by a corporate veil: a Delaware company with a Singapore address and a name, NYC Real Estate Opportunities, evoking the ambitions of an international buyer.
The secrecy surrounding 68AF is not unusual. Of the 192 condos at the Time Warner Center, nearly two-thirds are owned through shell companies, a Times investigation has found. Often the names of the people behind those shell companies are shrouded in secrecy. And 68AF is among the most carefully cloaked.
When the apartment was bought outright in February 2012 for $19.4 million, the backlash against Mr. Chawla had already begun in India.
A BOOM IN DEVELOPMENT
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A BPTP development outside New Delhi. In 2012, the company said it was overseeing more than two dozen projects, had 22,000 customers and had sales of $1.6 billion. CreditGraham Crouch for The New York TimesMr. Chawla, who is in his early 40s, got his start in the real estate business more than 20 years ago when he put up a building on property owned by his father. While his family name was well known in India — his cousin was the astronaut Kalpana Chawla, who died aboard the space shuttle Columbia — Mr. Chawla’s company, BPTP, was little known until 2005, when he began aggressively purchasing farmland near Faridabad, a suburb of New Delhi. At the time, a new commuter rail line and highway were progressing toward the suburb, and BPTP began buying land at prices as low as $12 per square yard, which it would later sell for more than 10 times that.
“No one showed interest in developing this area for 14 years, until we started land acquisition in 2005,” Mr. Chawla’s company said in an email, pointing out that the land had been cut off by two irrigation canals.
Mr. Chawla’s company constructed a six-lane highway bridge to make the project, called Parklands, accessible. His efforts dovetailed with a state plan to transform vast tracts of rich farmland near Faridabad to residential use, which itself was part of a construction boom in India to accommodate a rising middle class.
Continue reading the main storyTOWERS OF SECRECY
Articles in this series examine people behind shell companies buying high-end real estate.
By the fall of 2009, BPTP said it had presold 10,685 apartments and 5,657 residential plots at Parklands, which Mr. Chawla envisioned as a community that would include apartment buildings, lots for single-family homes and commercial establishments.
By 2012, the company was overseeing more than two dozen projects on nearly 2,500 acres. It had 22,000 customers and sales of $1.6 billion, according to a company news release at the time.
Today, many of those customers appear to be unhappy. They have flooded Facebook pages, real estate forums and consumer websites in India with complaints about BPTP and have staged protests at some of the company’s properties.
In an interview at his corporate headquarters near New Delhi and in emailed responses, Mr. Chawla and his company said that BPTP was highly professional and that it was catering to the region’s middle class. He acknowledged delays in some of his projects but blamed them on a “plethora” of external factors, including government setbacks in infrastructure development. Mr. Chawla’s company said it hoped to deliver the military officers’ apartments by this summer.
“All the developers are facing this kind of issue,” he said in the company’s conference room, which is dominated by a large portrait of Gandhi.
In addition to the six-lane bridge the company donated to the government, BPTP said it had taken on other projects that were the government’s responsibility.
But rather than the middle-class mecca Mr. Chawla had envisioned a decade ago, his signature development, Parklands, is a 1,700-acre dystopia of vacant lots and apartment structures, some finished but others in various stages of completion.
Many owners who had moved into their apartments complained about leaky roofs, poor plaster and wiring, substandard sewage treatment, deficient recreational facilities and parking spaces, and hidden and escalating charges.
Other buyers who are still without housing have accused BPTP of failing to deliver on properties they purchased.
At one of the Parklands apartment complexes, called Park Elite Floors, a buyer, Neeraj Jagga, said that there had been little construction progress in three years and that much of the project appeared to have been abandoned. A video Mr. Jagga made of his unit last winter shows crumbling bricks and plaster, unfinished walls and floors, no windows and rusting balcony railings. A recent visit to the site revealed no progress, he said.
Continue reading the main storyA tour of Neeraj Jagga's apartment in a BPTP development in February 2014. Video by Neeraj JaggaHe bought one of the 4,194 apartments in the sprawling Park Elite Floors, most of which were sold in the spring and summer of 2009. Mr. Jagga, who works in commercial printing, said BPTP had given various reasons for delays, including claims of a contractor dispute. “It’s been five years,” he said. “Everybody is stuck.”
The company has denied wrongdoing. In the case of Park Elite Floors, the company said that while work had slowed, the project had not been abandoned and that it had offered possession to 1,274 of the buyers.
In India, customers frequently put down money for apartments and lots in advance, then continue paying as construction proceeds.
But as BPTP buyers have waited long beyond the promised delivery dates of their lots and apartments, the company has begun new projects. “Most of the money they have used for developing other projects, buying other lands,” said Ashok Rajan Agarwal, a retired executive for a state-owned power company who invested in BPTP property.
BPTP denies such allegations, but a recent ruling by a government consumer commission seems to buttress Mr. Agarwal’s statement. Two buyers at another complex filed complaints in 2012 seeking the return of substantial deposits they had made on apartments beginning in 2005. The commission ruled that BPTP had to refund the money with interest, noting that the company failed for several years to use it for the apartments but “continued to utilize the amounts deposited by the complainants” in other projects. The complex has since been completed, and BPTP says it has appealed the decision.
In addition to the complaints from angry and, in some cases, desperate customers, many critics have alleged that Mr. Chawla is a major beneficiary of government officials who have bent rules for favored builders, to the detriment of consumers.
In August, an opposition party, Indian National Lok Dal, demanded an investigation of the relationship between several builders, including Mr. Chawla, and officials in Haryana State, where Faridabad is located. Mr. Chawla denies receiving any government favors.
Putting it into perspective, Amit Jain, who heads a consumer association representing apartment owners in a Delhi suburb, said BPTP is one of many companies that are taking advantage of a housing shortage and a loosely regulated system with few consumer protections. “I would say he is not a bad guy,” Mr. Jain said. “He is doing what most of the builders are doing. They’re good people but they are enjoying the largess of this failed state.”
‘THEY PROMISED HEAVEN’
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Mr. Jagga’s apartment at the BPTP development Park Elite Floors. The company said that work had slowed but that the project had not been abandoned. CreditGraham Crouch for The New York TimesOn Dec. 26, 2011, The Times of India quoted a local police official as saying, “We are on the lookout for the accused Kabul Chawla.”
The highly publicized case involved an accountant’s allegation that BPTP had cheated him out of 40 lakh rupees, then the equivalent of more than $85,000. The accountant, Suresh Goel, had bought a commercial lot in 2006 in Parklands, where he had planned to open an office. Mr. Goel said in an interview that he later learned that BPTP sold him the lot before getting required licenses and that when he complained to the company, it canceled his contract without returning his money.
After Mr. Goel filed a complaint with the police and another with a consumer commission, he said BPTP returned his money. The company said in an email that the allegations were false but that it returned Mr. Goel’s money to avoid harassment by the police.
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Even after the money was returned, the police continued their investigation. In 2012, BPTP went to court to get the case closed. The case was kept open, though, after an investigating officer testified that other people were approaching him with similar complaints against the company.
The case was closed in 2013 without charges being brought.
In interviews, some buyers who bought lots years ago in Parklands complained that the company arbitrarily switched the location of their lots to less developed parts of the project.
In a statement, the company strongly denied the allegations but said that some buyers were assigned different lots when the government ordered changes to the overall plan, including the widening of roads, that required a new layout.
Manoj Pandey, a real estate agent who said he sold more than 100 BPTP plots, ascribed a more nefarious motivation. He said that the company’s pattern was to sell property, then reassign customers to less desirable locations and resell the original property for more money.
BPTP, in a statement, called the allegation “false, frivolous and a figment of someone’s imagination.”
But Mr. Pandey said in an interview: “They promised heaven to all the buyers.”
Naveen Verma, an Indian who works in a technology job in Scotland, said he bought a Parklands lot in 2006. Mr. Verma, who said he had invested more than $90,000 in his property, provided The Times with dozens of emails to BPTP asking for possession. Mr. Verma said he had been promised a swimming pool and Wi-Fi connectivity in a gated community, but none of that had materialized. Instead, local villagers were using the site to dry cow manure for fuel when he last visited in December 2013.
In 2014, Mr. Verma went to court and BPTP agreed to turn over the lot to him, although he said there was little he could do with the property at this point. In a statement, the company said that no road had been built to Mr. Verma’s property because the government had been unable to acquire the necessary land, blaming “encroachment by some local villagers.”
One villager, a retired electrical worker named Ram Kishan, whose home is near Mr. Verma’s lot, says he will not leave the settlement. “I told them this is the land of my forefathers and we have been living here for over 150 years,” Mr. Kishan said, speaking in Hindi about visitors to the site who told him he had to leave. “How can I run away from the village of my ancestors? The whole world is building their homes around our village.”
A PURCHASE IN MANHATTAN
By the summer of 2011, as Mr. Chawla fended off criticism back home, a buyer expressed an interest in Apartment 68AF in the Time Warner Center.
The resulting cash offer of $19.4 million was more than $7 million below the asking price for the apartment, which encompasses five and a half marble baths, a 23-by-24-foot great room, his-and-her master closets and river-to-river views of the city.
ABOUT L.L.C.s
As The Times wrote in the first part of this series, while shell companies like limited liability companies and trusts can be used for secrecy, they are frequently used for other purposes, including avoiding exposure to lawsuits or double taxation. They are also used in multiparty real estate transactions. This was the case several years ago with family members of a reporter on this project, Louise Story. And they are used in inheritance matters and investment strategies.
When the contract was finally drawn up, it contained special language permitting the purchaser to transfer ownership to a limited liability company, which “may be owned by a Cayman Island limited liability company or a British Virgin Island limited liability company to be formed, and/or to a trust.”
The contract went on to suggest that another family would occupy the unit and might become the owner. The family’s name did not appear in the paperwork but was to be disclosed to the condo board. If the board did not agree to the arrangement, the deal was to be voided and the $1.9 million deposit returned. Such a transfer would not require any public filing.
Douglas A. Kellner, a New York lawyer who reviewed the contract at the request of The Times but knew nothing about the buyer, said the type of layering described in the document could place ownership in the jurisdiction with the most favorable tax treatment — which could reduce tax liabilities if a residence was rented or if a mortgage was taken out.
“There is also the possibility that the layering is used to hide the real ownership,” Mr. Kellner said.
Sales data from PropertyShark.
Months went by before the deal finally closed. If not for a lawsuit over real estate fees, neither the terms of the contract nor a clue linking it to Mr. Chawla would have been revealed.
Shortly after the sale, the brokerage firm Douglas Elliman sued the former owners of the condo, claiming the company was due brokerage fees. Documents filed in that case contained email exchanges among brokers, including Julie Rose of Citi Habitats, who had represented the buyer. One of the emails refers to the first name of a figure making requests from behind the scenes: Kabul.
“Dear All,” Brenda S. Powers, then a broker for Brown Harris Stevens, which represented the seller, wrote in an email to others involved in the transaction. “Julie Rose who is in direct communication with Kabul has requested the following.”
The email went on to explain that the buyer’s lawyer would not release the contract and deposit until complete measurements had been made of the unit. “We will get the different ways — methods of calculation,” Ms. Powers wrote. “Architect’s approach, graphic designer’s approach, developer’s approach.”
A person inside the Time Warner Center had suggested to The Times that Kabul Chawla and his wife, Anjali, owned 68AF, and Ms. Powers’s email supplied additional information.
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The Chawlas’ son posted photographs on his Facebook page that, with their expansive views of Central Park, seem to have been taken from the Time Warner Center. Kabul Chawla said the Time Warner apartment used by his family was owned by a cousin.In an interview, Mr. Chawla acknowledged that his family had used the Time Warner Center condo. The Chawlas’ teenage son had posted photographs on his Facebook page that, with their telling architectural detail and views of Central Park in the background, seem to have been taken from inside the unit. Mr. Chawla said the unit was owned by Aneil Anand, who he said was a cousin. “I don’t own an apartment in New York,” Mr. Chawla said.
Mr. Anand, who is listed as the purchaser in documents disclosed in the lawsuit, joined the hedge fund Duet Group in 2009 from JPMorgan Chase & Company. Mr. Anand did not respond to requests for an interview.
To further investigate the ownership, The Times contacted one of the people on the “Kabul” email, Hall F. Willkie, the president of Brown Harris Stevens. Citing the deed on 68AF, The Times asked Mr. Willkie why it was signed by Aneil Anand and not Kabul Chawla. “I think they usually just put it in another name for public records,” he replied.
When The Times asked whether Kabul Chawla or Aneil Anand toured the apartment before purchase, he said he did not know but could not disclose that even if he did.
“The last thing we do is talk about them as individuals,” he said.
“So for you to talk about this deal you would have to ask Kabul for permission?” The Times continued.
“Yes,” Mr. Willkie responded.
The deal for 68AF was one of New York’s 25 most expensive residential sales of 2012. After it closed, Citi Habitats posted an interview with Ms. Rose on the company website in which she described it as “a very complicated deal — but in the end my client was very happy. He loves his new home and that’s all that matters.”
In an effort to reach Mr. Anand, a reporter tried to deliver him a bottle of wine at the Time Warner Center. But staff members there did not know who he was. A concierge at the front desk searched through a list of residents, looking for Aneil Anand. “We don’t have anyone by that name,” she said.
Stephanie Saul reported from Faridabad, India, and Louise Story from New York. Sai Manish contributed reporting from Faridabad.
To contact the reporters, email louise@nytimes.com and sauls@nytimes.com.
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