You are on page 1of 8

From the Residents of Palm Springs, Golf Course Road, Sector 54, Gurgaon-122002 NOTICE 9 July 2012 To (1)

Emaar MGF Land Limited ECE House, 28 Kasturba Gandhi Marg, New Delhi-110001 Emaar MGF Services Private Limited ECE House, 28 Kasturba Gandhi Marg, New Delhi-110001 The Palm Spring Condominium Association Golf Course Road, Sector 54 Gurgaon 122001



Re: Electricity Bills for the period 15 January 31 March 2012 and 1 April 2012 -31 May 2012 This is with reference to:

(i) (ii)


the revised electricity bills for usage inside the units for the period 15 January to 31 March 2012, the electricity bills for usage inside the units for the period 1 April to 31 May 2012, the common area power charges for the period 15 January to 31 March 2012, the common area power charges for the period 1 April to 31 May 2012, and letter of demand towards electricity connection charges

dated on and around 5 July 2012. The residents are in shock having received such outrageous bills, which have manifest errors. Despite repeated requests on behalf of the residents for a meeting with Emaar MGF to discuss and resolve the issue regarding electricity bills since 14 June 2012, Emaar MGF has gone ahead without giving us a hearing and issued patently wrong bills in violation of its previous undertaking and commitment. The bills are fraught with financial irregularities, which have been set out below and the group appears to be now cheating residents and acting fraudulently. 1. (i) Rate per Kwh used in unit bills Contractual breach It had been assured to us and agreed in writing by Emaar MGF (by an authorized representative) that in the absence of Grid Supply, residents will be charged a flat rate of Rs. 7.00 per Kwh of electricity consumed inside their units. Please see official email attached at Annex I. In gross violation of this written promise and commitment, the rate charged in the bills is Rs. 13.04 per unit for the period 15 January- 31 March 2012 and Rs. 13.20 per unit for the period 1 April to 31 May 2012. There is absolutely no justification for Emaar MGF to unilaterally almost double the unit rate once it has been contractually offered, discussed and agreed between the residents and the builder. No prior written notice or explanation has ever been offered by the builder. (ii) Excess charge over DHBVN

The official rate at which Dakshin Haryana Bijli Vitran Nigam (DHBVN ) supplies electricity is around Rs. 4.57 and at the rate of Rs. 7.00, already the residents are having to pay significantly more than the official DHBVN rate. There can be no dispute on the fact that it is the builder's responsibility to get the grid connection from DHBVN and despite the owners having been asked to pay lumpsum electricity charges at the time of occupation certificate (August 2011), Emaar MGF has, almost 1 year after the date of commencing handover been unable to obtain a legitimate electricity connection from DHBVN. Please note that first, the residents will not bear the brunt of the delay and inefficiency on the part of Emaar MGF, which is entirely the builders fault; second, this delay in obtaining a legitimate connection appears to be deliberate as the builder is unjustly benefitting financially from its own delay. (iii) No market precedence The rates of Rs. Rs. 13.04 and Rs. 13.20 per unit are exorbitant and unheard of anywhere in any high end residential complex in Gurgaon. Please see Annex II for certain examples cited from other luxury residential complexes in Gurgaon, based on our residents previous stays. There are numerous other examples. Therefore, arbitrary and whimsical rates being charges by Emaar MGF smack of anti-competitive practice and abuse of dominant position of the builder vis a vis the residents. 2. Common area electrical charges The cover letter under which the electricity bills have been issued states that Emaar MGF is incurring a cost of Rs. 46 lakhs for diesel (HSD) every month towards providing electricity for 129 apartments. This statement, which is the basis of calculation, is flawed on many counts: (i) Conveniently the entire diesel consumption has been charged out to the units when there is a projects team still active on site with various projects works still pending eg. Projects work is going on in the lower basement parking which is entirely out of bounds for the residents, a large parts of the upper basement under Tower F is being used as projects stores, bowling alley is under way, restaurant fit-outs and interiors are not ready, work on about some 40-50 odd units which have not yet been handed over is still ongoing and till sometime ago, even the Emaar MGF sales office was functioning from this complex. Thus, scientifically the diesel consumption needs to be apportioned between the projects team, electricity consumption inside units (easily calculable per meter readings) and for common area maintenance. It is absolutely incorrect to allocate the entire diesel consumption towards common area electricity and inside unit electricity consumption. This amounts to the residents subsiding the builder.


There is something seriously wrong in Emaar MGFs statement that 115,000 litres of HSD is being consumed per month for 129 apartments. This works out to approximately 30 litres of diesel per day per apartment/villa and almost 900 liters per month with an average monthly cost of Rs. 35,658 per apartment/villa. Such numbers are ridiculously high and simply not credible. They need to be supported by a proper audit on consumption of diesel something which the residents have been requesting for a long time. Typically, high end residential complexes in Gurgaon charge about Rs. 0.50-0.70 per square foot towards common area electricity charges. It is shocking as to how Emaar MGF has charged Rs. 1.17 and Rs. 1.58 a square foot for Palm Springs. Such rates are absolutely out of synch with the market in Gurgaon. Arbitrarily


charging such a high figure towards common area electricity charges will not be accepted by the residents till a satisfactory explanation is provided as to what is the distinguishing feature in Palm Springs which causes the rates to double.


Further, there appears to be serious and deliberate accounting irregularities as the numbers simply do not add up. With a built up area of 1,470,595 square feet, when the total built up area is multiplied by a common area electricity charge of Rs. 1.58 a square foot, the aggregate monthly common area electricity bill works out to Rs. 23,23,540. This implies that the aggregate electricity consumption inside the 129 units in a month is Rs. 22,76,460, working out an average monthly charge per unit of Rs. 17,646. However, there are numerous instances of residents having received monthly bills for consumption inside their units which is way in excess of this average figure of Rs. 17,646. This suggests that residents are being doubly charged. The builder must provide a detailed excel sheet that clearly demonstrates what the sum of the common area electricity bills and the bills for electricity consumption inside units for each of the 129 units adds up to, failing which the only conclusion that can be drawn is that the authorized representatives of Emaar MGF are acting fraudulently and criminally embezzling money from the residents. For the initial months, in order to meet the minimum critical load that is necessary for operating the DG sets, lighting and air conditioning in the common areas was running 24 hours 7 days a week. The residents cannot be asked to pay for this which is entirely due to the builders fault and delay in not being able to obtain grid supply at the time of handover of the complex.



Please clarify whether the figure of 129 units refers to units that are occupied or does it also include units which have been handed over but whose interior fit outs are still being carried out.


Units consumed Many residents have complained that based on their typical electricity consumption patterns for their families in the past, the meters readings are inflated. For details of two such examples, please see Annex III and there are other such cases. This has led the residents to believe that the electricity meters are not properly calibrated. Some unit owners have already requested that meters be checked by an independent agency and evidence that these meters are not running fast be provided to the residents. This has not been acted upon the builder and needs to be done.


Frequency of billing The electricity bills for electricity consumption inside units as well for common area electricity usage are required to be issued on a monthly basis. This is not being adhered to and bills need to be re-issued providing a monthly break up. This is a right of the residents, which is being violated and causes unnecessary burden as a consumer.


Authorised Representative of the Condominium The electricity bills do not contain the name or designation of the signatory who has signed on behalf of the Palm Spring Condominium Association (PSCA ). As you are aware, till date despite repeated request (various emails are evidence) not a single genuine resident of the complex has been made a member of the society and therefore the residents do not have any real say or voice in the PSCA, which is meant to be a representative body of residents. In the absence of any genuine members on board this

society and no liaising between the named members of the PSCA and the real residents, we have a right to know who is the person(s) who has signed or issued these electricity bills and what is the basis of his/her authority to act on behalf of the real residents. 6. Bill for Electricity Connection charges At the time of intimation of possession, a lumpsum bill for electricity connection was charged; no explanation as to the basis of calculation was offered. Whilst some sort of explanation has been offered, it is not adequate. The residents need to be provided with supporting documentary evidence from the electricity board demanding such payments. We must also add that the timing of this bill is suspect, coming almost a year after the one time lumpsum electricity connection charge was raised by the builder in July/ August 2011 specially since the builder has hugely delayed obtaining the grid connection and provided no explanation to the residents for such delay for the last one year. 7. Service tax The electricity bills clearly show that PSCA is awaiting Service Tax Number. However, Emaar MGF levied service tax on the lumpsum demand towards electricity connection charges raised in July/Aug 2011 at the time of the final installment before possession and is now levying service tax on the common area power bills as well as charging the additional demand towards electricity connection charges. The common practice in India is that when any entity files it service tax returns in a quarter, the Service Tax Number is made available. Therefore it stands to reasons that has Emaar MGF filed its service tax return for 2nd or even 3rd quarter of FY 2011-2012, then it would have obtained a Service Tax Number. This prima facie suggests that the money on account of alleged service tax that has been collected from the residents of the complex has not been deposited with the government. If this is the case, this amounts to a serious breach of the laws of the land and a malafide intent on Emaar MGFs part. 8. Delayed Interest For the avoidance of doubt, it is clarified for the record that there is no question of delayed interest being levied on the revised bills, when the cause of the delay has been Emaar MGF and charging late interest would amount to benefitting from its own wrongs. First, Emaar MGF delayed by several months issuing the monthly electricity bills, then admitted that these bills have errors, then denied any meeting with the residents despite repeated requests and without any explanation and supporting documents went ahead and issued revised bills which for reasons outlined in this notice are full of errors. 9. Threat of electricity disconnection Since handover of units in August 2011, Emaar MGF has not been able to procure electricity for the condominium from DHBVN; so what is meant to be back up power to be provided by standby DG sets is actually the only source of electricity to the residents at present. As mentioned above, residents are already suffering on account of having to pay Rs. 7 per Kwh instead of the lower DHBVN rate. Any threat by the builder to disconnect an essential service such as electricity to the complex, after committing a breach of its promises and having acted unreasonably would cause irreparable damage to the residents. Genuine grievances of the residents must be addressed and issuing threats of disconnection of electricity is exploitative of the vulnerability of the residents. 10. Threat of drawing on the IBMS Arbitrarily imposing charges on residents and repeatedly denying them the opportunity to

meet and discuss their grievances regarding these charges is against the principles of natural justice. Following this up by a threat of drawing down on the IBMS, when in the past residents have in fact complained and pointed out that not enough evidence of the IBMS having been placed in a separate account and credit of interest has been made available by the builder is unjustified. The residents have full intention to pay bills; however lack of financial transparency on the part of Emaar MGF and refusal to meet and discuss maintenance issues in the complex will not be tolerated any further. To establish their bonafides, the residents will pay their electricity bills for the electricity consumed inside units at the agreed rate of Rs. 7 kwh. We strongly urge you not to do draw down on the IBMS funds and any actions to the contrary will be at your risk and peril. The above issues in this notice point towards serious financial irregularities in the electricity charges being levied on the residents. Separately, on the maintenance charges, the residents have not been provided with responses to their queries raised around 14 June 2012 meeting regarding an audit on the maintenance charges. If Emaar MGF and its group companies fail to act reasonably and honour their previous commitments, the residents will be constrained to pursue their right to legal remedies including initiating criminal proceedings against the authorized representatives and the persons issuing the aforementioned bills and complaints to the regulatory bodies in Delhi and Gurgaon, which will be solely to Emaar MGFs costs and consequences. We sincerely hope that Emaar MGF will not let such a situation arise and will take immediate steps to address each of the issues raised in this notice. For this, we request that a meeting be convened with the Palm Springs residents on 11 July/ 12 July (this meeting has now anyways been postponed by Emaar MGF on one pretext or the other for more than 2 weeks) and pending the meeting, an immediate notice be sent out to residents holding the electricity bills in abeyance. Yours sincerely, Residents of Palm Springs

Annex I

From: Date: 31 December 2011 5:53:47 PM GMT+06:00 To: Tejinder Singh @ Lynx Overseas <> Cc: Ashish Bhushan <>,,Nitin Jain <>," CHHATWAL" <>,Samir Kalia <>,Sandeep Kataria <>,,Suneeta Mukherjee <>,RAVI Virmani <>, Subject: Re: Critical Completion Issues at The Palm Springs

Dear Mr. Singh, Wishing you (and every one) A Very Happy New Year! This is to inform you that we will be starting levying "Electricity Consumption Charges" for individual units w.e.f. 1st January 2012. In absence of Grid (Main) Supply charges will be levied on the basis of following methodology (we are not starting with prepaid system as of now): Start reading will be taken (thru remote meter reading device) at 00:00 hrs and the same will be shared with you (Unit owners can verify their reading with the help of maintenance staff present at site). End reading will be taken at the end of the month (i.e. 31st January 2012). Your monthly bill will be generated in first week of February 2012 (On the basis of consumption i.e. end reading - (minus) start reading) which will be payable by 15th February 2012. At present charges will be at flat rate i.e. Rs. 7.00 (Seven) per unit (This has been already discussed).

I am not taking up rest of the points (as I could not deliver in past 4 months). I am sure Mr. Kamal will be able to resolve these long pending issues. Regards, Shishir

Annex II Uniworld City: Rate Charged during DG set only supply - equivalent to DHBVNL rate of Rs. 4.57 . Complete Subsidization upto electricity board rate by the builder. Bills and mail detailing the same from a resident, Mr.Arvind Bali is attached. Nirvana County: Rate Charged during DG set only supply - equivalent to DHBVNL rate of Rs.4.38 . Complete subsidization upto electricity board rate by the builder. Attached copies show DHBVNL connection activation in Feb 2009. Bills of prior period show rate charge of just Rs.4.38. Central Park I: Rate Charged- DHBVNL Rate plus Diesel surcharge of Rs.1.30 per sq ft + common area electricity charge of Rs.0.50 per sq. ft, totaling to Rs.6 per sq ft. Windsor Court: Rate Charged - DHBVNL rate + Electricity for common area + DG Charge = Rs.6.63 per sq ft.

Annex III Example 1- Complaint by Unit Villa 76 The meter reading on 11 June 2012 shows 22095.5 units. So, if the reading of bill shows 18298 units as on 10 May 2012 and the reading of the meter on 11 June 2012 shows 22095.5 units, it implies that in 31 days 3797.5 units were consumed. This is practically impossible for just 2-3 ACs being used by the family and that too not for round the clock and with thermostats set on 24 degrees Celsius. Even winter month consumption from 15 January 2012 till 31 March 2012 is charged for 5978 units which works to almost 80 units a day which is impossible to be consumed on lighting alone. The villa does not have even a single regular light bulb. It has all energy efficient CFL, LED & T5 lighting. Geysers just operate for a few minutes while usage and cut off automatically after that. Example 2- Complaint by Unit D101 - Bill No. 456 After making a correction for the incorrect start meter reading shown in the bill, the units consumed for the period 1 January to 31 March works out to 2,005 Kwh (3,140.70 Kwh less 1,135.70 Kwh). This, in turn, work out to an average consumption of 668 Kwh per month. This is way above our historical consumption patterns for months such as January to March, particularly February and March, where typically consumption is the lowest in the year. There are just 2 individuals residing in our unit and since we both work full time and are out for most part of the day, we have a strong suspicion that the electricity meters are not properly calibrated.