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In recent years, the real estate market has helped increase realty frauds and other phony real estate financing by the Banks. The recessionary trend in present realty scenario invariably has brought in many unscrupulous and unsavoury Builders/Developers who, in connivance with certain corrupt Bank Executives and dishonest officers, secure bogus loans by allegedly executing spurious documents supported by fudged Balance Sheets, highly inflated/false data, fabricated information/statements and try to make some fast money through illegal routes.

Builder - Advocate - Chartered Accountant - Bank Executives - Branch Managers/officers nexus is believed to be the root cause of Banks falling prey to realty frauds involving non-viable loans in multi-crore of rupees resulting in many fold increase in non-performing assets of Banks. Quite a number of times, the approvals come from a single branch of a Bank for sanction of loan to a blue-eyed Builders/Developers of that Bank, are the results of lack of any thorough scrutiny of the project by the Bank officials.

It is worthwhile to point here that even Banks are under pressure to disburse maximum amount of loans to reach the given targets as per directives from various authorities and consequently, some of them conveniently skip the required in-depth scrutiny for sanction of loans.

Banks are supposed to be more vigilant and enforce appropriate due diligence before sanctioning loans to the unscrupulous Builders/Developers. Bank Officials hand in hand for occasional pecuniary benefits, later face the music of investigation against them for Realty frauds front also because of the dereliction of duty by some advocates and chartered accountants. When a fraud comes to light, Bank Officials are either charge sheeted or summarily dismissed or put behind bars. However, no action is taken against the top executives of the Bank or the professionals hired by the Builders/Developers.

It has also been noticed where a Bank Manager is transferred or posted from one branch to another, such immoral clients follow these Bank executives to continue their illicit relations to avail more and more loans in multi-crore of rupees which are sanctioned or got sanctioned from HO by such dishonest Bank Managers who act as carriers for the top bosses of that Bank.

Complaints about mortgage frauds and predatory lending practices in Banks have also grown many-fold as the economy has soured and increasing numbers of Realtors face financial strains and even foreclosure. Reserve Bank is taking mortgage frauds seriously with assigning the task of investigations and prosecutions to the Central Bureau of Investigation Dept. and Banking Section of Economic Offence Division against the corrupt Bank executives and dishonest Bank Officials for rendering undue favours to the Builders/Developers and acquiring disproportionate Assets to their salaried income.

There are numerous cases registered by Central Bureau of Investigation Dept. and Banking Section of Economic Offence Wing against the erring Bank executives/Managers for abusing their official positions and entering into a criminal conspiracy and fraudulently sanctioning and disbursing various limits to the Builders/Developers on the basis of false and forged balance sheets thereby causing loss to the tune of multi-crore of rupees to their Banks.

There are umpteen numbers of such realty frauds with height of violation of the ground rules and guidelines of Credit Policies framed by the RBI where the project loans in crore of rupees have been disbursed without proper assessments, without adherence of sanction norms, with no proper verification of genuineness of title documents/balance sheets/data/projections and ignoring the viability guidelines of the Bank.

Banks have begun stress testing their realty assets as delinquencies in loan service payments begin mounting up and are now asking the Builders/Developers to lower prices to clear their piled-up Realty NPAs. Additionally, The Banks are reducing the moratorium period on loan repayment from 9-12 months earlier to just three months now as many banks have begun facing overdue on some of the past realty loans. This puts an indirect pressure on the Builders/Developers to sell off their projects quickly to start repaying their installments in default.

Distress sales have increased. Some Builders/Developers are resorting to discounted sales with attractive gifts for meeting liquidity requirements. Analysts have expressed concerns over the financial health of the Real Estate Sector. City-based retail broking firm, India Infoline, fears the liquidity situation of Builders/Developers could worsen further if banks refuse to refinance maturing debts of Real Estate Companies and maintain the credit freeze on their accounts.

Bankers are resorting to moral suasion, persuading borrowers to settle their overdue payments. However, despite such efforts, RBI said that subsequent to the AQR, gross NPAs rose 79.7 per cent year-on-year in March 2016. The net NPA of the Banks also increased sharply to 4.6 per cent in March 2016 from 2.8 per cent in September 2015. Public Sector Banks' net NPA was 6.1 per cent while the ratio for Private Sector Banks was 4.6 per cent. For the last financial year, the average was about 2.5 per cent of advances. Natural justice demands that disciplinary actions must be initiated to book the erring officials of the Banks in an expeditious manner.




 Are you cheated by the builders? Are your flats not delivered in time? Despite amounts received towards the cost of flat, builders did not execute and registered the flat agreement? Builders did not form Society and not conveyed the land in favour of Society within stipulated time as per the provisions of Maharashtra Ownership Flats Act, 1963 (MOFA)? Mandatory Building Occupation Certificate (BCC) not procured? The answer to all these questions is given hereunder. 

You can now file FIR against such unscrupulous builders. According to a recent circular issued by Maharashtra Police, the flat buyers who have been cheated by any reason as stated above can file a police complaint against their errant builders. The State Police has directed all the police stations across the State of Maharashtra to register complaints against such criminal builders who cheat flat buyers and violate norms under MOFA. In a recent circular issued by the Special Inspector General of Police, Prabhat Kumar instructed all Police Commissioners in the entire Maharashtra State to take action according to the provisions of law when aggrieved flat or property buyers file such complaints.

Earlier, many flat buyers victimized by con builders, went to the police station many times in the past but the police used to refuse to register the complaint against the builders under the MOFA and they were denied stating that their cases were a civil ones directing them to Consumer Court. This circular will now definitely bring relief to buyers who have been cheated by their builders.

It has been reported that there have been numerous cases of harassed flat buyers having a harrowing time at police stations when they went to file complaints. They also experienced that some police officers were being hand-in-glove with unscrupulous builders extracting ungrateful benefits. This circular is certainly a proactive step by the police, a strong push from the top to take such complaints seriously.

However, the builders’ lobby opines that holding builders solely responsible for the reasons beyond their control is a bad sign for construction business, especially when there are frequent changes in building rules and regulations and such circular shall subject the builders to blackmail them from all sections.

The builders’ lobby expresses that there are chances in the area of Redevelopment, the Managing Committee Members shall trouble builders by lodging false complaints and blackmail them for their personal gains. The circular mentions that action can be taken against builders under the MOFA, 1963. However, a senior government official stated that MOFA had been scrapped by the state government and the police had erred by mentioning it in the circular since the MOFA has been superseded by the new Real Estate (Regulation & Development Act) 2016 (RERA).

It is feared that after the implementation of RERA, the agreements will not be covered under MOFA as the new act doesn’t have the same provisions. However, Section 13(2) of the MOFA states that violation of Section 5 is punishable with five years. As per the Criminal Procedure Code (CrPC) First Schedule Table II, the offence is cognisable and an FIR can be filed by the police and should be as per the law. However, for other MOFA violations, the police may not be able to take cognisance as the punishment is less than three years. The RERA has mentioned punishment for three years, if a project is sold without registration and is not cognisable and thus, the police cannot register an FIR. In a few years, most MOFA agreements will be extinct and this will affect the circular.

Some industry players, however, feel that this move is irrational and will discourage the builders since the circular is ‘disturbing’ and it holds the builder solely responsible for delays but there are many issues, which are not in his control. Cornering the real estate sector like this, will spread a negative signal within the industry which is trying to recover and that the onus should also be on the concerned officials of civic body who delay granting the permissions.

City builders are lobbying with the state to withdraw the circular issued by the State Special Inspector General of Police directing every police station to take action against errant builders by registering complaints and further initiating penal action against them. Builders claim the circular is just another ploy that would help police officers to extort money from them for any small reason.

After Prabhat Kumar, the Special Inspector General of Police, issued the circular, several top builders had meetings with officials from the Housing and Home Department at Mantralaya. The builders also met Mr Kumar over getting clarification from him on the circular that was issued. The circular states that complaint should be registered against builders who fail to hand over possession on time to buyers or deliver flats without obtaining occupation certificate (OC). It was further cited that after a delegation of activists had made representation to the police and highlighting various laws under which the police could initiate action against builders.

Meanwhile, a Home Department Official said that the law is already in place and there is no point even if the circular is withdrawn. It was just a communication sent to all the police commissioners and nothing more should be read out of it. There is no question of withdrawing the circular. The relevant circular in original has been displayed hereunder for the victims to cite while they register FIR against the delinquent builders.





After many years of independence, even today the realty sector is remained unregulated and so far no law has been enacted to regulate it because of the evil nexus amongst builders, politicians and under-world dons. The private builders lobby has got strengthen and looting the general public. There are many cases that the life time earning of a common man with family has been swindled away by builders and the victims are not so powerful to fight against the influential builders lobby. Presently real estate sector has been converted into a well of corruption.

It is a long ending tussle between builders and home buyers that never seems to end delivering projects on time. There are umpteen cases where builders have taken extra time to finish projects while leaving home buyers to suffer fiscal setbacks. Imagine a situation where you have booked a house in an apartment complex while paying hefty EMIs and also the rent for the temporary accommodation that you currently occupy. Any delay in getting into your own house obviously means a financial loss.

A common man in Malad of Mumbai Suburb, after relentlessly pursuing a case before Consumer Forum, defeated a delinquent builder and got himself compensated at current market price of the flat which was un-delivered more than a decade ago. The buyer reportedly booked a flat for an agreed price of Rs 9.26 lakhs in the year 1999 and paid Rupees 3.51 lakhs as advance.

The builder did not perform his principal obligation namely delivery of the flat besides committing several criminal offenses under MOFA. The buyer successfully agitated before the Maharashtra State Consumer Disputes Redressal Commission (MSCDRC) and got the order for payment of Rupees 25.25 lakhs passed against the delinquent builder who cheated him.

There is a lot to think about this case about the builders going unpunished and that is what causes deficiency in service i.e. a civil wrong. If the deterrents were activated to curb the crimes it would have acted as obstacles to deficiency in service. The builder’s criminal wrong-deeds were; (1) he took more than the maximum permissible 20% of total flat price as advance i.e. Rs 3.51 lakhs, (2) he committed a criminal offence also of not executing an agreement mandated under Section 4 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management And Transfer) Act, 1963 (the MOFA).

The question of another obligation of the registration of the agreement did not arise as none was written down by the builder; (3) another offence under MOFA. Till today apparently these criminal-deeds are like technical lapses as the State Administration does not seem to consider them as worth a blink of an eye, but the important fact was these criminal deeds induced the builder to commit a civil wrong and the flat was ultimately not delivered.

Instead, what delivered by the builder was plethora of excuses for years together, a torture worth imagination but only a common man can do it and not the authorities responsible to prevent them happening. One more highly contentious legislation namely the Maharashtra Housing (Regulation and Development) Act, 2012 (Maharashtra Housing Regulation Act) is poised to replace this alleged incompetent MOFA (as admitted by the Government after over half a century!!!).

The Maharashtra State Consumer Disputes Redressal Commission reasoned out the compensation of Rs. 25.25 lakhs by reckoning the land cost per sq. ft built-up area at Rs10,191/- as per the Government Ready Reckoner Rates for stamp duty in the same area. Since the buyer had paid Rupees 3.51 lakhs, (37% of the prevalent flat price) for 620 Sq. Ft prorated value worked out to Rupees 23.37 lakhs which the Commission held as payable to him by the builder. The remaining amount of Rs.1.87 lakhs was assigned towards the compensation for money spent on travel and for suffering the mental agony, harassment and the costs of the complaint.

Now the most important un-attempted question; Should the builders go scot-free despite committing acts attracting penal provision up to 5 years’ imprisonment under MOFA as listed below?


(1) Any promoter who, without reasonable excuse, fails to comply with, or contravenes, the provisions of Section 3,4,5 (save as provided in Sub-Section (2) of this Section), 10 or 11 shall, on conviction, be punished with imprisonment for a term which may extend to three years or with fine, or with both.

(2) Any promoter who commits criminal breach of trust of any amount advanced or deposited with him for the purposes mentioned in Section 5 shall on conviction be punished with imprisonment for a term which may extend to five years, or with fine, or with both.

(3) Any promoter who, without reasonable excuse, fails to comply with or contravenes any other provision of this Act or of any rule made there-under, shall, if no other penalty is expressly provided for the offence, be punished, on conviction, with imprisonment for a term which may extend to one year, or with fine which may extend to ten thousand rupees, or with both. UNQUOTE

Under Section 3 he must give information and the documents listed in this Section.

Under Section 4 he must execute agreement/register it and take advance (below 20%).

Under Section 5 he must maintain a separate bank account of sums taken as advance.

The moot question therefore is why the presence of the proven evidences of criminal offences under a State Law (MOFA) on the records of the neutral forum like the Consumer Court should be allowed to go un-recognized for appropriate punitive actions by the competent court in the State? Should the Consumer Forums not reach out to potential remedial measures which can help cut back the complaints from taking place in future which later need not come up for adjudication before that body?



For an illegal and unauthorised construction by flouting the basic laws of redevelopment in a housing society under redevelopment, the Govandi Police has booked one of the top and leading Developers, their architect and the corrupt members of the Managing Committee of one of the housing societies in Chembur under Indian Penal Code for criminal breach of trust and cheating in connivance with the members of the Managing Committee following allegations of malpractices in the redevelopment process of the society’s property. The complaint was filed by one of the society’s resident member before the Metropolitan Magistrate, Kurla Court under Sect.156 (3) of CrPC. The Court directed the Govandi Police for filing of an FIR and a conduct a thorough probe.

The charges against the Developers are proved beyond doubt that the accused dishonestly induced the complainant and other members of the society to vacate their old premises and shift to the building which is not constructed in accordance with the law as ruled by Additional Chief Metropolitan Magistrate, 11th Court, Kurla.

Advocate who represented the complainant charged the Developers for not obtaining an NOC from the Civil Aviation Ministry before construction of towers within the property of the society but it was not done. Two towers, namely A and B having 20 floors each were constructed even before applying for the NOC from the said Ministry. Knowing well about the dishonest intentions of the Developers, the Managing Committee maintained silence and the BMC have refused to issue Occupation Certificate (OC) until the NOC from Civil Aviation Ministry is obtained.

The unashamed Developers blamed the architect who was introduced to by the society and that it was his responsibility as the project in-charge to follow-up with the Civil Aviation Ministry for the NOC. Further, the complaint said that the architect and the Developer's application for Commencement Certificate (CC) before the BMC in 2008 and that the Developers had claimed they had obtained an NOC from the Civil Aviation Ministry. An RTI filing revealed that the Developers were seeking permission now in 2015 though construction work of two towers was completed long ago and people had been coaxed by the Developers into moving into the newly built alternate towers.

The naked fact is that an NOC was applied from the Civil Aviation Ministry only in the last year 2014 and the Developers in their application affirmed that they never had applied for an NOC earlier. This means that the victimized members residing for almost four years in these two towers have been living without an Occupation Certificate. This case is similar to an another Campa Cola project as their existing old homes have been demolished by the Developers in connivance with the dishonest members of the Managing Committee making it impossible for them to move back.

The members of the co-operative housing societies in Mumbai are required to be vigilant while handing over their societies for redevelopment to such fraud and dishonest Developers carry out the unauthorized/additional unlawful constructions for their hidden financial gains which they are not entitled to. There are umpteen cases where the Developers, to sub-serve their dishonest intention, offer handsome bribes in cash and kind to the Office Bearers, members of the Managing Committee and their stooges.

It is the demand of time that when unauthorized constructions beyond the laws are the statutory norms of such intellectually dishonest Developers rather than an exception to the rules, the strict implementation of laws of the land have always to be upheld by taking stern actions against such under the laws.

AUTHOR’S COMMENT:Society members, please educate yourself and caution your friendly neighbors to be vigilant from irregularities and illegalities ruling the redevelopment industry and the illegal gratifications showered by Developers on corrupt members of Managing Committees having malicious characters and criminal conspiracy with the Developers, flagrant violation of rules and regulations as also to beware of cheat and fraud Developers and their criminal and felonious acts.




The Provision under DCR 33(14) allows a Developer to get unusually, a higher FSI to a Developer for redevelopment if he constructs free transit tenements for project-affected persons on the same plot or elsewhere and hand over the same to Slum Redevelopment Authority popularly known as SRA. This is a outlandish reward for Developers whose plots in prime localities may not have even a single slum.

A little-known provision under the Development Control Regulation known as DCR 33(14) is used to get the said benefit of huge additional FSI at their disposal as against the minimal Plot FSI. To follow the suit, other Developers are now planning to follow the same modus operandi by ignoring the BMC permissions. One of the Developers in western suburb of Mumbai bypassed the BMC Regulations and was blessed by approaching the SRA and reaped soaring FSI in addition to the Plot FSI.

In one of the posh western suburbs, while the progress of construction of a tower reached in its mid-way, the Developer realized that he could procure a much larger built-up area on the plot if he approached the SRA. Soon; he succeeded in getting permission from SRA to substantially increase the height from the 12 floors which was initially approved by the BMC, to 20 floors under the super power of this “Magic Wand” under the DCR 33(14) where each flat is now quoted for not less than Rs 10 crore.

The Market sources reveal that manoeuvring of getting more FSI under DCR 33(14) has now given the Mumbai’s Developers ideas of how to obtain higher FSI by taking ‘U’ Turn from the Civic Body’s Regulations and approach the SRA to build more and more luxury towers even on a very narrow plot.

On a Plot FSI of 6,000 sq ft, the said Developer had a construction area of around 60,000 sq. ft which is 10 times more than the plot area. The Developer while submitting the initial plans, had shown the transit tenements to be a part of this plush tower where the rate is as high as Rs. 60,000/- a sq. ft of carpet area.

However, the Developer later opted that these transit tenements will be built on his another land elsewhere in western suburbs and shall hand over the same to the SRA. The Developer stated that the rules permit this and one can have the benefit of higher FSI by approaching the SRA with submitting fresh plans if necessary.

The swanky tower constructed by the said Developer has several duplex and triplex apartments between the 4th and 20th floors having a terrace swimming pool. It is believed to be the first such project under this SRA provision in the upmarket of one of the posh western suburbs locality.

An investigating team of one of the leading news papers of Mumbai revealed that the rampant violations of DC Regulations in this plush tower may now result in the residents losing a little less than 50% (say 40%) of their apartment areas.

The tower is already under the scanner for large-scale violations including utilizing in multiple sq. meters of the permissible FSI. The building plans show how rules have been contravened. Ducts with service slabs are shown as Prayer Room in the drawings of saleable flats. Other ducts are shown as toilets while a room meant for multipurpose is shown as a bedroom.

The SRA-approved plans showed a Fitness Centre, a Letter Box Room, MTNL Room, A Multi-Purpose Room and a Small Transit Tenement on the 4th floor. But a Sale Agreement showed it as a 1,668 sq. ft apartment. The Slum Authority also allowed an elevation of 2.25 metres beyond the balcony line. The BMC does not permit an elevation more than 0.75 metres which has to be two feet below the floor level so that it cannot be misused.

The inspection team also found several other violations including merging the lift lobby area into adjacent rooms, illegal covering of elevation features and conversion of ducts into toilets.

The construction of such unjustifiable high-rises via misappropriation of large-scale FSI on an isolated narrow lane is an example of how the Developers in Mumbai abuse the laid down laws of BMC. However, because the slums occupy one-fourth of Mumbai's land, this is the driving force why the Developers grab a whole plate of pie by approaching SRA and take advantage of unlimited FSI under the DCR 33(14) to construct high-rise towers.

It was in 1995 that the Maharashtra Government came up with an ambitious plan to redevelop these encroached plots and rehabilitate the slum dwellers on the same plots. The slum redevelopment was widely appreciated as an innovative scheme to combat the menace of encroachment but did not know that a devil has already born.

The SRA scheme permits the Developers to commercially exploit the slum plot as well since he gets a free-sale component too. The higher the number of people gets rehabilitated, the larger the area is available to sell in the open market at prevalent commercial rate. And this is where the Developers often tend to flout selling norms by joining hands with Civic Officials.

More often than not, the redeveloped flats under slum rehabilitation scheme are illegally occupied as these slum-dwellers who get flats, sell or rent them and create another illegal slum. In many instances, the Developers have resorted to fraudulent practice of double the number of slum occupants by forging documents and names.

Back to the story, the controversial tower has now become a hot current topic point in the city's realty industry and the state government circles following a News Paper’s shocking and unprecedented revelations how the Developer bypassed the Civic Body and obtained higher FSI by approaching the SRA.

One of the flat buyers said that he had planned to book a flat in this posh tower. He was surprised that the BMC’s sanctioned plan showed the flat size as 750 sq ft. However, the Sale Agreement indicated an area of 3,050 sq. ft.

The said buyer filed a complaint with BMC against several unauthorized changes made by the Developer, resulting in cheating with flat buyers and loss of revenue to the exchequer. He further added that the large pocket terraces, which are supposed to be open, were been covered up.

On the basis of the complaint from the said buyer, the BMC's Building Proposals Department issued a notice to the Developer. The Developer challenged the notice in the City Civil Court and obtained an order, which directed the BMC to consider his application for regularisation of violation of FSI. Later, instead of applying for regularization to the BMC, the Developer submitted revised plans for construction to the SRA by suppressing the fact that he had already entered into Agreements for sale of flats.

The Developer in his plea said that the rules permitted him to change over to the slum scheme by providing transit tenements free to the SRA. However; the Slum Authority wanted the Developer to provide 17 transit tenements in the luxury tower itself.

The SRA's letter to the Developer stated that these transit tenements should include a Balwadi, Welfare Centre and Society Office and that these transit tenements should be marked as transit tenements on doors prominently and handed over to the concerned authority by providing security guards.

However, the said Developer stated that these transit tenements will now be provided on his another land though in western suburb only. The original SRA Rule stipulated that these transit tenements are to be provided on the same plot. But later the government, allegedly under immense pressure from the Developers, issued a circular, allowing them to provide the transit tenements elsewhere in a different area.

One can well predict the role of a Developer as the king, as higher FSI and concessions are gifted out frequently to them through various schemes that are most often conflicting with each other.

This is an example of the systematic destruction of Mumbai, legitimized by superfluous laws enacted by the State and Civic Body. This ‘BUILDMORE’ syndrome is a blatant bluff and an illusory consolation that such relaxed policies to grant exorbitant FSI shall solve the shortage of housing but in reality it shall lead to the inconsistent and incoherent growth in high rise towers.