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Press Release

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed developer to give an undertaking that the firm will cover any losses suffered by five home buyers, who got refund orders for delayed possession last month, till the filing of an appeal with the appellate tribunal.

On September 27, 2018, MahaRERA had ordered the developer to refund the investments of five home buyers – Rahul Bhosale, Hitesh Shah, Riyaz Jetham, Alistair Gomes and Sachin Kadam – who had booked flats in Acropolis project in Virar through a subvention scheme in which buyers paid eight per cent of the flat consideration and the banks paid the remaining 92 per cent. The order was to be executed by the developer within 30 days from the date of the order.

The subvention scheme itself is a very big scam, in this scheme the builder gets almost 95% of the loan amount on signing of the agreement without laying a brick, unlike regular home loan where the bank pays to the builder as per progress of the work, the builder lures the home buyers on promise to pay EMI till he hands over the possession, but when builder fails to construct or give possession on time the liabilities comes on the home buyer and the home buyers becomes defaulter and not the builder, in subvention scheme builder charges 10% more then the market value which the buyer realises on the later stage, subvention scheme is design to cheat home buyers.

The developer approached MahaRERA again on October 11 and got a stay on the order till October 24. On October 24, the matter was heard again, and the developer sought extension of stay on the execution of the judgment till the end of 60-day appeal period, citing financial crunch to pay the decretal amount that needs to be paid before the Maharashtra Real Estate Appellate Tribunal.

According to Section 43 of RERA, the appellant has to deposit 50 per cent of the amount with the tribunal before the appeal can be heard.

During the hearing before MahaRERA member Madhav Kulkarni, Sulaiman Bhimani, who appeared for the home buyers, strongly opposed the stay petition arguing that home buyers will suffer monetary losses since they had purchased the flats with bank loans and are paying EMIs. He argued that Rahul Bhosale, who had taken two bank loans, had received a foreclosure letter from the bank stating that if dues are paid before a cut-off date, he will get a concession of Rs seven lakh. He argued that home buyers will suffer immediate losses if the stay is extended.

Kulkarni then directed the developer to file an undertaking to make good any losses suffered by the home buyers till the end of the 60-day appeal period which ends on November 26. The stay was granted after developer complied with the undertaking.

Sulaiman Bhimani Legal Consultant
Expert RERA & Co-operative Scty Matters
Human and Civil Rights Activist
President Citizens Justice Forum 
9323642081
Sulaimanbhimani11@gmail.com

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The Osmanabad District Cooperative Bank Ltd, has started sending notices to farmers with outstanding loans asking them to repay the loans or the bank would take socially humiliating measures against them. So far over 30 farmers in Nagur alone have received these notices; in the Lohara taluka, over 1000 farmers. The notices are dated 14th October 2016, however the farmers claim that they received them on the 23rd November 2016 (the notices are likely backdated, essentially rendering the one month notice meaningless). The farmers have been informed that unless the loans are repaid, they will begin to face recovery process in December.

Osmanabad district in the Marathwada region of Maharashtra has been experiencing drought for several successive years leading to crop failures and increasing problems with bad loans and farmer suicides. As per government records, over a thousand farmers from here have committed suicide. The actual numbers are bound to be higher, as the government records often don't record those who either took loans from unregistered money-lenders, do not have their own land, or did not leave behind a suicide note (many are illiterate). The problem of farmer suicides had reached such horrifying extents that banks had been urged caution in the recovery of loans that were not paid.

This year some late seasonal rain had brought hope. After many years, it seemed like the cycle of despair was about to break and farmers were looking forward to sowing winter crops, when a new crisis hit. Demonetisation. Banks in rural Maharashtra have seen very little by way of new notes coming in to replace the Rs. 500 and Rs. 1000 notes that have been withdrawn as legal tender. As a consequence, there is a severe cash crunch in most villages. Indeed in most of rural India. With Rabi crops due to be sowed and no money in hand to buy seed, things looked hopeless. The government allowed the purchase of seeds with old Rs. 500 notes, allowing a tentative hope to seed, when a further crisis hit several homes in Nagur village.

The Osmanabad District Cooperative Bank Ltd, has started sending notices to farmers with outstanding loans asking them to repay the loans or the bank would take socially humiliating measures against them. So far over 30 farmers in Nagur alone have received these notices; in the Lohara taluka, over 1000 farmers. The notices are dated 14th October 2016, however the farmers claim that they received them on the 23rd November 2016 (the notices are likely backdated, essentially rendering the one month notice meaningless). The farmers have been informed that unless the loans are repaid, they will begin to face recovery process in December.

osmanabad-district-cooperative-bank

This is a translation of the letter (written in Marathi):

Osmanabad District Cooperative Bank Ltd., Head Office, Osmanabad

Agriculture Credit /   / 2016-17.     NOTICE.  Date: 14/10/2016

Shri. Yadav Lukshiram Patil ,  Place:  Nagur

Greetings.

You must be aware of the economic situation of the Osmanabad District Bank. Since the bank is in a financial difficulties, the bank depositors have their full focus on the bank. Due to the increase in overdue unpaid loans there is the fear of  loss of liquidity for the bank which is now caught in this quagmire. At least at this time, the only option the bank has to improve its situation is to recover the overdue loans. Naturally, due to the pending loans with you, the bank is unable to pay its depositors the amounts they want to withdraw whenever they want to withdraw. As a result, the depositors are very disappointed with the bank operations. Similarly, many depositors, when they are faced with the prospect of being unable to withdraw their own money from their accounts are sending us statements that if they cannot withdraw their money, they will be forced to commit suicide and you should be aware that if any depositors commit suicide for such reasons, you will he held responsible and you should understand this.

You are a respectable member of the society and you have an overdue loan since 25/1/2000 with the Y. V. K. Seva Society which is a  partner of 'Bhorala' (not sure of this name). Because of your overdue loan, the bank is facing a cash crunch and the bank cannot conduct its operations effectively.

The bank's management committee, senior officers and employee association have decided to use Gandhigiri to try and recover the loans. For this, the bank has decided to do one of the following: 1) Put up a tent opposite your house to protest 2) Make use of a band  3) Ring bells

Due to these actions, your standing and image in society is likely to be in danger. Therefore, to avoid such a situation, you should immediately repay your overdue loans with interest in the concerned bank within 30 days and take a receipt for such payment. Else, the recovery team will take action as explained above.

We are deliberately writing this to you so that you are aware of the situation.

We are in no doubt that you will repay your loan and avoid any unpleasant events from happening.

Expecting your cooperation,

Details of Overdue Loans:

Type of loan,  Principal: 136300  Interest: 348930 . Total : 485230

Yours faithfully,

Sd-

Vijay S. Ghonse

Executive Director

Suresh Ediga, an NRI who had done volunteer work related with organic farming in the region over the last few years was informed about these notices when Dnyaneshwar, who runs an NGO to improve farmers' financial literacy, told him about the plight of the farmers receiving the notices. The farmers are understandably anxious. Cash strapped, demonetisation trapped, and due to sow their rabbi crops, they are in no condition to repay the loans, which have piled up over years of severe drought, with dues that have doubled or tripled in the interim in many cases. One season of rain is nowhere close to adequate to clear loans. The bank is pressuring them because the bank itself is short of cash and this year, due to the rain, the restrictions on loan recovery have been relaxed. Earlier when the bank had threatened farmers about loan recovery during drought, the district collector had intervened. It is unclear what will happen now. Suresh has contacted the district collector again, who has assured him that he will intervene to ensure no harassment happens, but it appears to be a far-from-resolved situation.

The bank itself is close to bankruptcy. Dnyaneshwar contends that far larger loans taken by politicians, sugar factories and other local bigwigs were written off routinely, while farmers are pressurized to repay their own loans. An interesting practice is that moneylenders take loans from the banks and loan this money to farmers. These loan defaulters are politically powerful and well connected and the farmers are not able to confront these practices for fear of backlash. The bank is aware of these practices and yet easily extends loans to them, but the loans to ordinary farmers are very difficult to get and the interest is calculated in a manner that the farmers cannot understand, departing from RBI guidelines where the amount of interest should not exceed the capital. Farmers have often been advised to restructure but they have not been provided adequate information and bank officials, from time to time have taken their signatures on various papers, but no restructuring appears to have taken place. In several cases, the interest is several times the capital. With demonetisation no one has any money at all, and the bank seems to have seen this as an opportunity to extort whatever cash they can get their hands on, from farmers.

All the farmers receiving these notices are planning to meet collectively to decide a course of action. With their backs to the wall and at risk of suicide, they are being threatened that they will be held responsible for potential suicides of those who will not be able to withdraw money from the bank due to their non-repayment of dues. They fear harassment from the recovery agents of banks. Being financially vulnerable themselves in a region where there are several suicides of farmers per week, the threat of being held legally, socially or morally responsible for the suicide of any another person, even in an illogical manner, is a particularly traumatizing threat. The idea that they could publicly be accused of causing suicides and humiliated has them all in a terrible state and Dnyaneshwar fears that this kind of extortion can lead to increased suicides this year. It is a Mexican standoff made worse by the cash crunch stemming from demonetisation. The farmers inform Suresh that they have been warned of actions taken to socially humiliate them beginning in December unless they pay off their dues.

Unless something is done to defuse the situation, the farmers could be faced with harassment over loans they don't have the money to pay off in addition to the stress of not having legal tender for expenses related to winter sowing (they can only buy seeds with the old notes). Banks need to find cash to satisfy increasingly irate customers bombarded with information about the withdrawals they are entitled to make, yet almost never see in rural India. People need money to survive, and banks are where they have been told they can get the money. It is a tinderbox of desperation waiting for a spark.

What happens next is anyone's guess.

Update: This story has been taken action on. It is now getting the attention of various people from banking to government and media. More information will definitely follow. There are actions being taken to protect the farmers from further threat.

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Media Release: RNA Corp teaches Exotic Arithmetic to Axis Bank! "One-two-ka-four, four-two-ka-one, my name is Lakhan"

22nd June, 2016: When builder Anil Aggarwal's Skyline Construction Co approached Axis Bank for a project loan for RNA Exotica in 2011, the bankers forgot simple arithmetic. On two separate instances -- in 2011 and in 2013 -- Axis Bank's SME loans division gave loans of Rs 75 crore and Rs 100 crore against hugely inflated mortgages of floor space in RNA Exotica. The flat size was inflated by 500 to 700 square feet per flat, and the number of unsold flats mortgaged was inflated by a couple of hundred flats in 2013. Anil Aggarwal, like Anil Kapoor (you know, the chap who sang, "One-two-ka-four, four-two-ka-one, my name is Lakhan") sang a seductive song to Axis Bank executives, who were more than willing to be seduced.

The late Anil Aggarwal's version of one-two-ka-four sounds like this: "770 square feet flat ka 1299 and 979 sq. ft. ka 1650... My name is RNA Corp! Jadoogar Anil Agarwal said 168 sold flats in 2011, but 66 sold flats in 2013. Numbers mein kya rakha hai? Now gimme your money, sweetheart."  The sweethearts at Axis Bank gave the builder a Rs 75 cr line of credit in March 2011, and beefed it up to Rs 100 crore in March 2013, even as the value of the collateral fell sharply!

RNA Exotica's Flat Sizes are on Steroids:

  • Skyline Construction Co's registered mortgage deeds in 2011 (and 2013) based on inflated and unverifiable figures, viz. 1299, 1650 and 1699 sq. ft. The correct sizes i.e. carpet areas, viz 770 and 979 sq. ft. are readily available through the flats' sale agreements.
  • The sale deed of flat no. D-1903 booked by actor Arif Zakaria shows 979 sq. ft. whereas the mortgage deed shows 1650 sq. ft. So, RNA Corp has represented to Axis Bank that this flat is 671 sq. ft. larger than its actual carpet area! And Axis Bank has unquestioningly accepted this figure as a basis for its mortgage!

This raises the question whether Axis Bank has double-standards – one for people like you and me, and another for people like Anil Aggarwal. Would Axis Bank have sanctioned a loan against our flats if you and I cited Super Built Up area instead of the carpet area?

Axis Bank loan was Supersized while RNA Exotica was Downsized:

  • RNA's Skyline Construction Co.'s March 2011 loan was of Rs 75 crore. In March 2013, Skyline prepaid the RNA Exotica project loan and got the mortgage released, and immediately took a fresh loan of Rs 100 crore. Unsold flats of RNA Exotica were mortgaged to Axis Bank. The 2011 mortgage deed shows the number of sold flats as 168 (2,41,350 sq. ft.), with a table of flat-buyers' names and flat numbers. The 2013 mortgage deed claims that the number of sold flats supposedly dropped down to 66 (i.e. 94,951 sq. ft.). How? Did Skyline sales staff spend two years buying back over 100 flats from investors, instead of selling additional flats? There is no table of sold and unsold flats in the March 2013 mortgage deed.
  • Why this reduction in the number of sold flats? Because RNA Corp, which had gone to town in 2010 claiming that RNA Exotica would be a 48-storey tower, (i.e. 10 floors podium parking, one floor E-deck, plus 37 upper floors) was not getting MMRDA's permission for building that many floors.
  • The March 2011 mortgage deed is based on calcuations of 30 upper floors (i.e. 459 flats, 16 flats per floor). In March 2013, there is reduction of 35 flats. That means roughly two floors less, bringing the total to about 28 upper floors. But is that final? NO!
  • According to a source at MMRDA, RNA Corp in June 2016 has permission to build only 21 upper floors. Frantic efforts are being made by the builder to get this raised to 25 upper floors. Even if such efforts succeed, further reduction of 48 flats will happen – i.e. a total reduction of about 80 flats. The top floor will be 36th floor (i.e. 10+1+25).
  • The falling expectations show in the sale agreements. Whereas Kushan Pritish Nandy's sale agreement registered in October 2014 said 30 upper floors, Arif Zakaria's sale agreement in August 2015 mentioned 25 upper floors!

One two ka four 1

Why Financial Jugglery was done:

In 2013, Anil Aggarwal's big problem was: How to get a higher loan amount sanctioned from Axis Bank against a much smaller mortgage? The solution was: by reducing the number of sold flats, the "stock" of mortgagable unsold flats would appear higher. (So, what is the real number of sold flats? My guesstimate is: if 168 flats were already sold in March 2011, then 100 more flats in the next 24 months @ four flats per month. So, 268 sold flats were falsely declared as 66 flats. If each flat is valued at Rs 1.5 cr on average, the property mortgaged to Axis Bank was worth Rs 300 cr less than claimed!)

If the building is of only 36 floors including podium, what will happen to flats such as these where sale agreements have been registered for flats on the 40th floor etc? Will the investors be compensated by RNA Corp for not delivering of the promised flats after paying money and waiting for several years?

All this financial jugglery for downplaying the risk of RNA Exotica becoming a Stressed Asset! RNA Corp has defaulted on smaller loans from Bank of India and State Bank of India. This auction notice says that RNA Corporate Park defaulted on SBI for Rs 61.50 crore, for which mortgaged land parcels in Palghar district will be auctioned. And this letter from Bank Of India to the secretary of RNA Royal Park, Kandivali, tells a similar story of default and bank recovery proceedings.

SBI is struggling to recover an amount of Rs 61.5 cr by auctioning land plots that turned out to be under CRZ, and therefore valued at a fraction of the original projected values. Will the one-two-ka-four loan transaction of RNA Exotica and Axis Bank have a similar ending? Wait and watch.

This story is based on inputs from RTI activist Sulaiman Bhimani 

(9323642081, sulaimanbhimani11@gmail.com).

ISSUED IN PUBLIC INTEREST BY

Krishnaraj Rao

9821588114

krish.kkphoto@gmail.com

 Links of articles related to RNA Corp. Misdeeds

 

Press Release: Slippages & Shrinkages in RNA Exotica, Oshiwara

19th June, 2016: Welcome to RNA Exotica, a premium building project by Skyline Construction Co, owned by Saranga Anil Aggarwal, where deadlines keep slipping and the number of flats to be constructed keeps shrinking year after year. The number of flats to be constructed has dropped by at least 80 since the March 2011, and the project completion date has slipped by six years. Further shrinkages may lie ahead, and slippages in possession date are definitely forecast. Also, visible manipulation of facts and figures in official documents should make investors sit up and wonder what is going on behind the scenes.
RNA Cartoon
 
The gory details: 
  1. In Axis Bank's first mortgage deed registered in March 2011, RNA Exotica's project completion date was mentioned as September 2012. Given the amount of work that had to be completed within 18 months by Skyline Construction Co, the deadline was obviously a bare-faced lie. Axis Bank's first loan to RNA's Skyline Construction Co for the project was of Rs 75 crore. At that time, 459 flats were to be constructed i.e. 30 floors of 16 flats each, plus 11 floors of common amenities such as parking etc. Unsold flats and future receivables of RNA Exotica were offered as mortgage. The number of sold flats was mentioned as being 168 (2,41,350 sq. ft.), and purchasers' names and flat numbers were mentioned in tabular form.
  1. In March 2013, Skyline got the mortgage released and immediately took a fresh loan of Rs 100 crore from Axis Bank for the same project. In the second mortgage deed registered in March 2013, the project completion date mentioned is March 2016-- which turned out to be another lie, causing anxiety and financial distress to many of the investors. In the 2013 mortgage deed, the project parameters changed quite dramatically. The total number of flats to be built in RNA Exotica were reduced by 35 (i.e. height reduction of two or three floors), and the number of sold flats miraculously dropped down to 66 (94,951 sq. ft.) only. (How? Did RNA Corp buy back flats from its investors?) Particulars of sold and unsold flats were not mentioned in this mortgage deed.
  1. After a meeting with angry investors on 5th May 2016, RNA Corp issued a statement signed by some unnamed spokesperson, that flats' possession will be given in December 2017. Judging from the present progress of RNA Exotica's construction, this also is a lie. Also, further reduction of the building's height is a high probability. According to MMRDA sources, the sanctioned number of floors currently is 11+21 floors. Will it go up to 25 floors? Possibly, but not necessarily. This height reduction reflects in registered agreements. Producer Kushan Pritish Nandy's flat purchase agreement registered in 2014 said 30 upper floors.Actor Arif Zakaria's purchase agreement registered in August 2015 said 25 upper floors. Reduction of even five floors (30 minus 5) means approximately 80 flats less than earlier planned, and the top floor would be the 36th floor (11 plus 25). So what will happen to sale-purchase agreements registered for flats on 40th floor etc?
  2. SRi SRI is popular for Art of Living, RNA Corp. is popular and infamous for Art of Lying and Art of Selling Non Existing Floors in the air (Hawa Mahal)
    Many twists and turns lie ahead. Dekhte rahye iss dhaaravahik ki UGLY kadee!
(Deep gratitude and appreciation to Sulaiman Bhimani (9323642081) for tracking this case over the past six years, digging up documents and interviewing sources.)
ISSUED IN PUBLIC INTEREST BY

Krishnaraj Rao
9821588114