Mumbai, 14th February, 2017: Horizon Green, the prestigious new Borivali East project, has huge issues. No real drainage system – that's a serious problem we have written articles about. But there's a more serious worry for flat-purchasers, namely, not getting proper title to the purchased flat at Horizon Green. The confusion on who's legally the builder of Horizon Green -- Raheja, Bhoomi or Prashasti -- is like three men claiming to have fathered one child. On the municipal corporation's records, K Raheja is the builder. But Prashasti Enterprise is claiming to prospective flat-purchasers that it is the builder. And in between Raheja and Prashasti, there's the ghost of Bhoomi Constructions, a partnership that has been dissolved.
On paper, Bhoomi Constructions got the development rights in 2003 from K Raheja for building Horizon Green, and in turn assigned these development rights to Prashasti Enterprise in 2008. But that's only on paper; in real life, neither Bhoomi nor Prashasti exercised the said development rights, and Horizon Green was entirely built by the efforts of K Raheja through their company Tropicana Properties Pvt. Ltd. which was later changed to Palm Grove Beach Hotels Pvt. Ltd.
So, if you buy a flat in Horizon Green, it's like buying something from Chor Bazaar; pay the money, take the goods and don't ask uncomfortable questions!You get no warranties, no guarantees and no consumer rights. Between Raheja, Bhoomi and Prashasti, there is a defective and broken chain of title; then how can Prashasti transfer good title to a flat purchaser? Clearly, it can't! So, the flat-buyers cannot get clear title over their flats.
The whole realty market is giving conflicting versions on who is the developer. Home Realty says Horizon Green is a Bhoomi project. Mumbai Property Exchange lists it as a Prashasti project. Housing.com is promoting it as a K Raheja project.
The IOD, CC and OC were issued to K Raheja. MCGM's Occcupation Certificate was issued to Palm Grove Beach Hotels Pvt. Ltd. (a Raheja Group company) in April 2015. The stop-work notice and FIR filed in 2016 were also filed against Palm Grove. So, in the eyes of civic authorities, Palm Grove i.e. K Raheja is the builder.
But a flat-buyer is forced to enter into the flat-purchase agreement with Prashasti Enterprise, which is completely unrelated to K Raheja.
Prashati came into the picture by virtue of a doubtful and possibly illegal unregistered Agreement made in March 2008, which was reinforced by a Supplementary Agreement signed in June 2015, three months after the Occupation Certificate was issued to K Raheja. Bhoomi Constructions claims to got development rights from K Raheja vide an agreement made in January 2003, and transferred the same to Prashasti Enterprise.
The agreement between Bhoomi Constructions and Prashasti Enterprise is illegal and invalid. Why? Here are some reasons:
1) Can a dissolved partnership firm transfer any title or development rights formerly held by the firm? NO. When Bhoomi Constructions transferred the rights to Prashasti Enterprises by a stamped and registered supplementary agreement, the former had already been dissolved. How can the individual partners of a partnership firm that is no longer in existence, enter into (or ratify, confirm, stamp and register) any agreement and to transfer the development rights i.e. title that was held by the firm? This transfer is bad in law.
2) If development rights are not exercised by the entity holding it, can it claim to be the "developer"? NO. Development rights were never exercised by Bhoomi and Prashasti. Neither Bhoomi nor Prashasti exercised their development rights for building Horizon Green. From beginning to end of construction, the development rights were exercised by Palm Grove i.e. K Raheja. There isn't even one paper on record showing that Bhoomi Constructions or Prashasti Enterprise exercised the development rights.
3) Can an Association Of Persons act like a corporate entity? NO. Prashasti Enterprise is only an Association Of Persons (AOP), not a proper corporate or firm. It is neither a company nor a partnership firm, but an odd kind of association – a conglomerate of two natural persons (Mr Jayesh J Doshi and Mr Nirav B Mehta, apparently relatives of the owners of Bhoomi Constructions) and a corporate entity (M/s Prashasti Developers Pvt. Ltd.). In India, there is no special law applicable to an AOP, and therefore, there is no transparency in their dealings with the public or with government authorities. AOP is an entity under Income Tax Act, but it is generally unregulated, unaccountable, and difficult to hold legally liable.
Telling MCGM that Palm Grove is the builder and telling the flat purchaser that Prashasti is the builder -- that is itself cheating. Yeh 420 wala kaam hai! The three builder groups have deliberately colluded to create grey areas for everybody, in order to evade being held responsible by various law-enforcement agencies and judicial forums. (More details of this will be disclosed in future articles.)
WARNING TO POTENTIAL HOME BUYERS
If you are thinking of buying a flat at Horizon Green, ask yourself the question: if you have to go to consumer court for some reason, against whom will your make you claim for compensation -- K Raheja's Palm Grove Beach Hotels, Bhoomi Construction's individual partners or the Association of Persons called Prashasti Enterprise? Consult some chartered accountants and lawyers, and they will tell you that this is a grey area. Our courts take decades to decide even clear-cut cases where everything is black-and-white. If there are grey areas, you will have to run from pillar to post for many decades in search of justice.
Mr & Mrs Home Buyer, a flat in Horizon Green is like quicksand. So keep a safe distance, and don't get stuck in it.
Mumbai, 27th January, 2017: Justice Chinnasamy Swaminathan Karnan of Culcutta High Court and formerly of Madras High Court, wrote to Prime Minister Narendra Modi urging him to take action against "high corruption at the judiciary". In his letter dated 23rdJanuary, 2017, Justice CS Karnan furnished the prime minister with "an initial list of corrupt judges", and in addition, three other officers of Madras High Court, who he implied had detailed knowledge and proof of the corrupt acts of the 20 judges. Justice Karnan asked for all these persons to be "interrogated by the officers of the Central Agencies" – probably referring to Central Bureau of Investigation (CBI).
Justice CS Karnan's recent writings and actions have confronted India with huge questions and challenges, namely:
a) Is Justice CS Karnan a judge a nutcase – a man with impaired mental functioning? If so, what constitutional safeguards does the nation have to remove him, to prevent him from damaging the reputation and function of the higher judiciary?
b) Alternatively, is Justice CS Karnan a whistleblower revealing rampant corruption in Madras High Court and Supreme Court? If so, what constitutional mechanisms does India have to conduct proper investigation of his allegations?
Read Justice CS Karnan's letter to the Prime Minister below:
The judges named in this letter are mostly Justice Karnan's former colleagues, namely:
Justice Sanjay Kishan Kaul, Chief Justice of Madras High Court and earlier, Punjab and Haryana High Court
Justice S Manikumar of Madras High Court
Justice V Ramasubramanian of Madras High Court
Justice (Retd) Chitra Venkataraman of Madras High Court
Justice (Retd) RS Ramanathan of Madras High Court\
Justice RK Agrawal of Supreme Court
Justice TS Thakur, who recently retired as Chief Justice of India
Justice MY Eqbal (Retd), former Chief Justice of Madras High Court and Supreme Court judge
Justice (Retd) FM Ibrahim Kalifulla of Supreme Court
Justice (Retd) Satish Agnihotri of Madras High Court
Justice (Retd) Elipe Dharma Rao of Madras High Court
Justice (Retd) KN Basha of Madras High Court
Justice (Retd) G M Akbar Ali of Madras High Court
Justice (Retd) Aruna Jagadeesan of Madras High Court
So, in the light of this letter, let us consider whether Karnan is a raving nutcase that the judiciary is unable to rid itself of.Is justice Karnan a living proof of the fact that there is almost no way of getting rid of a bad or incompetent judge?
Or is Karnan a whistleblower exposing the corruption of Indian judiciary, and deserving of the respect and gratitude of all Indian citizens? And therefore, is he a living proof of the fact that even a High Court judge cannot bring corrupt judges to justice?
The jury is still out on that one.
ISSUED IN PUBLIC INTEREST BY Krishnaraj Rao 9821588114 firstname.lastname@example.org
Delayed Ekta Parksville: Builder offers full refund plus 9% interest
Mumbai, 9th December 2016: Vineet Malik, a flat-buyer in Ekta Parksville aggrieved by the interminable delay in project completion and occupation certificate, received a pleasant surprise a couple of days ago. Ekta Parksville Homes Pvt Ltd sent him a letter that agreed to cancel the deal and refund the entire amount paid by him – Rs 25.24 lakhs – and additionally, interest of 9%. The total amount that Ekta World offered to pay is Rs 34.57 lakhs.
This letter was received in the wake of patient exchange of correspondence and meetings by Vineet Malik with CMD Ashok Mohanani, plus mainstream media and social media coverage (especially our blog) and also my and Sulaiman Bhimani's meeting and negotiation with the builder's men on Vineet Malik's behalf.
Ekta World's letter dated 3rd December 2016 proposed interest payment of Rs 9.32 lakhs to Vineet Malik.
At first, this seemed like an extremely generous offer, and any aggrieved buyer should be thrilled by this success! But let us examine the issue a bit more closely. After a delay of more than three years (and counting) in delivering the agreed flat in the Virar project, Ekta World is, "as a goodwill gesture" agreeing to pay back the paid amount plus 9% interest. This rate of interest is no more than what he would have had to pay for a project loan.
On the other hand, what is the penalty and interest that the buyer would have to pay Ekta World if he had slipped up in paying up his installments on time? Read this excerpt from the one-sided Registered Agreement.
The agreement states Ekta World can terminate the contract after giving the helpless buyer only seven days notice, if he slipped up in paying even one installment! Not only that, he would further forfeit 20% of the total consideration i.e. Rs 5.2 lakhs. Read this excerpt from the agreement.
Further, in case the builder chose not to terminate the contract unilaterally, the interest payable by the buyer for the delayed payment would be 24%. Read this excerpt.
So, 24% interest from buyer, 9% interest from builder. Does that sound fair? Vineet Malik doesn't think so.
Therefore, this feisty investor is turning down Ekta World's generous offer of interest of Rs 9.32 lakhs for five years. He will continue fighting for his just and equitable dues i.e. 24% interest on the refunded amount.
At around 830 pm on Monday, Nov. 21, my phone was stolen from me. The incident occurred at the crowded Saket Metro bus stop, while I was inside a feeder bus and the thief outside a window. By the time I could get off the bus and chase him, he had disappeared in the crowd. I looked around for a while before returning home, determined to do all I legally and possibly could in such a case, but feeling hopeless and dejected.
Primary concern, ensuring security
I filed an e-FIR, used Android Device Manager to try and locate the phone, placed a request to erase data with the Manager as well as my office IT service center. I knew that I had logged out of banking apps and they could not be accessed without MPins, but the PayTM app had login details saved. So I tried to lock my PayTM account via their website. Shocker: to verify my login they needed me to enter, apart from my e-mail/phone number and password, an OTP which I could only receive via SMS or call. I wondered why they could not e-mail me the OTP as well, which is standard practice in 2-factor authentication. I then used their customer care page to request a block on my account. I received an acknowledgement of this request almost instantly, (940 pm, Nov. 21, query #10133775). However, I received no reply, so I took to Twitter (1159 pm, Nov. 21):
@Paytmcare my phone got stolen this evening. can you lock my PayTM app?
This tweet, unsurprisingly, did not get any response. In the meanwhile, I had not only got a replacement SIM card from Airtel, but also had the SIM cards activated within the estimated time of 4-6 hours, despite being told that there may be a further delay as my number had been barred due to filing the FIR. I was thus able to receive the OTP now via the on call option (SMS services took a further 24 hours, as estimated, to get reactivated), and logged into PayTM.
It took me less than five minutes to change my password, and also log myself out of all devices. But I had to wait nearly a full day to do it because of the infuriating lack of response from PayTM. Compare this with the speed of transactions on PayTM. If you had to wait 22 hours for your PayTM wallet to be recharged, or if PayTM took 22 hours to pay your Uber cab fare, they would not remain in business very long, would they? So why do they assume they can take their own sweet time about customer service?
I quickly used up the balance in my PayTM wallet in order to close the account. I waited for a day to ensure those transactions did come through, and then tried closing my account this evening. Surprise, surprise. There is no option on the site to close your account, not even among their myriad customer care options. My requesting customer care to do so got me the no-less-surprising response that "Paytm account cannot be deleted, but we can block it for you please help us with the mail form your registered email id stating the same." Bank accounts can be closed, social media accounts can be deleted (I just deleted my WhatsApp account this evening, in under 5 minutes), but a PayTM account cannot be deleted. Why is this so?
Again, for a digital service, PayTM's frankly ridiculous, repetitive insistence on e-mail confirmation is nothing short of painful, especially given that there is NO guarantee your e-mail will actually merit a response from them, as so amply demonstrated by this experience.
Update: @Paytmcare chose to respond to this story via both tweet (0242am, Nov. 24) and e-mail (0615am, Nov. 24). The tweet asked me to check my email with reference to the request for closing my account (query #10291894). Only, their reply was to my e-mail of Nov. 22 (query #10152004). Not only did they get this mixed up, their response was on how I could get a new mobile number updated in my account while my old number was inaccessible - whereas my query had been about blocking my account. At this point, I could only conclude that PayTM's customer care is, in addition to being poorly managed, is also poorly trained to respond to customer queries. And yes, PayTM has not yet confirmed that my account has been blocked, as of 0925am, Nov. 25.
For those interested, I have Storified the full exchange with @Paytmcare on Twitter, and my tweetstorm on the overall experience, here:
There is an abundance of claims by the government both about the virtues of demonetisation as well as the duration of the "inconvenience" people have to go through. Here is my attempt to debunk some of them.
To begin with, there is a slight problem. The objectives of the demonetisation have not been officially and explicitly listed anywhere, it appears, so one must draw them based on the Prime Minister's speech and whatever various people have said would be a "good" result from the demonetisation. These include fighting black money, fake currency notes, reducing corruption, bringing most of the money in the country into the banking system, generating more taxes and improving economy. Other non-stated objectives, widely pointed out of course, would be the ongoing bank bailout using private funds of citizens (recapitalizing, it is called in polite circles) and strangling the financial resources and thus limiting power while contesting elections for political opponents.
Let us look at these one by one.
Fighting black money
There seems to be no consensus on how much black money exactly is in the form of currency notes. An estimated 6% of all illegitimate income recovered has been in the form of currency, which does not appear to be a lot in comparison with the losses to the economy from the shock of the demonetisation. How much has been recovered is unclear. There are several reported instances of notes being confiscated. However how much of it is black money and how much is (or gets explained away as) legitimate income remains to be seen. There are reports of the news of the demonetisation already been leaked to the wealthy well in time and is supported by increased sales of gold before the demonetisation being announced. Additionally, as economists are repeatedly cautioning, black money is a result of the nature of the transaction rather than a quality of the money, so the same notes can be black money or white depending on the legality of the transaction and whether it is declared in taxes.
Supporters of the government, in their attempts to silence all criticism of demonetisation have increasingly taken to demonising cash transactions or the possession of cash itself as black money, which is a dangerous perspective in a country where 95% of the transactions happen in cash. They might as well call India a black money country. This view is incorrect and obfuscates facts. However, there is no shortage of reports of the old notes themselves being traded for a lesser value creating an overnight black market ranging from a single note to crores being laundered through agents. Between the advance warning and the laundering a large amount of the already small percentage of black money is likely to have safely returned to its owners without changing color.
A small percentage of people may declare their money and choose to pay tax on it, but this is not likely to be a large amount given that amounts over 2.5 lakh will be flagged for Income Tax, and those that cannot be explained as legitimate income are likely to incur a 200% fine in addition to the tax on the deposit (though there currently does not appear to be a provision under the law), essentially leaving only 10% with the owner of the money. Another percentage of the black money is likely to be confiscated from suspicious deposits in banks and through raids. Given that the Income Tax Department will have to show that this money is not legitimate income, the percentage of money likely to be confiscated will be small compared with all deposits flagged, if for no reason then for the sheer number of accounts that will be flagged requiring manpower to investigate and process. No doubt mass mailing of notices will happen and is already reported to have started.
However, there appear to be plenty of ways for people to launder money, including big and connected agents close to the government, false sales of gold, purchase of gold, backdated fixed deposits in banks, interest free loans, advance salaries for several months to employees and more. The government itself offered the victims of the Kanpur train tragedy compensation in the old and illegal notes. It is anyone's guess whether these amounts were originally withdrawn as legal notes and swapped with illegal ones before giving the victims, since the notes not being legal tender cannot be legally paid out by the government after demonetisation.
But the biggest blow to claims of black money being hindered by #demonetisation is the abundance of people named as having offshore accounts, notorious for having black money, cronies who have benefited from disproportionate favors from Modi led governments (state before center) and of course the noble denizens of the black money rich Bollywood. If all these people support demonetisation, they are clearly not worried about their black money being in trouble.
Fighting fake currency notes
The new notes introduced have no additional security features. Existing notes are already counterfeited, so it does not seem like demonetisation will prevent fake currency to any large degree. In fact, within days of the new notes being released, there were instances of photocopies of the notes being used to defraud people, including, in one instance by school children. The garish color and relatively flimsy paper of the new 2000 rupee notes make even real notes appear to be dubious in comparison with regular currency notes. How soon or late counterfeiters start producing fake notes is anyone's guess, but there is absolutely nothing to indicate that it won't happen. We certainly seem to have failed in intercepting their distribution, or fake notes would not be a reason to demonetise.
This seems to be mostly fiction, as even in this short duration, a bribe of four lakhs was paid using the new 2,000 rupee notes, that at the time of being caught had not even been released for a week. Reducing corruption cannot be achieved by changing currency. It would require better law enforcement and deterrents. The government machinery being one of the biggest causes of corruption in the country on every level, the government making a claim of reducing corruption with the simple changing of notes sounds mostly like the fox claiming to provide security for the poultry. Indeed in recent days, we have seen allegations backed by documents that implicate the Prime Minister himself in receiving over 55 crores from the Sahara group when he was the Chief Minister of Gujarat.
Another set of serious allegations come from several quarters, notably a BJP MLA himself, indicating that businessmen close to the ruling party had advance notice of the demonetisation and had already cleared their black money. A third allegation is that people close to the president of BJP, Amit Shah himself are exchanging large sums of black money for a fat commission. This is by Yatin Oza, a former BJP MLA who also claims to have videos backing his accusation as well as makes some realistic challenges about the richest people not featuring among those with large deposits of money into banks. Large quantities of 2,000 rupee notes seen with various people support these accusations, as no one can legally get a bundle of 2,000 rupee notes at this point due to limitations on withdrawal. None of these allegations have so far been denied by the Prime Minster or Amit Shah.
While the country lines up for access to its own cash, a large number of loans by high profile defaulters have been written off. A green fine worth 200 crore levied on Adani has been waived. BJP MLA from Rohtak has publicly reassured black money owners that they need not worry and that Haryana Chief Minister Khattar and Modi were with them. And all this is just within the last few days without needing any extensive searches through history. It is unclear why corruption would reduce under a leadership like this.
Routing most money through the banking system
How much money remains in the banking system is a matter of debate once the cash demonetised is fully replaced. Opinions are split on this. Right now people have no choice, since they aren't allowed to withdraw much cash, and banks are often even failing to provide the allowed limits of cash given the severe cash crunch that is likely to last for 4 - 6 months by most estimates. When they do have choice, it is quite possible that a lot of the cash will be withdrawn right back out. Also, given the availability of the 2,000 rupee notes and their relatively low utility for transactions, the only purpose they could realistically be used in any quantity appears to be hoarding. Even while limited cash withdrawals are allowed, there have been several instances of bundles of 2,000 rupees being seen with people including office bearers of the BJP as well as being used to pay bribes. The instances described in the black money laundering also would remain outside the banking system. So it is entirely possible that while the country struggles for cash, a lot of the illegitimate money may still remain out of the system, merely converted to new notes.
In the meanwhile, there seems to be some evidence for the misuse of Jan Dhan accounts (and indeed it could be done with other accounts too) for parking funds. So money entering the banking system may not necessarily be in a manner desired. My suspicion is also that if there are corrupt bank employees, money could be deposited into the bank accounts of people who aren't even aware that their account is being used for laundering. Such money could probably be recovered by forging signatures on withdrawal slips or misuse of debit cards if the person whose account is misused is known to the launderer and trusts them. There seems to be evidence of this happening as well. Such money would fly right out of the banking system once scrutiny was reduced and if caught, would implicate a complete innocent.
The large number of Jan Dhan accounts lying unused and thus likely to not be monitored by owners are particularly a concern, as they have been suspected to be misused for hawala transations in the past.
Improving collection of taxes
While there will be increased collection of taxes, there are easier ways of doing this with far less loss to the economy. Namely tax reforms, reducing corruption in the tax system and robust enforcement. As of now, about 1% of India's population pays taxes. Given the widespread poverty even with an absurdly low poverty line, how much this number can be realistically expected to rise is anyone's guess. The economic stagnation will also result in fewer taxes being collected because of lost jobs, wages, business losses and devalued goods, even if more people temporarily seem to be on the radar.
Banks will be recapitalized, loans will be easier to get, interest rates will be lowered... are the expected outcomes from demonetisation. I am no expert on these matters, but given the kind of slowdown the economy is seeing, there will also be reduced deposits, transactions, people digging into savings and businesses collapsing, taking their loans down the drain with them. There is speculation that low interest loans will encourage rebuilding of the economy. No economist of note seems optimistic that it will outstrip the shrinking already set into motion. At best it is put as a possibility in the long run, all things going well. All things don't appear to be going well, given that it will be months before there is any liquidity worth mentioning for businesses. What advantage will evolve in the long run remains to be seen.
Preventing terror financing
This seems to be a popular reason on TV as well as supporters of the government. Modi himself referred to it in his speech. However, going by evidence so far, it does not make sense. Manohar Parrikar hurried to claimsuccess as a halt in stone pelting incidents in Kashmir after demonetisation. This echoes a popular belief within the ranks of the BJP leadership and supporters - that the stone pelting incidents in Kashmir are not spontaneous protests, but well organized and funded with black money. However, this couldn't be farther from the truth. Apart from demonetisation having triggered stone pelting on banks in other parts of the country, the stone pelting in Kashmir had actually reduced by October - as per the J&K Home department data (BJP itself is a part of the J&K government) - well before demonetisation and there have been incidents of stone pelting after the demonetisation as well, though congruent with the slower frequency. Furthermore, Kashmir actually saw the least disruption to daily life and order as a result of demonetisation in the country - this is attributed to the penetration of banking to even remote parts of Kashmir as compared with the rest of the country.
Furthermore, the most counterfeited currency in the world is the dollar and it is also the one most likely to be used by international terrorists for financing, yet demonetisation has not seemed to be a feasible deterrent to any such use if it happens. In comparison, Indian currency has far more limited use - within India and Nepal alone and is even less likely to be used. Several people have pointed out that there is no reason why terrorists wouldn't use online banking and electronic transfers, given that they could be accomplished with fake identities, and being caught for taxes is unlikely to bother those willing to brave the consequences of being caught for terrorism (there may be the potential to dispute this using some jokes on taxes here).
Attack on finances of other political parties
One would expect to see a lot more agitation among political parties if their finances were truly disrupted. And it would have been possible for the BJP to disrupt them quite thoroughly if it had chosen to implement transparency in political funding as well. However, BJP has not done that - quite likely as a result of it being the party with the largest amounts of unaccounted funding in the country at present. Consequently, the other parties are merely opposing the BJP for politics as well as the sheer disastrous nature of the demonetisation. There seem to be no indications of alarm for their own well being.
There have been no instances of black money being found with rival parties or politicans so far. In fact, so far the few instances of large amounts of cash being found as currency notes have all been from the BJP itself. The reason for this likely is that political parties being allowed to accept funds in cash as well as not provide details for donations under 20,000 rupees, it is a routine practice for parties to even show larger amounts of black money as several donations of smaller amounts. Far from being cornered, rival parties would likely be able to comfortably change old notes for new ones, including the potential of laundering black money to white for politicians belonging to the party.
It is unclear what advantage, if any the demonetisation will end up giving BJP in comparison with rivals when measured against the tremendous inconvenience, losses and worse caused to voters.
This post will be updated with links to all the claims and quotes in a couple of days when I get some time. Till then, you could probably google the references up if you need them.