Over 5K Mumbai homebuyers cheated of Rs 3,683-cr in frauds since 2016
The economic offences wing of Mumbai Police said one of the prime reasons behind such frauds is diversion of funds.Updated: Feb 26, 2019 14:28 IST
More than 5,000 homebuyers have been cheated of Rs 3,683 crore in 123 mass housing frauds in Mumbai in the past three years, according to the economic offences wing (EOW) of the Mumbai police.
While 32 cases, worth Rs1,087 crore, were registered in 2016, 50 (worth Rs 1,085 crore) were reported in 2017 and 41 (worth Rs 1,510 crore) last year. Most of them are projects that started between 2009 and 2015. “Flat buyers wait for long in the hope that the construction work will begin at some point. So the complaints are mostly related to old housing projects. At least 5,000 people have fallen prey to the lucrative offers and smart tactics of builders, losing their hard-earned money,” said a police officer.
EOW said one of the prime reasons behind such frauds is diversion of funds. Builders usually take money from buyers, but instead of using it for that project, they divert it to other ventures, thus delaying them. In some cases, the delay is because builders are waiting for positive changes to real estate policies or rules to get extra floor space index. They also sell flats on additional floors, without procuring mandatory permissions for the upper floors and later don’t get the nod for it. In some instances, the same flat is sold to multiple individuals or a flat which is already mortgaged with a bank is sold to the buyer. “The interrogation of the arrested developers/ builders showed that they were largely dependent on black market. The slow market, sudden cash crunch caused by demonetisation, and pressure to do business in white broke their backbone, leading to such frauds,” an assistant commissioner of police from EOW.
Elaborating on the other reasons, Ramesh Prabhu, president of Maharashtra Societies Welfare Association, said, “Builders circulate the money to a point where they have multiple projects in hand, each one incomplete, but no money to complete them.”
Police officers feel homebuyers’ ignorance too is to blame (see box for dos and don’ts). The introduction of MahaRERA is expected to check this.
A police officer said almost all victims who approach the police against builders don’t want to prosecute the builder. “They just want their money back. But they don’t understand that the police are not recovery agents,” said an officer.
Dayanand Moily, one of the victims who is fighting a legal battle, said, “The police can apply sections of Maharashtra Protection of Interests of Depositors Act to help in the recovery. The attached assets can be sold and the duped flat purchasers can be repaid.”
The officer, however, said MPID Act is applied to investment frauds.
Advocate Vinod Sampat, president of Co-Operative Societies Association and a real estate expert, said, “Even after filing a complaint, homebuyers can approach the consumer or civil court.”
First Published: Feb 26, 2019 14:16 IST