Ek rupaya dya, ani flat tumcha navavar kara’ (‘Pay Rs 1 and get the flat in your name’). Karrm developers enticed customers from lower middle-class families with their offers of ‘Zero down payment, pay Rs 7,900/Rs 5,000 monthly for 100 months.’ However, this attractive pitch concealed a Ponzi scheme that targeted unsuspecting customers. These customers, mostly from lower middle-class families, were induced to sign multiple blank documents, along with personal documents like Aadhaar, PAN, and proof of address, during the flat-booking process. Unfortunately, the promised flats either never materialised or remained incomplete.

A shock awaited most of the 11,500 customers when they began receiving recovery notices from various banks and NBFCs for housing loans they were unaware of. In some instances, loans were even disbursed to the developer without a registered sale agreement. Some customers discovered that the same flat documents had been presented to multiple banks and NBFCs, resulting in multiple loan approvals.

“We have neither got our flats nor will get any housing loans in the near future, as our CBIL ratings are adversely affected due to the developer defaulting on the loan EMIs, which he never informed us about,” shared the petitioners in conversation with mid-day.

Babanrao Miratkar was promised a four-wheeler by the developer

The petitioners lodged a writ before the Bombay High Court, revealing that certain flat buyers had secured loans from banking institutions and NBFCs, payment of which has been disbursed to the developer Karrm Infrastructure. Surprisingly, these institutions disbursed loans despite the construction not having commenced yet, in disregard of due diligence. Prabhuram Giri, a whistleblower, exposed these wrongdoings.

Giri pointed out, “The banks and NBFCs have thus disbursed loans illegally. They have flouted the RBI guidelines for home loans by not carrying out any verification and without due diligence. It appears that in some cases loans have been disbursed from multiple financial institutions for the same flat. Today, the banks and NBFCs are issuing notices to innocent flat purchasers for repayment of loans. The banks and NBFCs have acted detrimentally to public policy, thereby causing grave injustice to these innocent flat purchasers.”

No due diligence done

Prabhuram Giri’s own experience illustrated this point. He took a loan of `15 lakh from LIC of India against the total consideration of `16.50 lakh for his flat cost. He had been paying a monthly EMI of `15,500. However, he ceased payment in protest since March 2021. Giri elaborated, “I availed of the loan from LIC, trusting them… I believed that the project was genuine and that all papers from the developer were legal, but it was not the case.”

Karrm developers’ ad promising free helicopter rides

“I stopped paying the EMI as a protest and have also made complaints with the RBI Ombudsman, after LIC issued a notice under the SARFAESI Act 2002, with an intent to take over my property, which I have opposed,” Giri added. “To my shock, LIC of India did not check any project documents nor do they have the tri-party agreement—between the developer, myself and LIC nor do they have any MOU,” Giri said.

Rupesh Singh, who booked a flat in Karrm Panchtatva, faced a similar predicament. Despite paying his EMIs, the construction work never commenced. His CIBIL score suffered due to unauthorised loans taken by the developer on his behalf.

CIBIL score shocker

In 2018, while considering the purchase of a 2BHK flat in Surat, Singh discovered something troubling: his CIBIL report indicated two outstanding loans, one for `4.75 lakh and the other for `3.53 lakh, from two NBFCs. He remarked, “The developer’s staff had taken my personal documents during the booking, and they had mentioned that the developer intended to secure a project loan for construction purposes. They said having flat buyers’ details was necessary, and I agreed and provided my documents. Now I realise that the developer used my papers to secure a loan on my behalf, without my knowledge. Despite my efforts, I’ve learned that all their offices have closed, and they’ve disappeared.”

(From right to left) Rupesh Singh, Prabhuram Giri, Babanrao Miratkar

Paid more than flat cost

“I paid more than the flat cost,” Singh revealed. “The cost of my booked flat was Rs 6.30 lakh. The developer received 31 EMIs of Rs 7,900, totalling Rs 2.82 lakh. Additionally, the developer took loans of Rs 4.75 and 3.53 lakh on my flat, totaling `11.10 lakh. My CIBIL score, which was 800 before dealing with Karrm, has now dropped to 600. I’ve stopped paying the remaining EMI and to the NBFCs that sanctioned the developer’s loan,” he added.

Case in consumer court

Singh stated, “I lodged a complaint against the two NBFCs and the developer in Surat. The NBFCs responded, but the developer’s notice was returned, as their office doesn’t exist. I’ve traced the developer’s address. The case is set for September 6, and I must locate the developer before that for the trial to begin.”

Actors and ads lured me

Babanrao Miratkar explained. “Full-page advertisements with Bollywood actors and a well-known politician endorsing the developer created  confidence. I believed it would be a safe bet, but I was wrong.”

Miratkar recounted, “I booked a 719-square-foot flat in 2013. Despite the `1 scheme, I had to pay Rs 1.58 lakh within 10 days, selling my wife’s jewellery and withdrawing from my provident fund. The developer took my signature, and without informing me, they said a state bank sanctioned the balance and I have to pay an EMI of Rs 11,715 against the home loan of Rs 13.44 lakh sanctioned. From 2013 to December 2019, I paid EMIs but later had to stop due to job loss during COVID-19, I shifted to Pune after the lockdown lifted.”

No car no house

Miratkar continued, “I was told I’d get a car upon possession. But I got neither the flat nor the car. Now I live in a rented flat, paying Rs 15,000 monthly, my CIBIL score has dropped to 200. The developer ruined us. With my low CIBIL score, getting a loan to build a home for my children seems impossible.”

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