After losing their life savings in a controversial housing project in 2009 and getting no redressal, a group of 150 investors have approached the police against the builder who duped them.
The Economic Offences Wing of the Mumbai Police, meanwhile, has also initiated an independent inquiry into the matter.
In late 2009, about 300 Mumbai residents put in their life savings in a housing project in Saki Naka to realise the quintessential Mumbaikar dream: a house in the city. What most of them didn’t know was that the builder, Orbit Corporation Ltd., had taken a massive loan against the project, which it later defaulted on.
The investors included pensioners, government employees and professors, and their world came crashing down when Life Insurance Corporation Housing Finance Ltd. issued a public notice declaring the loan as a non-performing asset. Seven years on, the property has been seized, the matter drags on in court and probe is on.
Orbit Corporation Ltd. unveiled Orbit Residency Park, a housing project comprising six 13-storeyed buildings, in late 2009. Buyers were expected to gain possession of a one bedroom-hall-kitchen flat for Rs. 55 lakh to Rs. 60 lakh by 2013. Lalit Vazirani, an investor, said, “I booked a flat in November 2009. We were supposed to pay instalments every time a slab was completed. What none of us knew was that 145 flats in the project had been pledged to Life Insurance Corporation Housing Finance Ltd. in exchange for a loan that Orbit had taken.”
Himanshu Jain, another investor, said, “The arrangement between Orbit and LIC HFL was that the cheques received towards flat bookings would be sent to an escrow account jointly operated by both the parties. Orbit never revealed this to us, and asked us to issue cheques to its private account.”
Defaulting on the loan was only the beginning of Orbit’s malpractices. The investors went on to discover that Orbit only had permission to construct buildings up to six floors, but it built the additional floors and even accepted bookings for them. Further, Orbit Residency Park was just one of the several properties against which Orbit had borrowed money — a total of Rs. 250 crore — from LIC HFL.
Over the last seven years, the investors have had several meetings with LIC HFL, the National Housing Board and Pujit Agarwal, Managing Director of Orbit Corporation Ltd. The investors also submitted an application to Saki Naka police, seeking an FIR against Orbit, in July this year.
Deputy Commissioner of Police (Zone X) Vinayak Deshmukh confirmed that the application had been received and added that inquiries were under way. EOW officials, meanwhile, told The Hindu that an open inquiry had been initiated into the matter after a separate complaint earlier this year. An officer said, “We have recorded statements from several parties, and are conducting further investigations into the case.”
Meanwhile, the investors are getting disillusioned with Orbit and the entire system. In a double blow, they are repaying loans taken to book the flats while living in rented houses.
Mr. Vazirani said, “By his own admission, Mr. Agarwal has received around Rs. 114 crore from investors till now. He has been promising to solve all the legal hassles and give us the houses. LIC HFL should have prominently declared its loan with Orbit to ensure that investors were aware of it. Had they done this, we would have issued cheques to the escrow account instead of Orbit’s private account. The banks that gave us loans, too, seem to have missed out on this while doing their due diligence.”
An official statement from LIC HFL in response to The Hindu ’s query said, “LIC Housing Finance had classified its loan to Orbit Corporation as a non-performing asset, following their default in repayment commitments.
“Since then the company has proceeded against Orbit by initiating various legal proceedings including action under the SARFAESI Act [Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002] and complaints with law enforcement agencies. Since the matter is sub-judice, we would not like to comment further.” An email to Mr. Agarwal sent on August 23 did not receive a response till the time of going to press despite a reminder to him via text message.
