It was almost like a dream come true for around 2,100 homebuyers when Rajkumar Jain and his associates promised to deliver their flats within four years and that too with a ‘no EMI till possession’ offer. Anil Singh, Arun Bhardwaj, and Anshul Garg were among those lured by the offer, investing their hard-earned savings to buy a home. As the years passed, they realized that they were among thousands of homebuyers in Noida, Greater Noida, and Ghaziabad who had been duped by builders.
Jain, who is now behind bars, is the director of several firms, including Red Apple Society, Manju J Homes India Pvt Ltd, and Idea Builders. Primarily using Idea Builders and Manju J Homes, Jain floated three projects in Ghaziabad—Red Apple Residency, Red Apple Homez, and Bahubali Enclave — to allegedly cheat homebuyers of crores of rupees. He sold flats that were not even approved by the Ghaziabad Development Authority (GDA), alleged buyers. They said that they came to know about this only after the wrongdoing came to light.
The Jain family and their associates launched the projects in 2012-2013 when real estate demand was booming and almost everyone wished to own a home.
"I invested in 2013. They promised a flat in four years but not a single flat was delivered. I got a loan as well, as we were promised there would be no EMIs till possession (for 36 months). Now, I pay rent as well as EMI," said Arun Bhardwaj, an investor in Red Apple Residency.
Members of the Jain family were arrested in March when they were planning to leave for Dubai, a senior police official of Nandgram Police Station in Ghaziabad told Moneycontrol on the condition of anonymity as he isn’t the official spokesperson. Home buyers allege that the family never intended to complete any of the projects as they were found with forged documents and passports. The police claimed that the accused made fake Aadhaar cards and fake PAN cards. The police official said that the accused would be charged with the Gangsters Act besides relevant sections of the Indian Penal Code (IPC).
Ghaziabad police chief Muniraj G told news agency PTI on 4 July 2022 that considering the amount of money involved in the alleged fraud — around Rs 200 crore — he had recommended that the case be investigated by the Economic Offences Wing. The FIRs, he said, had been lodged under sections 420 (cheating), 467 (forgery), 468 (forgery for cheating), 471 (using as genuine a forged document), and 120B (criminal conspiracy).
Multiple FIRs have been registered against the developers and SBI officials. SP Ghaziabad Deeksha Sharma told Moneycontrol that the police department is coordinating with the NCLT and EOW as well. "We have written to the GDA seeking details of the project. We have also received documents from the banks. Some buyers have moved to the NCLT and some have also moved to the Economic Offence Wing, Delhi. So there is duplicity, thus we are coordinating with the EOW and the NCLT as well. The investigation is underway," said Sharma.
While the case is very similar to others in Noida or Greater Noida, what differentiates it is the allegation by some buyers of active collusion between the builder and bank officials. This was also noted by the Debt Recovery Tribunal (banks had approached the DRT), which found that "there was active connivance between the bank and the builders".
Problems plaguing the project
None of the three projects —Red Apple Residency, Red Apple Homez, and Bahubali Enclave — have been completed and not a single flat has been delivered. However, while one can see the skeleton frame at Red Apple Residency and Red Apple Homez, only some foundation work and walls are visible at Bahubali Enclave in Ghaziabad's Morta. None of these saw the light of day. Moneycontrol could not reach out to any of the accused since they are in Dasna jail. A mail sent to the Idea Builders’ email ID remains unanswered.
Making matters worse for some homebuyers, there was an alleged nexus between a few officials of State Bank of India and the builder in disbursing loans with forged signatures of the buyers. In many cases, the loan amount, ranging from Rs 16 lakh to Rs 22 lakh per flat, was disbursed to the builder without the borrowers' consent.
"I took a loan under the subvention scheme from the State Bank of Hyderabad (now SBI) and the bank officials forged my signatures to disburse the loan without my consent. I got to know about it only after the second demand note and then raised the issue with the bank. Then, my signature was forged and the entire amount was disbursed without my knowledge," alleged Anshul Garg, one of the investors in Red Apple Homez. Garg is the president of the Red Apple Homez Buyers Association.
Moneycontrol has reached out to State Bank of India with queries by mail but has received no response so far. This article will be updated once the bank responds.
"I bought a flat in the Red Apple Residency in 2013. They promised to deliver the flat in three years but not a single flat was delivered. They paid some EMIs initially but later they stopped paying that. Banks also moved the DRT. Even UP-RERA and the Allahabad High Court ordered a refund in our favour but nothing has happened so far. I had my savings worth Rs 7.5 lakh in the State Bank of Patiala (now SBI), which the bank auto-deducted, leaving me helpless. Now, I am not only bearing legal expenses but also have to look after my children's education. The daily stress made me a blood pressure patient," said Anil Singh, who was sold a flat that had not been approved by the GDA.
On its part, the Debt Recovery Tribunal had also recorded a serious lapse on the part of the banks in disbursing the loans.
"Generally, whenever such projects are being launched and the flats are being constructed, the buyers have to pay the entire cost of the flat in question in phases. But the Bank preferred to pay the payment to the builders in lump-sum and never preferred to see the interest of the buyers as the said amount should have been paid in a phased manner, that is in accordance with the development and the construction raised at the site by the M/s Idea Builder Pvt Ltd, therefore, there was active connivance between the bank and the builders," the tribunal said in its order dated December 16, 2019, in the case of State Bank of India vs Hardarshan Singh and Idea Builders.
Seeking justice in multiple fora
Home buyers and suppliers have approached different platforms seeking refunds or payments.
For instance, homebuyers have written to the Ghaziabad District Magistrate and also approached various courts, including the National Consumer Disputes Redressal Commission (NCDRC), DRT, and National Company Law Tribunal (NCLT), UP-RERA, district courts and Allahabad High Court with their pleas.
As many as 17 buyers had received refund notices issued from the UP-RERA in 2020 but the notice was not implemented despite repeated letters to the Ghaziabad DM by the homebuyers. According to documents seen by Moneycontrol, the homebuyers then approached the Allahabad High Court and the court also directed the strict implementation of the recovery notice, but to no avail.
A mail sent to the Ghaziabad DM and GDA remained unanswered.
In some other cases, the DRT has also issued recovery notices in favour of the buyers.
Gagan Ferrotech Limited, a steel supplier to Manju J Homes, had moved the NCLT in 2018 over the non-payment of dues worth over Rs 84 lakh, including interest, by the builder. Homebuyers also submitted their claims before the NCLT but no resolution applicant (developers) showed interest in the project. The homebuyers (of Red Apple Homez) have since formed a group and claim that they will be moving ahead with the project by taking it over.
"We booked our flats in 2012. I had booked a 4-BHK. Later on, they refused to build a 4 BHK and asked me to take two 2 BHK flats, to which I agreed on the condition that both flats will be adjacent to each other...We approached the NCDRC in 2017. When GaganFerrotech approached the NCLT in 2018, we, too, submitted our claim. Since we did not receive any application from the resolution applicant (developers), we are now taking over the project. The construction plan of the Red Apple Buyers Welfare Association (the group formed by buyers of Red Apple Homez) has already been approved by the CoC members with 100 percent voting and submitted to the NCLT for approval. Then, we will go all out against SBI to expose its wrongdoings," said Garg.
The Red Apple Residency case is at a very nascent stage and a resolution professional is yet to be appointed.
"We have filed an insolvency case in the NCLT. Since 2020, due to COVID and other issues, the case is only getting new dates. Even an Interim Resolution Professional (IRP) has not been appointed. The next hearing is likely in July where the court may go for an ex-parte order to appoint the IRP as no one is coming to represent the builder,” said Advocate Sandeep Tiwari, who is representing the buyers at the NCLT.What is next?
The case is before the NCLT. Advocate Gerald Manoharan, Partner at JSA, said that such situations are a frequent occurrence these days, especially among mid-size developers, who embark on extremely large projects and are unable to complete the same on time on account of diversion of funds or misutilisation of project proceeds.
"While the entire development can be entangled in multiple legal disputes, what may be relevant at this point in time is, under the provisions of the RERA Act, the RERA Court is empowered to hand over the project to the association of allottees. If they are capable of taking over the project en bloc, without any reference to the developer in terms of being able to collect the balance amounts from subscribers or allottees, and putting in place a mechanism whereby the existing third-party vendors can be deployed for a meaningful completion of the project, then that could be a feasible recourse," said Manoharan.
He said there are a couple of such examples from the recent past in Bengaluru, where the allottees have kind of stepped in to complete portions of incomplete projects.
"However, it's possible the landowners could object to the allottees taking over the project because of their own financial interests being affected adversely. These would have to be dealt with on a case-to-case basis," said Manoharan.
Project Timeline2012-13: Idea Builder/Manju J Homes launched Red Apple projects