HC RULES TO CONSIDER CHEATING CASES BY BUILDERS ARE CRIMINAL OFFENCES AND NOT CIVIL CASES

Today, the redevelopment in real estate industry is one most flourishing features in India. The demand for redevelopment of residential and commercial property is increasing constantly and so is the number of Builders and Developers who offer special features to attract the prospective housing societies where a very important role is played by Builders and Developers. However, there are numerous cases where the Builders and Developers have either taken more than the required time to finish projects while leaving home buyers to suffer financial loss or such projects have been abandoned on a half way.

The Bombay High Court in a landmark judgement recently told City Police that cases where a Developers or Builder cheats his customers, must be considered as criminal offenses rather than civil suits. The statement by Justice came when he was hearing a case where a one of the housing societies accused the Developers of cheating.

While slamming senior officers of the Malad police station for failure to file an FIR in the case, the Justice said that he had repeatedly recorded in his orders that the complaints filed by the public alleging that they have been cheated by the Developers cannot be termed as disputes of a civil nature. Yet the police officials are not ready to assist the common man when he seeks police assistance against fraud Developers and instead, he is show the door by police terming the complaint as being civil disputes.

The Justice's statement comes at a crucial time as Indian States gear up to implement the Real Estate Regulation Act (RERA) across the country. While RERA has been put into effect in the state of Maharashtra, the case illustrates how home buyers in the country are largely unaware of their rights, some of which are easy to understand and important to know.

The relevant judgment is reproduced hereunder:

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

IN ITS COMMERCIAL DIVISION

CONTEMPT PETITION NO.20 OF 2018

IN

ARBITRATION PETITION NO.247 OF 2017

 Liberty Garden Co-op. Housing Soc. Ltd.     …     Petitioner

Versus

K.T. Group and Ors                                    …      Respondents

Mr. Tushar Gujjar with Mr. Deepak Singh i/by M/s. Solicis Lex, for Petitioner

Mr. U.S.Upadhyay, AGP for State.

Mr. Sudhir Mahadik, Sr. P.I., Malad Police Station present.

Mr. Sandeep Sheth and Mr. Dhairya Sheth, Ms. Hema Sheth present

CORAM:  S.J. KATHAWALLA, J.

DATE: 4^th MAY, 2018

P.C.:

1.   The Petitioner is a Co-Operative Housing Society whose building was constructed in the year 1968. On 19^th December, 2013, Respondent No.1 – K.T. Group through its three partners Dhairya Sheth, Sandeep Sheth and Dhruv Sheth entered into a Development Agreement with the Petitioner-Society. On 13^th July, 2014, IOD was issued and possession was obtained by the Respondents-Developers from the members on 30^th September, 2014. On 21^st January, 2015, Commencement Certificate (CC) was issued and the partners of K.T. Group agreed to complete the project i.e. on or before 22 months + 6 months grace period. The Respondents failed to complete the project within a stipulated period and also failed and neglected to make payments towards compensation agreed to be paid to the members since April, 2017.

2.          Though the Senior Inspector of Malad Police Station received a complaint from the Petitioner-Society against the Respondents – K.T. Group, as far back as on 23-09-2017 that the members of the Society have been cheated by the Developers, the Senior Inspector has failed and neglected to take any action in the matter. Instead, he has written a letter to the complainant Society stating that their complaint is in the nature of a civil dispute.

3.          I have in the past repeatedly recorded in my orders that the complaints filed by the members of the public alleging that they have been cheated by the Developers cannot be termed as disputes of a civil nature, yet the Police Officials, In-Charge of the Police Stations are not ready to assist the common man when they seek police assistance and instead show them the door by terming their complaints as being civil disputes. Despite the above observations in my orders, I find that there is no improvement in the approach/conduct of the Senior Police Officers. When the concerned officer/s are directed to remain present before the Court and questioned as to what steps they have taken qua such complaints, they simply tender a mechanical apology. The Senior Inspector of Malad Police Station now states that he shall forthwith look into the complaint and take necessary steps. A copy of this order shall be forthwith forwarded to the Commissioner of Police, Greater Mumbai and the Deputy Commissioner of Police, Zone XI.

Stand over to 13^th June, 2018.

(JUSTICE S.J.KATHAWALLA)

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