COURT directs police to investigate cheating charges against
union bank of India and merlin projects ltd.
In PR (Jr.) a Software Professional then staying in UK decided to buy an independent Row House with a small garden in a complex named Merlin Greens, developed by M/s. Merlin Projects Ltd., which he felt would be an ideal dwelling for his parents in their twilight years.
PR (Sr.), father and Constituted Attorney of PR (Jr.) booked the property in their joint names by paying an advance of Rs.50, 000/- and executed an Allotment Agreement and a Supplementary Agreement with the Builder on 01/05.
Agreed consideration for the property was Rs.16.25 Lakhs which included Rs.2 Lakhs towards life-time maintenance charges, provision of common services like water supply, generator power back-up, security services etc., and also Membership of the Ibiza Club located within the complex.
Delivery period was originally indicated as 12 months in the Allotment Agreement but PR (Sr.) was later informed that the Row House was ready for immediate delivery. PR (Sr.) then told the Builder that since the delivery period had been advanced, they would need to avail a Housing Loan to arrange the funds quickly.
On learning of their intention to avail a housing loan, the Builder stated that they had good connections with top management of Union Bank of India and introduced PR (Sr.) to one Mr. Ashok Ghosh, the then Manager of the Sarat Bose Road Branch of the Bank. The Builder requested him for quick processing of the loan as the subject property was ready for delivery.
The said Bank Manager, after reviewing income & personal documents of the loan applicants confirmed that they were eligible for getting a housing loan of Rs.15, 00, 000/- .
On 15/10 PR (Sr.) lodged a formal loan application for Rs.15 Lakhs (including Registration costs) and by letter dated 22/01, PR (Sr.) was informed by a new Bank Manager (one Mr. Supriyo Sengupta) that their home loan application had been provisionally sanctioned subject to their executing a “Tripartite Agreement” with the Bank and the Builder which was required to secure advance payments made by the Bank to the Builder.
It later transpired that a “Tripartite Agreement” of this type was required only for properties under construction or which were not ready for possession. In such cases advance / stage payments made by a Bank to the Builder on behalf of Borrowers are secured by the “Tripartite Agreement” and the Builder acts as a Guarantor of the loan advances till the property is mortgaged to the Bank.
In their case, since the Bank was financing an independent house, ready for possession, a “Tripartite Agreement” was not necessary and as per settled practices / banking norms the Builder had to first convey the property to the Borrowers and deposit the duly executed Sale Deed or IGR copy to the Bank whereupon the loan was to be disbursed. Therefore, no further Guarantor was required as the property itself was hypothecated to the Bank as Guarantee
The Bank Manager induced PR (Sr.) to execute the “Tripartite Agreement” by stating that this would ensure that the loan was sanctioned quickly. He explained that 25th February was the cut-off date for disbursement of loans for any particular financial year. Only loans disbursed within this date could be included in a Bank’s disbursement target for that particular year which was always a motivation for higher authorities of the Bank to sanction the loan quickly. The Bank Manager further stated that if the matter was delayed, the urgency would be lost and the loan would then take six months to be sanctioned.
The Builder also induced the complainant to execute the “Tripartite Agreement” by saying that it would enable the Bank to quickly sanction the loan and the Row House could then be immediately delivered. The Builder further stated that if the loan was delayed, they would have to sell the Row House to some other customer with ready funds.
It was stipulated in the said “Tripartite Agreement” that the Bank could legally disburse the loan only after the property was conveyed to the purchaser and the original Title Deeds were deposited in the Bank. The agreement further stipulated that it was the responsibility of the Builder to submit the Title Deeds and all related ‘Link Documents’ that form part & parcel of a Title Deed directly to the Bank.
Reposing confidence on a supposedly reputed Builder and a Nationalized Bank, on or around 28/01, PR (Sr.) executed the “Tripartite Agreement” and also paid the balance Earnest Money in cash as insisted by both the Builder and the Bank. Receipt of Earnest Money was duly recorded in the said “Tripartite Agreement” signed by the Bank, the Builder and PR (Sr.).
PR (Sr.) was told that as per usual practice all payments made to the Builder would also be recorded in the ‘Memo of Consideration’ that would form a part & parcel of the Sale Deed.
In retrospect, PR (Sr.) who was a former NRI and not conversant with Banking Rules in India discovered that the Bank and the Builder had induced and compelled him to enter into the said “Tripartite Agreement” with the main objective of illegally releasing full payment to the Builder before all formalities were completed. This became clear from the fact that he had not been asked to submit a single property related document along with their loan application and the same had been approved based only on their personal and income details which was unusual.
On 25/02, PR (Sr.) received a Final Loan Sanction Letter from the Bank and he was asked to meet the Bank Manager and issue instructions regarding disbursement of the loan.
On receiving the above letter on 26.02. PR (Sr.) went to the Sarat Bose Road Branch of Union Bank of India and was shocked to find that Rs.13, 81, 250/- had already been disbursed to the Builder and only Rs.1, 18, 250/- was remaining in their loan account to meet Stamp Duty and Registration expenses.
This meant that after taking into account Earnest Money of Rs.2, 43, 750/- already paid, the Builder had received the entire agreed consideration of Rs.16, 25, 000/- before conveying the property to the Borrowers and without handing over the Title Deeds to the Bank to create an equitable mortgage.
PR (Sr.) was given a copy of a cover letter dated 25.02.2004 issued by the Bank to the Builder forwarding Pay Order for Rs.13, 81, 250/- and in this letter the Builder had also been instructed to hand over possession of the Row House to the Borrowers.
PR (Sr.) was further asked to accept a Debit Note debiting Rs.13, 81, 250/- to their loan account. This effectively meant that the Borrowers had been made liable for repayment of the loan on a property on which they had no legal ownership rights and on which the Bank also had not created any ‘security interest’ by taking charge of Title Deeds.
Both the Builder and the Bank Manager assured PR (Sr.) that he had nothing to worry about and that delay in execution of the Sale Deed was because the Builder had not received some approvals & clearances without which a Sale Deed would not be acceptable by Bank authorities.
Meanwhile, in anticipation of moving to the new house, PR (Sr.) had rented out portions of his house where they were then staying and within a short period he had to vacate these portions (a fact known to the Builder and the Bank authorities). Having no other option, he was compelled to move into the new property on 20.04.2004.
However, he was not given any official possession letter and the Bank Manager told him that this could not be given till a Bank appointed Architect inspected the property and confirmed that the construction was as per Sanctioned Building Plan.
Meanwhile, the Builder applied for an electric meter in the name of PR (Sr.) which was duly installed and also all other services were also duly provided by the Builder as promised.
PR (Sr.) repeatedly requested the Bank and the Builder for conveyance of the title in their favour but no action was taken under some pretext or the other and his letters were not replied.
After paying 18 EMIs, PR (Sr.) refused to make any more payments till the property was conveyed to them and the Builder then started showing their true colours by falsely claiming that they had not been paid the Earnest Money in full.
On the basis of this unsubstantiated claim the Builder unilaterally cancelled aforementioned Allotment & Supplementary Agreements, declared the Borrowers as Trespassers, cut-off water supply, generator services etc. and cancelled Club Membership of the Borrowers.
PR (Sr.), being a senior citizen, was in dire straits and he even offered to pay the amount that was being illegally claimed by the Builder but his pleas were rejected. He also approached the Bank and offered to pay back their loan in full subject to the property being conveyed to them but the Bank too rejected his offer.
In view of above circumstances, PR (Sr.) had no other option but to vacate the subject property after having legally and peacefully occupied the same for 2 ½ years and was compelled to move into a rented flat under humiliating conditions.
In March PR (Sr.) lodged a complaint with the State Consumer Distress Redressal Commission which is still in progress.
In August the Bank issued a SARFAESI Repossession Notice which the Borrowers challenged by a Writ Petition submitted in the Honb’le High Court of Kolkata stating that the said Act was not applicable in their case because the Bank had not created any ‘security interest’ on the subject property by taking charge of Title Deeds from the Builder.
The Bank claimed that a ‘security interest’ had been created by virtue of the “Tripartite Agreement” and the property had not been conveyed due to a mutual arrangement between the Builder and the Bank.
The Appellate Bench kept the maintainability issue open and ordered that further action of the Bank should abide by the result of the writ application of the Petitioners.
At this stage, Bank officials approached PR (Sr.) and proposed that if the property was voluntarily handed over to the Bank then on repayment of their loan dues, the Bank as empowered u/s 13 (6) (8) of the SARFAESI Act could deliver back possession of the property with title, rights and interests by executing a suitable Sale Deed in favour of the Borrowers.
Since their only interest was to secure legal ownership and live peacefully in the property, PR (Sr.) agreed to the Bank’s proposal and handed over the property to the Bank. He then offered to repay their loan dues immediately subject to title of the property being legally conveyed to them and the Bank agreed to do so.
To complete the transaction, PR (Sr.) then asked the Bank for copies of the documents that form part & parcel of a Title Deed, namely: (i) Certified Copy of Mother Deed (ii) Mutation Certificate (iii) Tax Bills (iv) Agricultural Conversion Certificate / Town & Country Planning Dept. Approval (v) Sanctioned Building Plan (vi) Completion Certificate (vii) Possession Certificate etc.
It was then found that the Bank did not have any of the above documents and had sanctioned and disbursed the loan without obtaining or verifying the same.
Also the property had not been inspected by a Bank appointed Architect and PR (Sr.) had no way to know whether he was placing their savings at risk by investing in an illegally constructed house. Therefore, to safeguard their interest, he refused to complete the transaction till the Bank demonstrated its ability to convey a clean title and provided copies of documents that form a part & parcel of a Title Deed.
The Bank in violation of the directives of the Honb’le Calcutta High Court then offered the property for sale by Public Auction on 08/12.
However, it is poetic justice that after accepting the full bid amount of Rs.20.51 Lakhs, the Bank could not legally convey the title to the Highest Bidder because the Bank had no legal right to sell or transfer a property which officially did not belong to them but to the Builder.
Some of the built-in fittings, fixtures and personal belongings of the Borrowers which the Bank had promised to return are still remaining in the property and can not be removed because the Builder has denied access to the Highest Bidder and both the Builder and the Highest Bidder have now sealed the property.
Feeling that they had been criminally cheated, PR (Sr.) filed a Complaint Case against the Bank and the Builder for offences committed u/s 420/427/120 B of IPC and the Honb’le Chief Judicial Magistrate, Alipore Court taking due cognizance of the complaint issued orders u/s 156 (3) of Cr. P.C directing the Kolkata Police to investigate the case.
The victims would welcome legal opinion/suggestions which could offer them some relief and bring an end to such unhealthy BANKER-BUILDER NEXUS for public benefit.
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