Filing Criminal Cases against Builders – How to Do It?

Real estate developers in India frequently end up on the wrong side of the law. Delayed possession of flats, misappropriation and diversion of consumers money, cheating, illegal construction … these are but few of the many malpractices that have beleaguered the Indian real estate sector. To combat this, the law permits home-buyers to file criminal cases against errant builders, in addition to civil remedies provided under law. Once a criminal case is filed, the builder can be arrested, his home and offices searched, and documents seized.

In the last few years, several prominent real estate developers went behind bars. Be it Anil Sharma of Amrapali or Jitendra Jain of Kamla Landmarc, both were arrested by the police (on court orders) for diverting and misappropriating customer’s funds. These arrests conveyed a powerful message to errant builders who assumed they could make hay while customers underwent the agony of legal battles in courts.

What Kinds of Criminal Cases can be filed against Builders:

Criminal proceedings against builders can be initiated either by lodging a police FIR (First Information Report) or a direct criminal complaint in the Magistrate’s Court. If the Police register an FIR, they will investigate the case and collect evidence to charge-sheet the builder. In case of a complaint to Magistrate, the homebuyer must himself obtain all necessary documentary evidence in order to make out a strong case against the Developer.

Cheating:

An FIR for cheating can be registered against a Builder if he indulges in dishonest dealings. Showing misleading brochures, falsification of plans or fraudulently reducing the area of the flat – all these are acts of cheating punishable under Section 420 of the Indian Penal Code, 1860. This is punishable with imprisonment of up to seven (7) years in jail.

In August, 2019 Sachin Zende, a real estate developer in Panvel near Mumbai was arrested for allegedly duping 350 homebuyers of over Rs. 50 crore. He had accepted booking amounts for flats in numerous projects since 2011. However, these projects were never completed. When customers demanded refunds, Zende issued post-dated cheques which bounced.

However, Zende’s customers wouldn’t take his antics lying down. They immediately filed an FIR in the Economic Offences Wing (EOW). The EOW investigated the case and arrested the builder. Now it is up to the police to trace the diversion of funds and recover the money to repay the homebuyers.

Criminal Complaint under MoFA, 1963:

In Maharashtra, violations of the Maharashtra Ownership of Flats Act, 1963 (MoFA, 1963) is punishable with imprisonment of up to three years. If a builder accepts more than 20 percent booking amount (of the value of flat) but fails to register the sale agreement, he commits an offence under Section 13 of the MoFA,1963. It is punishable with imprisonment of up to three years.

In addition to accepting money without registration, the builder can face criminal prosecution under MoFA for the following violations of law:

  • Illegally altering the floor plan specifications and amending building plans without buyer approval;
  • Failing to provide copies of approved plans, permissions, title documents to the homebuyer for inspection;
  • Failing to create a society of homebuyers after 10 flats have been booked in the project (a minimum of ten people are required to form a society);
  • Failure to convey ownership of land and common areas to the society after building construction is complete and possession of flats is given;

A criminal case under MoFA can be filed by two means. First is to register FIR in the local police station. Second is to by-pass the police and directly file a criminal complaint in the Magistrate’s Court under Sections 190 and 200 of the Code of Criminal Procedure, 1973.

Criminal Prosecution by RERA:

If a builder violates the Real Estate Regulation Act of 2016 (RERA Act), he can be criminally prosecuted by the Real Estate Regulatory Authority (RERA). Under Sections 59 of RERA Act, if a builder starts marketing his project without obtaining a RERA registration number, he can be punished with up to three (3) years in jail as well as fine.

It is important to note that a homebuyer cannot file a criminal complaint under RERA Act directly. He must first address his complaint to the Authority (RERA). If RERA feels that the complaint has merit, it will file a criminal case against the errant Builder for violating the Act and orders passed by it.

What to Do if Police mismanages the case against the Builder?

If the Police misguide the investigation or deliberately weaken the case, it is clear evidence of collusion between the builder and the investigating officer. In such cases, the homebuyer can write to the Commissioner of Police to transfer the investigation to another branch. He can also file a complaint with the Police Complaints Authority (Maharashtra) alleging misconduct on part of the investigating officer.

In several instances, it has been observed that while Police are quick to register FIR against the builder, they tend to go slow in the investigation. Very often, Builders lobby with unscrupulous police officers to dilute the charges and tamper with the evidence. Any complainant should be vigilant against such malpractices and immediately report them should they occur.

The mere filing of a criminal case against a builder does not imply a pat on the back. The homebuyer must do thorough homework and assemble concrete evidence necessary to prove his case. If the Police are at work, they must be urged to investigate the case properly and honestly. Only then would justice see the light of the day and protect the interests of the homebuyer.

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Advocate Aditya Pratap
About Advocate Aditya Pratap 64 Articles
Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.