Unravelling the Extortion Charges: Coercing New Flat Buyers to Foot the Bill for Building Painting in Mumbai

Housing Society Law

Posted by Aditya Pratap Law Offices on 01 Mar 24

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Mumbai, known for its vibrant culture and thriving real estate market, has recently been marred by a disturbing incident involving members of a housing society. Members of a housing society are facing extortion charges after allegedly forcing new flat buyers to foot the bill for building painting in exchange for a No Objection Certificate (NOC). The NOC, or No Objection Certificate, is a critical document in the real estate industry. Authorities and financial institutions frequently require it during property transactions to ensure that the property complies with all legal and regulatory standards.

Extortion charges resulting from forcing new flat buyers to bear the cost of painting the building have recently emerged, shedding light on the dark underbelly of the property market. This unethical practice not only raises ethical concerns but also highlights legal implications.

Brief Facts of the Case-

In the current case, it is claimed that certain unscrupulous housing society members have weaponized the issuance of NOCs, turning it into a tool for extortion. The issue came up in the court of law when five office-bearers of a housing society in Mumbai’s Bandra (West) were charged with extortion after allegedly demanding that new flat-buyers have to pay for the entire building to be painted in exchange for issuing a no-objection certificate (NOC). The Bandra police arrested Afzal Kazi, treasurer Asgar Zafri, secretary Aslam Mukhtar, and managing committee members Akhtar Zafri and Salim Aslam Mukhtar on Wednesday. The five accused were arrested after businessman Mufazzal Lahari, 71, filed a complaint.

What is Extortion?

Extortion is a criminal offense in India, as defined by Sections 383 to 389 of the Indian Penal Code (IPC). These sections describe various offenses involving extortion, threats, and abduction with the intent of extorting property or compelling someone to do an act against their will. Extortion is defined in Section 383 of the IPC as “the intentional putting of a person in fear of any injury to that person or any other person, and thus dishonestly inducing the person so put in fear to deliver to any person any property or valuable security, or anything signed or sealed which may be converted into a valuable security.” Section 384 prescribes punishment for extortion. Any person found guilty of extortion can be punished with imprisonment for a term which may extend to three years, or with a fine, or with both.

 

Legal Ramifications:

i) The Rising Tide of Property Prices in Mumbai:

Mumbai, known as India’s financial capital, has seen an unprecedented rise in property prices over the years. As the demand for housing continues to outstrip the supply, real estate developers frequently find themselves balancing profit margins and customer satisfaction. However, a recent spate of cases suggests that some developers may be using illegal means to maximize their profits.

ii) Recognizing the Extortion Charges:

Extortion is a serious criminal offense that involves using force or threats to obtain something, usually money. Extortion charges have been leveled against developers in Mumbai who allegedly coerce new flat buyers into shouldering the financial burden of painting the entire building.

iii) The Mode of Operation:

According to reports, unscrupulous developers use a legal grey area to carry out their nefarious plans. Developers allegedly slip in clauses requiring the buyer to pay for the painting of the building during the final stages of a property transaction, when the buyer is vulnerable and eager to close the deal. Buyers, often unaware of their rights and under pressure to secure the property, agree to these terms reluctantly.

iv) Legal Implications and Violations:

Such practices not only violate fair trade principles, but they also violate legal norms. The Consumer Protection Act, which protects consumers’ rights, is frequently cited in cases where developers are accused of imposing unfair and one-sided terms on buyers. Extortion charges, which can result in serious legal consequences such as imprisonment, fines, or both, emphasize the seriousness of these offenses.

v) Regulatory Authorities’ Roles:

Following an increase in complaints and legal actions, regulatory bodies such as the Real Estate Regulatory Authority (RERA) have become more vigilant. RERA, which was created to protect homebuyers’ interests and promote transparency in the real estate sector, has the authority to penalize developers who engage in unfair trade practices.

vi) Impact on Homebuyers:

Such extortionate practices can have far-reaching consequences for unsuspecting homebuyers. Buyers may find themselves embroiled in protracted legal battles, causing stress, financial strain, and a delay in occupying their new homes, in addition to the immediate financial burden of paying for building painting. This not only taints the dream of home ownership, but it also erodes trust in the real estate sector.

vii) Advocacy and Education:

In response to the increase in extortion charges, advocacy organizations and legal experts are working tirelessly to educate homebuyers. Educating buyers about their rights and responsibilities is viewed as a critical step in combating these unethical practices. Seminars, workshops, and online resources are being employed to educate potential buyers about the red flags to watch out for in property agreements. As the legal fight against extortion charges gains traction, landmark cases emerge, setting precedents that may shape the future of real estate transactions in Mumbai. Courts are increasingly taking a hard line against developers who use coercive tactics, indicating a shift towards a more transparent and buyer-friendly real estate market.

viii) Collaborative Efforts for Reform:

To address the root causes of extortion charges, there is a growing call for government officials, real estate developers, and consumer advocacy groups to work together. It is critical to foster a sustainable and ethical real estate market by striking a balance between the interests of developers and buyers through fair regulations and stringent enforcement.

Conclusion

Extortion charges involving the forcible imposition of building painting costs on new flat buyers in Mumbai highlight the urgent need for real estate reform. As legal battles play out and awareness campaigns gain traction, the hope is that these unethical practices will be eradicated, paving the way for a more transparent, ethical, and consumer-friendly real estate market in India’s financial capital. Only time will tell whether Mumbai’s real estate can shed its tarnished image and rise to the challenge of providing homes without compromising on fairness and justice principles.

Aditya Pratap is a lawyer and founder of Aditya Pratap Law Offices. He practices in the realm of real estate, corporate, and criminal law. His website is adityapratap.in and his media interviews can be accessed at http://www.youtube.com/@AdityaPratap/featured. Views expressed are personal.