Developers arrested, projects stuck: What can homebuyers of Nirmal Lifestyle projects do now?

After the arrest of developers of Nirmal Lifestyle, homebuyers are concerned about the fate of over 30 projects in MMR.

Imagine working hard, saving up all your life and finally, investing all of your life savings on your dream home, only to be cheated on and deprived of that dream. This nightmare has become a reality for homebuyers in over 30 Nirmal Lifestyle Housing Projects in Mulund. The Mumbai police arrested Dharmesh Jain and Rajiv Jain, directors of Nirmal, a few weeks ago for cheating homebuyers. The firm went into insolvency in 2022 after failing to repay crores of debt.

What is the case against Nirmal Lifestyle Ltd.?

The authorities arrested the two accused on charges of allegedly duping 34 home buyers of over 11 crore rupees. The Economic Offences Wing (EOW) of the Mumbai police found that the two had accepted rupees 80.93 crores from 461 buyers for 4 projects in Mulund West but had failed to even commence the construction process for any of these projects. The accused had collected this money in 2011 from the buyers, promising them possession by 2019, along with providing allotment letters and letters of intent, the Indian Express reported. The probe revealed that they diverted all of the funds collected towards different projects, companies, and establishments.

Nirmal Lifestyle Brothers
Dharmesh and Rajiv Jain were arrested by the Mumbai Police.

EOW investigations have also revealed that the developers never signed an agreement with them. When the home buyers diligently followed up with the two directors of Nirmal Lifestyle Ltd, they were promised that their money would be returned, and post-dated cheques were issued to them. However, these cheques bounced due to insufficient funds in the account. The developer had also promised to deliver flats to home buyers in their other projects instead, but failed to do so, the EOW officer said.

MahaRERA (Maharashtra Real Estate Regulatory Authority) subsequently released a list of over 300 housing projects around the Mulund, Kalyan, Thane, Dombivli areas that are currently facing insolvency, to caution home buyers of the issue. These projects range from 20% to even 90% reservations completed. The due dates of some have lapsed in 2019. 

Spokesperson for Nirmal Lifestyle did not wish to comment when asked about the fate of these projects.


Read More: How luxury housing is changing Mumbai’s housing landscape


What happened after the complaints?

Some of the victims in the project approached the EOW with their complaints and moved to the National Company Law Tribunal (NCLT). When one moves to the NCLT, there is an automatic stay imposed on all projects under the firm. After the stay, the developers are stripped of their powers to work. This in turn affects all projects under the firm, and everything gets stalled, further impacting even more people. This is exactly what happened in Nirmal Lifestyle’s case.

Legally, how much money can developers take from buyers?

According to Shirish Deshpande of the Mumbai Grahak Panchayat, in most cases, developers are not supposed to take more than 20% of the money from buyers before acquiring a commencement certificate (CC). According to MahaRERA regulations, one cannot take more than 10% of the total value unless they have the CC. Nirmal has grossly violated these regulations. Buyers can contact the authorities in case developers ask for more than this.

What are the legal provisions available to buyers/victims?

The law also has some provisions for victims. Section 18 of the RERA act clearly outlines policies related to the return of amount and compensation. It states that if the promoter fails to complete or is unable to give possession of an apartment, plot, or building, in accordance with the terms of the agreement for sale, he shall be liable to refund the amount received by him if the allottee wants to withdraw from the project. Or he has to pay interest for every month of delay till hand over of the possession.

Buyers can come together, form an association and throw the developers out. They can go to MahaRERA, notify them of the violations and breach of conditions and remove the developers. This requires at least two thirds of the buyers to come together and approach the RERA authority. In such cases, the MahaRERA will step in. This association can file a civil suit. Unless the developer has a Sole Proprietorship or a Partnership, one cannot target their personal assets. However, builders generally have a company registered under the companies act or the LLP Act. In this case, the association or even an individual can file an insolvency petition in the High Court or the NCLT.

What are the provisions for monetary compensation?

Home buyers are also entitled to the interest on whatever amounts they have paid and can ask for compensation too, says Shirish. There are two options in this. If one wants to pull out of the project, they can ask for a refund. Along with claiming the refund, one can also claim the interest as well as the compensation. In the second option, if one wants to continue on the project, they would only receive the interest every month and the amount that they have paid. This is specified in the Section 18.

The situation of these refunds is looking bleak as Nirmal has gone into liquidation as a result of the NCLT. A large number of home buyers are now stranded in this situation and the struggle to recover the money or the house will be long. 

Also Read:

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Similar Story

City Buzz: Delhi ranks 350th in global index | Heat wave grips north… and more

In other news: Heat-related illnesses claim lives; Urban women in salaried jobs at 6-yr low and Delhi issues first bus aggregator licence.

Delhi ranks 350 in global index; no Indian city in top 300 Oxford Economics’ new ‘Global Cities Index’ report ranks Delhi at 350, the highest among 91 Indian cities. This was the first edition of the index, released on 21st May by the global advisory firm, Oxford Economics, which is assessing metropolitan cities across 163 countries on five parameters - economics, human capital, quality of life, environment, and governance. The top three cities in the list are New York, London and San Jose. In the category of human capital, which “encompasses the collective knowledge and skills of a city’s population,” measured…

Similar Story

Bengaluru citizens’ solutions to combat civic activism fatigue

Citizens cite diversity, recognition, a sense of ownership, and ward committees as vital to keep the flame of civic activism alive.

(In part 1 of the series Srinivas Alavilli and Vikram Rai wrote about their experience of moderating the masterclass, 'Is there burnout in civic activism?’, at the India Civic Summit, organised by Oorvani Foundation. Part 2 covers the discussions and insights by the participants)  The 35 plus participants in the masterclass-'Is there burnout in civic activism?', at the India Civic Summit, organised by Oorvani Foundation, were divided into six groups, who shared their observations and solutions to civic activism apathy. While nine questions were put to vote, the following six got the maximum votes in the following order:  Is there…