Applicability of Chit Fund Law to Bhagtani Allotment Letter
Mumbai, 1 November, 2017: Some FIRs against Bhagtani cite only IPC sections, whereas others cite MOFA sections also. No FIR currently cites that Bhagtani violated the law banning money circulation schemes, although Bhagtani's allotment letter points to such a scheme.
The definition of Money Circulation Scheme in Prize Chits & Money Circulation Schemes Banning Act (PCMC Act) is: "money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrollment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions."
For ease of understanding, we can simplify this definition like this: "money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money as the consideration for a promise to pay money, on any event or contingency applicable to the enrollment of members"
Bhagtani's scheme is called by the name, "Provisional Allotment Letter of flat no ___". The "quick and easy money" is the 15% (and in some cases 24%) interest promised in the allotment letter. The "event or contingency" is the contingency that necessary approvals for the proposed building project are not received by Bhagtani.
The Allotment Letter is actually a letter of NON-ALLOTMENT. It repeatedly and emphatically says that although you, the investor, are desirous of booking a particular flat, you are NOT entitled to that flat in any manner. See for yourself.
Let us start at the bottom of this Allotment Letter specimen and read till the top:
1) Clause 18 says, "This letter is an understanding between you as an investor and us as a developer which is not covered under MOFA." Not covered under MOFA, means you aren't protected by The Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963. Why? Because the lakhs of rupees that you paid as booking amount is not for construction, sale, management and transfer of any flat!
2) Clause 17 says, "You agree not to claim any right, title or interest in the said flat till the entire consideration... is paid in full". Until you pay every last rupee, do you have any claim on the flat? Have you paid the full amount? No! Then what did you pay lakhs of rupees for? Obviously, for 15% interest only.
3) Clause 11 says, "It is agreed that you are an investor and hence in the event we do not obtain the requisite Intimation of Disapproval... you shall terminate this letter of allotment and claim refund from us... with interest... at the rate of 15% p.a..." So what is your entitlement? Only refund with 15% interest, nothing else.
4) Clause 1 says, "You have expressed your desire to acquire from us the said flat..." Please note, Mr Investor, YOU expressed YOUR desire, but your desire is not binding on Bhagtani. In this entire allotment letter, nowhere is it said that the said flat is allotted to you. To the contrary, the letter says repeatedly that the flat is NOT allotted to you.
5) The subject line says, "Provisional Allotment of Flat no. ___". Provisional, means that it is a makeshift substitute for an allotment letter. It is not actually an allotment letter for the flat, only a substitute.
6) According to this particular Allotment Letter, you, the INVESTOR EXPRESSED HIS DESIRE to buy a particular flat by paying the booking amount and service tax amount -- Rs 20.97 lakh -- but the "developer" (not "seller") BHAGTANI REPEATEDLY AND EMPHATICALLY DENIED HIS REQUEST for the said flat until such time that all the conditions mentioned in the letter are fulfilled. The only thing that Bhagtani confirmed from his side is refund of your money with 15% interest upon cancellation.
DID YOU, THE INVESTOR, ACCEPT THESE CONDITIONS? YES, YOU DID! You signed at the bottom of the allotment letter. You accepted that you have no entitlement to the flat, and you accepted the offer of 15% interest that was made by the developer.
But there is a catch: the Allotment letter said, "in the event we do not obtain the requisite Intimation of Disapproval... you shall terminate this letter of allotment and claim refund from us..." The catch is that Bhagtani has never admitted that he was unable to obtain the IOD, even though everybody knows he is unable. You are compelled to terminate the letter of allotment by signing a cancellation deed format that says, "Due to unavoidable circumstances, I wish to cancel the booking of the above flat". This format puts words in your mouth. You, the investor, are compelled to accept the onus for the cancellation; you are not relating the cancellation to Bhagtani's inability to get the IOD.
In the end, of course, Bhagtani doesn't refund your money with 15% interest. He never does, never mind what the papers say. That is because he never intended to refund your amount in the first place. This is exactly the finale of typical money circulation schemes, where the intention is to collect a large amount of money, divert it into various channels and disappear. What you are suffering from is the typical anticlimax of a get-rich scheme participant.
Crime & Punishment
PCMC Act bans get-rich-quick schemes, and awards a minimum of one year of imprisonment for such schemes. The maximum imprisonment is three years. Section 3 of the Act says: "3. Banning of prize chit and money circulation schemes or enrollment as members or participation therein. No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme." Section 4 of the Act says, "4. Penalty for contravening the provisions of section 3. Whoever contravenes the provisions of section 3 shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both: Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgment of the court, the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees."
Even participating in such a scheme is a punishable offence. But, you, Mr Investor, don't have to worry because you were clearly cheated and tricked into participating in this get-rich scheme disguised as the Allotment Letter of a flat. Don't worry, you are the complainant and the victim, and not the perpetrator of this crime.
The FIR against Bhagtani should therefore cite sections 2, 3 and 4 of the PCMC Act, besides the usual IPC sections connected with cheating, such as section 420. For such an FIR to be registered, you should file a police complaint that clearly points out the above mentioned fraudulent aspects of the allotment letter. If you want to achieve different results, you can't keep doing the same things!
ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao
9821588114
krish.kkphoto@gmail.com
The definition of Money Circulation Scheme in Prize Chits & Money Circulation Schemes Banning Act (PCMC Act) is: "money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrollment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions."
For ease of understanding, we can simplify this definition like this: "money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money as the consideration for a promise to pay money, on any event or contingency applicable to the enrollment of members"
Bhagtani's scheme is called by the name, "Provisional Allotment Letter of flat no ___". The "quick and easy money" is the 15% (and in some cases 24%) interest promised in the allotment letter. The "event or contingency" is the contingency that necessary approvals for the proposed building project are not received by Bhagtani.
The Allotment Letter is actually a letter of NON-ALLOTMENT. It repeatedly and emphatically says that although you, the investor, are desirous of booking a particular flat, you are NOT entitled to that flat in any manner. See for yourself.
Let us start at the bottom of this Allotment Letter specimen and read till the top:
1) Clause 18 says, "This letter is an understanding between you as an investor and us as a developer which is not covered under MOFA." Not covered under MOFA, means you aren't protected by The Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963. Why? Because the lakhs of rupees that you paid as booking amount is not for construction, sale, management and transfer of any flat!
2) Clause 17 says, "You agree not to claim any right, title or interest in the said flat till the entire consideration... is paid in full". Until you pay every last rupee, do you have any claim on the flat? Have you paid the full amount? No! Then what did you pay lakhs of rupees for? Obviously, for 15% interest only.
3) Clause 11 says, "It is agreed that you are an investor and hence in the event we do not obtain the requisite Intimation of Disapproval... you shall terminate this letter of allotment and claim refund from us... with interest... at the rate of 15% p.a..." So what is your entitlement? Only refund with 15% interest, nothing else.
4) Clause 1 says, "You have expressed your desire to acquire from us the said flat..." Please note, Mr Investor, YOU expressed YOUR desire, but your desire is not binding on Bhagtani. In this entire allotment letter, nowhere is it said that the said flat is allotted to you. To the contrary, the letter says repeatedly that the flat is NOT allotted to you.
5) The subject line says, "Provisional Allotment of Flat no. ___". Provisional, means that it is a makeshift substitute for an allotment letter. It is not actually an allotment letter for the flat, only a substitute.
6) According to this particular Allotment Letter, you, the INVESTOR EXPRESSED HIS DESIRE to buy a particular flat by paying the booking amount and service tax amount -- Rs 20.97 lakh -- but the "developer" (not "seller") BHAGTANI REPEATEDLY AND EMPHATICALLY DENIED HIS REQUEST for the said flat until such time that all the conditions mentioned in the letter are fulfilled. The only thing that Bhagtani confirmed from his side is refund of your money with 15% interest upon cancellation.
DID YOU, THE INVESTOR, ACCEPT THESE CONDITIONS? YES, YOU DID! You signed at the bottom of the allotment letter. You accepted that you have no entitlement to the flat, and you accepted the offer of 15% interest that was made by the developer.
But there is a catch: the Allotment letter said, "in the event we do not obtain the requisite Intimation of Disapproval... you shall terminate this letter of allotment and claim refund from us..." The catch is that Bhagtani has never admitted that he was unable to obtain the IOD, even though everybody knows he is unable. You are compelled to terminate the letter of allotment by signing a cancellation deed format that says, "Due to unavoidable circumstances, I wish to cancel the booking of the above flat". This format puts words in your mouth. You, the investor, are compelled to accept the onus for the cancellation; you are not relating the cancellation to Bhagtani's inability to get the IOD.
In the end, of course, Bhagtani doesn't refund your money with 15% interest. He never does, never mind what the papers say. That is because he never intended to refund your amount in the first place. This is exactly the finale of typical money circulation schemes, where the intention is to collect a large amount of money, divert it into various channels and disappear. What you are suffering from is the typical anticlimax of a get-rich scheme participant.
Crime & Punishment
PCMC Act bans get-rich-quick schemes, and awards a minimum of one year of imprisonment for such schemes. The maximum imprisonment is three years. Section 3 of the Act says: "3. Banning of prize chit and money circulation schemes or enrollment as members or participation therein. No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme." Section 4 of the Act says, "4. Penalty for contravening the provisions of section 3. Whoever contravenes the provisions of section 3 shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both: Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgment of the court, the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees."
Even participating in such a scheme is a punishable offence. But, you, Mr Investor, don't have to worry because you were clearly cheated and tricked into participating in this get-rich scheme disguised as the Allotment Letter of a flat. Don't worry, you are the complainant and the victim, and not the perpetrator of this crime.
The FIR against Bhagtani should therefore cite sections 2, 3 and 4 of the PCMC Act, besides the usual IPC sections connected with cheating, such as section 420. For such an FIR to be registered, you should file a police complaint that clearly points out the above mentioned fraudulent aspects of the allotment letter. If you want to achieve different results, you can't keep doing the same things!
ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao
9821588114
krish.kkphoto@gmail.com
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Thank you for bringing this perspective Krish. Given that many buyers are planning individual FIRs in their local police station, this will guide them
ReplyDeleteExcellent insights as usual
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