Orbit Corp had borrowed Rs 135 crore from the consortium of SBI and Union Bank of India by creating a charge on the project in their favour.
In a relief of sorts for flat buyers in stalled Orbit projects, the Bombay High Court on Monday appointed senior advocate Shiraz Rustomjee to represent aggrieved buyers of flats and commercial properties and tenants in the company’s meeting of creditors, when it is called. Justice SJ Kathawalla, who has been hearing the high-profile case filed by flat-purchasers of the stuck Orbit Terraces project passed the order appointing Rustomjee after all parties, including the banks, gave a no-objection.
While the move was welcomed by many, all claims cases related to Orbit Corp, filed before the HC, are likely to come to a standstill if the National Company Law Tribunal (NCLT) admits insolvency proceedings filed by State Bank of India against Orbit.
Orbit Corp had borrowed Rs 135 crore from the consortium of SBI and Union Bank of India by creating a charge on the project in their favour. It had re-paid around Rs 76 crore before it stopped work on the project in 2014.
The creditors’ meet, for which Rustomjee has been appointed, will happen only after the NCLT admits the case and appoints an Insolvency Resolution Professional (IRP). The IRP will then call for a Creditors’ meeting. Once an IRP is appointed, the board of the concerned company is suspended. The IRP is given a period of 180 days, which is extendable up to 270 days, to turn the company around. If the IRP is unable to manage this within the given time frame, the company goes into liquidation – meaning its assets would be sold off to pay of its debts – automatically.
But the appointment of IRP by the NCLT will automatically bring to a halt all claims filed against Orbit before all courts, even as a few purchasers were pooling in money and hoping to reach a resolution.
In the case of Orbit Terraces, the aggrieved flat buyers had initially offered Rs 45 crore to the banks and later increased the amount to Rs 60 crore by way of final settlement for the balance debt on Orbit.
SBI had, last month, informed the HC that they had filed Insolvency proceedings against Orbit at the NCLT. The flat-purchasers in the Orbit Terraces project, represented by Advocate Vivek Shiralkar, have filed an intervention application in the NCLT in those proceedings.
Orbit Corporation case; bankruptcy code challenged
The legal challenge comes over three months after State Bank of India filed insolvency proceedings with the National Company Law Tribunal (NCLT) against the troubled Orbit Corporation. The company had borrowed Rs 135 crore from SBI and Union Bank of India, but managed to repay only Rs 76 crore.
MUMBAI: The Economic Offenses Wing of Mumbai police are investigating one more case of Rs 52 crore alleged cheating by realty developer Orbit Corporation and its directors Pujit Aggarwal and Ravikiran Aggarwal. The matter is related to an FIR filed by Capri Global Advisory Services, a promoter group company of financial institution Capri Global Capital Ltd
An officer from EOW confirmed the ongoing investigation based on the FIR that was filed in April 2016.
\"We are investigating the matter right now and won\'t be able to disclose anything further at this time,\" Mumbai Police EOW, Deputy Commissioner of Police, Jayakumar told ET.
On Thursday, Mumbai police has arrested Pujit Aggarwal, MD & CEO of realty developer Orbit Corporation under charges of cheating and violation of Maharashtra Ownership Flat Act, 1963. The court sent him to police custody till September 12. The arrest was also made following the FIR filed by Capri Global Capital Ltd.
According to the FIR, Capri Global Advisory Services had invested over Rs 52 crores in Orbit\'s two projects Orbit Terraces and Orbit Haven. After these projects failed to take off, Aggarwals requested Capri to convert the transactions into debt and mortgaged a property claiming to be theirs which later turned out to be occupied by someone else and a commercial premise that turned out to be parking space.
\"When they failed to repay the debt, we deposited the cheques that we had taken as security. When the cheques bounced, we filed an RTI and found out that the bank account was already frozen by sales tax department. They had issued post-dated cheques having full knowledge about the account being frozen. They have caused a wrongful loss to the tune of Rs. 100.12 crores to us including principal and interest till April 2016,\" said a spokesman of Capri Global Advisory.
According to the FIR, without requisite permissions Orbit claimed to have development rights and required FSI to carry out their projects Orbit Terraces and Orbit Haven.
Until 2008, Orbit Corporation was a leading builder in Mumbai with some prime south Mumbai properties under redevelopment, including a few bungalows. However, post the global financial crisis of 2008, the developer found it difficult to take most of its projects forward and defaulted on loan repayments.
ET had reported in June 2015 that following a default on loan repayment, LIC Housing Finance had put part of Orbit Corporation\'s several projects including Orbit Residency on block to recover its dues. LIC Housing Finance had taken possession of the property following the developer defaulting on loans worth 96 crore out of total dues of Rs 250 crore.
The lender had invited bids under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest price of Rs 125 crore for the project.
LIC Housing Finance had marked nearly 26,000 sq ft at Orbit Corporation\'s Lower Parel project Orbit Grand, 1.70 lakh sq ft at project Orbit Residency Park in Andheri and 45,600 sq ft space at Orbit Midtown at Lower Parel for its dues. The company had secured loans from LIC Housing Finance through personal guarantees executed by its directors Ravikiran Aggarwal and Pujit Aggarwal.
MUMBAI: A magistrate court in Mumbai on Thursday rejected the bail application of realty developer Orbit Corporation’s MD & CEO Pujit Aggarwal in two cases of alleged fraud filed by financial institution Capri Global Capital Ltd and its promoter group company, Capri Global Advisory Services.
Aggarwal has been in custody since he was arrested by the Mumbai police in September 2016 following an FIR filed by Capri Global Capital Ltd at the Azad Maidan police station.
In 2008, the company had bought three apartments at the builder’s project, Orbit Residency Park, in Andheri, Mumbai, for Rs 2.55 crore. According to the FIR, the builder never deposited the amount into an escrow account as per the developer\'s agreement with the lender, LIC Housing Finance.
The Economic Offences Wing of the Mumbai police was already investigating a separate case of alleged cheating against the builder and its promoters filed in April 2016 by Capri Global Advisory Services, which loaned Rs 52 crore to the builder for its two projects, Orbit Terraces and Orbit Haven. After the two projects failed to take off, Aggarwals requested Capri to convert the transactions into debt and mortgaged a property claiming to be theirs which later turned out to be occupied by someone else and a commercial premise that turned out to be parking spaces.
The Mumbai police had been seeking the extension of Aggarwal’s custody in order to probe the money trail. The developer had raised money from LIC Housing Finance and also from several home buyers for the Andheri project.
The builder had raised Rs 250 crore from LIC Housing Finance for the project.
ET had reported in June 2015 that following a default on loan repayment, LIC Housing Finance had put part of Orbit Corporation several projects including Orbit Residency on block to recover its dues. The lender had taken possession of the property following the developer defaulting on loans worth 96 crore.
The builder had also sold 82 apartments in Orbit Residency without informing home buyers about LIC Housing’s charge on the project. At least 30 of the 82 home buyers have also filed complaints against the builder.
Until 2008, Orbit Corporation was a leading builder in Mumbai with several prime south Mumbai properties under redevelopment, including a few bungalows. However, post the global financial crisis of 2008, the developer found it difficult to take most of its projects forward and defaulted on loan repayments.
In June 2015, following a default on loan repayment, LIC Housing Finance had put part of Orbit Corporation\'s several projects including Orbit Residency on block to recover its dues. LIC Housing Finance had taken possession of the property following the developer defaulting on loans worth 96 crore out of total dues of Rs 250 crore. The lender had invited bids under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest price of Rs 125 crore for the project.
Orbit developers arrest highlights the plight of home buyers in maximum city. Buyers of the Orbit Corporation under different projects are filing complaints with police and consumer forum demanding their homes.
Pujit Aggrawal, who was arrested in connection with the cheating case, has been remanded to police custody till September 16 by Magistrate court on Monday. Aggarwal, 44, the CEO and the managing director of the construction firm Orbit Construction Limited, is accused of selling three apartments in Orbit Residency Park in Saki Naka to Capri Global Capital Limited for Rs 2.53 crore.
INVESTORS KEPT IN THE DARK
According to the police complaint, Aggarwal had not disclosed the arrangement the firm had with LIC Housing Finance Limited(HFL) to the individuals who invested in homes in the project. LIC HFL subsequently took symbolic possession of the building, while the home buyers are still waiting for their homes.
LIC HFL had put part of Orbit Corporation\'s several projects including Orbit Residency on block to recover its dues. LIC Housing Finance had taken possession of the property following the developer defaulting on loans worth Rs 96 crore out of total dues of Rs 250 crore.
A compliant was registered at Azad Maidan police station against the Aggarwals, under sections 420 and 34 of the IPC. Subsequently, as investigations proceeded, sections 406, 120 (B) of the IPC and sections 3, 4, 5 of MOFA were added to the case. Capri Global is the complainant in the case.
POLICE TO TRACE DOCUMENTS
During the previous hearing prosecution told the court that Pujit failed to respond despite the police\'s repeated attempts to reach him, after which they arrested him. Police wants to get the documents and find the money on the matter.
Pujit\'s lawyer on Monday told court that his client is suffering from slipped disk and needs a pillow under his back and prescribed medicine which the court allowed.
On Monday, investors of Aggarwals Saki Naka project flanked the court and met the investigating officials. They have claimed that around 230 home buyers are in limbo because of Aggarwal\'s financial mismanagement.
Arrested builder Pujit Aggarwal has claimed that repeated changes in building plans led to IDBI Bank lodging a case of financial fraud against him, police said.
Mr. Aggarwal was first arrested by the Azad Maidan police for allegedly cheating investors in his Sakinaka project, Orbit Residency Park, of Rs. 2.5 crore. He was later arrested by the Economic Offences Wing (EOW) for alleged financial fraud worth Rs. 52 crore, and again by the EOW based on a complaint filed by the retail recovery division of IDBI bank.
In its complaint, IDBI Bank has alleged that in 2005, deceased stockbroker Amitabh Parekh took a loan of Rs. 3 crore from the bank to buy three flats in Orbit Heights, Mr. Aggarwal’s project in Nana Chowk. After Parekh’s demise, IDBI Bank visited the three flats in question and it to be occupied by three individuals not named by Parekh while taking the loan, and approached the police.
“During interrogation, Mr. Aggarwal said from the time Parekh booked the three flats till the project’s completion, there were repeated changes in the building plans due to various reasons, and he had to reassign flats to several buyers. He has further claimed that it was due to this that the flats booked by Parekh were later allotted to other parties. We will be making inquiries with residents of Orbit Heights to find out if such changes in allotments actually happened,\" said an EOW officer.
The EOW is also trying to locate R. Chatterjee, a former Orbit Corporation employee, who represented Orbit on behalf of Mr. Aggarwal when Parekh obtained the loan from IDBI. “Mr. Chatterjee quit his job several years ago and we are trying to trace him, as he has also been named as an accused in the FIR. Since all matters related to Parekh’s loan were handled by him, his questioning is important for the case,” another officer said.
Meanwhile, inquiries have revealed that in 2015, Aggarwal repaid the outstanding loan amount along with interest to IDBI Bank, and also paid Parekh’s wife some money in lieu of the flats booked by her husband. The EOW is investigating this, officers said. Mr. Aggarwal has been remanded in police custody till October 18.
MUMBAI: The economic offences wing of the city police, probing cheating cases against developer Pujit Aggarwal, has filed an application before a court to take him in its custody in a Rs 2.5 crore cheating case.
According to a complaint lodged by Taro Vazirani, 73, Aggarwal, managing director of Orbit Constructions, lured him into investing Rs 2.5 crore in their project, The Angel-2 at Gamdevi, promising him 15% interest. However, the builder’s cheques to repay the money bounced. Later Aggarwal allegedly promised to give Vazirani, who has shipping business, a flat on the 52nd floor in his Lower Parel project. However, the project had permission only up to 20 floors.
Vazirani, a Peddar Road resident, lodged an FIR with Gamdevi police on September 19 against Aggarwal and two others—Surendra Yadav and Deepak Sanghvi. “Aggarwal paid Rs 76 lakh to the complainant and issued cheques too. However, the cheques bounced due to insufficient funds. Later, Aggarwal offered him a flat on the 52nd floor in his project, Orbit Terrace. Upon inquiries, Vazirani learnt that Aggarwal had permission for 20 storeys only,” said a police source.
Sources said Aggarwal issued several post-dated cheques to the complainant to settle the matter. The complainant had not got his money back till the time he filed FIR. “We have filed an application before the court seeking Aggarwal’s cusotody. He is currently in EOW’s custody in another cheating case. Once his custody is over, we are hoping to take him in our custody and arrest him in this case,” said the officer.The EOW has registered four cases against Aggarwal and he is being arrested in all the cases one by one. He was first arrested by Azad Maidan police in a Rs 2.53 crore cheating case last month.
MUMBAI: Bombay high court on Tuesday summoned Ravikiran Aggarwal, father of Orbit Corp chairman Pujit Aggarwal, in a dispute between the builder and home buyers who have alleged gross delay in getting possession of their duplex flats. They had booked flats in a Nepean Sea Road project of the builder 8 years ago.
Ravikiran, whole-time director at Orbit, was summoned to explain his stance in an affidavit on security appointed at the site of the 31-storey luxury building, Orbit Haven. Buyers had dragged the builder to court to secure possession as construction was on hold and a bank said the flats had been mortgaged to it. The court was looking into the aspect of protecting the building and the premises as buyers and the bank apprehended that vandals might enter and cause damage. Pujit is still in judicial custody after his arrest by the economic offences wing (EOW) of Mumbai police last year in an alleged cheating case.
Justice S J Kathawalla asked Ravikiran how many security guards were at the site. Perhaps two, he replied, along with “support staff’’ meant to protect expensive machinery, including unboxed elevators, which cost over Rs 10 crore. His affidavit had said there were four security guards. Ravikiran said the guards were placed by an agency which owed him for their success and added that he had no money to pay them full time. “So they work for you for free, without uniform too?” asked the judge, questioning him over the discrepancy in his affidavit, which the court had directed him to file on Monday. Ravikiran said he was “not happy” with the affidavit, which his lawyer Veenu Khatri had tendered, as it was made in a hurry. He said “sometimes there are two or four guards”.
One of the buyers, in a suit filed through advocate Satyen Vaishnav, said she had booked two flats in 2009. The flats cost Rs 12.5 crore, of which she has already paid over Rs 9 crore. However, her counsel Pravin Samdani said no agreement has been registered under Maharashtra Ownership of Flats Act, yet. He said that the bank and the builder have allegedly colluded over the loan and questioned its use. “Moneys paid by buyers were used for construction,’’ he said and sought appointment of a court receiver to protect their rights.
But appearing for the bank, counsel Sharan Jagtiani said only two flat sales were registered and other buyers had no valid rights as owners yet. He said the bank would install CCTVs, appoint proper security and may be permitted to take symbolic possession of the property. The court was inclined to such submission after checking with Ravikiran to make sure that all construction permissions were in place. Samdani said the building has the permissions.