Pre-launch offer fraud- How Bharathi Builders cheated buyers with discounted deals

Hyderabad: Ch Diwakar Babu (name changed), a resident of Alwal in Secunderabad was one among the 350 investors deceived by Bharathi Builders in the name of a pre-launch offer of residential apartments ‘Bharathi Lake View’ in Kompally, Medchal-Malkajgiri district.

On May 18, the Cyber Economic Offences Wing (EOW) arrested Bharathi Builders chairman Dupati Nagaraju, managing director Mulpury Shivarama Krishna and chief executive officer Thoddakula Narasimha Rao aka Ponnari for duping 350 investors to the tune of Rs 60 crore of constructing residential apartments in Kompally.

Disclosing his plight to the NewsMeter, Diwakar said, “Upon knowing information from my relative, I invested Rs 12 lakhs as a down payment in the Bharathi Builders housing project in Kompally in December 2020. I paid 25 per cent of the total flat cost to the builder for 1,650 sq ft (a triple bedroom flat) Rs 2,800 per sqft. Bharathi Builders had promised to hand over the flat to all the customers in December 2022. If they fail to hand over the flat by December 2022, the builder even assured all the customers to pay rent from January 2023.

However, so far, the builder has not paid any amount to Diwakar. When questioned about it, the builder gathered the customers on several occasions and cited his reasons for the completion of the project but ended up taking no action to compensate the customers.

“Me and my wife dreamed of owning a house and invested Rs 12 lakhs as a down payment to the Bharati Builders. However, all our dreams were shattered. With no option left, I knocked on the doors of the EOW for justice,” he said. Soon after, 10 more victims of the Bharathi Builders pre-launch offer made a beeline to the EOW in Cyberabad on Monday, seeking action against the people responsible.

What is a pre-launch offer?

In a pre-launch offer, customers who wish to purchase a home project are granted flats at the lowest cost in comparison with other builders. The builders simply take the money from the consumer to cover the upfront costs associated with getting permissions, NOCs and other necessary approvals.

However, the project in question was delayed as a result of the builders taking longer than expected to pay the authorities and obtain NOCs and other approvals. The builder adjusts costs during the pre-launch phase when it reaches its ideal duration of 12 to 15 months. However, the buyer is psychologically tricked into thinking that he is fortunate to reserve a unit at a discounted pre-launch rate.

Speaking to NewsMeter, EOW Cyberabad deputy commissioner of police (DCP) K Prasad said that builders introduce pre-launch offers to create hype among the customers around their respective residential projects.

Although these projects are conceptualised, no governmental permits have been granted yet. These projects are therefore referred to as pre-launch projects because a formal launch occurs later, following the completion of all necessary clearances and RERA registration, he said.

How are pre-launch offers marketed?

The DCP said that under-construction projects are typically between 30 and 70 per cent completed, with the developer having sold 20 to 30 per cent of the project.

It’s a safer investment at this point because most bank approvals are in place and most home loans are available. Explaining the modus operandi of the builders, the DCP said that initially, the builders publish classifieds in the newspapers, along with that they also circulate brochures and pamphlets and even hire telecallers to promote their ventures.

In some cases, a few builders also set up hoardings at public gathering places and even hire sub-agents to market the best of their residential projects.

How Bharathi Builders attracted customers

Regarding Bharati Builders fraud, Prasad said that Dupati Nagaraju and Mulpury Shivarama started a construction firm in 2021 in the name of Bharathi Builders and set up an office in Madhapur, Hyderabad.

They acquired 6 acres and 23 guntas of land in Kompally and planned to construct residential apartments in the name of Bharathi Lake View apartments. The builders offered flats to the public at Rs 3,200 per square foot in colourful brochures and conducted meetings to attract deposits from various purchasers.

However, even after collecting the deposits, they did not construct any building, failed to deliver the flats to the purchasers as promised and sold the entire land for Rs 100 crores to another party.

The DCP said that a case has been registered under sections 406, 420 IPC and Section 5 of the Telangana Protection of Depositors of Financial Establishments Act-1999 of PS EOW, Cyberabad.

“I appeal to the public not to invest/deposit any money in any such pre-launch offers and to report any suspicious investment schemes/real estate transactions or activities to the authorities. The customer should verify the projects’ RERA registration on its website, check other projects by the developer, and get a legal opinion on land-related information. Apart from that, the customer should also verify the title documents, make payments through cheques and ask for receipts. The department is committed to prosecuting the perpetrators and ensuring justice for the victims,” Prasad said.

Sahiti Infrastructure victims seeks justice

In January 2024, victims of Sahithi Infrastructure Ventures, as they call themselves, approached the Hyderabad police against the builders for allegedly cheating them. As per the latest details of the investigation, out of the nine projects handled by the company, including its first one Sarvani Elite, approximately Rs 1,164 crores has been collected from the customers. In the complaint, the group alleged that the builder had misled them in many ways.

It is alleged that from June 2019 to 2022 the builder collected more than Rs 504 crores and failed to complete the project, thereby cheating the investors.

Based on a complaint filed by one M Yashwanth Kumar and (240) others, a case under sections 406, 420 r/w 34 IPC was registered against Boodati Laxminarayana, MD Sahiti Infratech Ventures India Pvt. Ltd. A total of 50 cases have been registered against Sahiti Infratech Ventures India Private Limited and its directors.

As per case details, Boodati Laxminarayana (A-1), other directors, their authorised signatories and the marketing team (A-2 to A-22) by colluding with each other have induced the complainant and other victims, which consists of nearly 1,752 members, and cheated in the name of constructing high-rise apartments with 32 floors in 10 towers in their project Sahiti Sarvani Elite spread over 23 acres in Ameenpur Village, Ameenpur Mandal in Sanga Reddy district.

It is pertinent to mention here that the accused launched the prelaunch offer much before buying the land and obtaining the requisite permissions from HMDA, GHMC etc.

He started collecting deposits from the customers in June 2019, whereas he bought land of about 10 acres out of 23 acres during 2019-20 by using these deposits and the remaining 13 acres have been taken on agreement of sale for nine acres and unregistered sale agreement for four acres.

The builder further submitted that he applied for HMDA permission on May 16 and June 13, 2022, and subsequently, the HMDA gave him permission on August 1, 2022.

After collecting the above-mentioned Rs 504 crores, he started the following projects by investing the money of the above victims and collected money from other projects also. But he hasn’t completed them either.

Here is a list of the projects, the number of customers and the amount collected from them:

1. Sahiti’s Swadha Commercial in Nanakramguda: Rs 65 crores (approx.) from 69 customers

2. Shista Abode in Kompally, Medchal: Rs 79 crores (approx.) from 248 customers

3. Sahiti Green in Kompally which was cancelled later: Rs 40 crores (approx.) from 153 customers

4. Sahiti’s Sitara Commercial Rolling Hills in Gachibowli: Rs 135 crores (approx.) from 269 customers

5. Sahiti’s Maheto Centro in Banjara Hills: Rs 22 crores (approx.) from 44 customers

6. Anand Fortune in Nizampet: Rs 45.50 crores (approx.) from 120 customers

7. Sahiti Kruthi Blossom in Gachibowli: Rs 16 crores (approx.) from 25 customers

8. Sahiti Sudeeksha in Mokila: Rs 22 crores (approx.) from 30 customers

9. Ruby con Sahiti in Bachipally: Rs 6.9 crores (approx.) from 43 customers