PNB freezes bank account of fake Housing Societies in Vidya-Vihar West

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By Rohit Sharma


Recently, Punjab National Bank (PNB) has blocked the bank account of Avanti CHS Ltd (proposed) and two other buildings in the residential complex, Neelkanth Kingdom located in Vidya-Vihar (West), for flouting KYC requirements and illegally opening the bank account, said the sources.

On February 2019, PNB had sent a letter to the letter to society operating in the name of proposed housing society stating that, “We have opened your society account on the basis of resolution and with consideration of other formalities will be provided shortly…. for banks to open society account its registration is must, an opening of non registered society violates the guidelines of RBI.” It further added that account will remain freezed until the accounts become fully compliant.

The complex Neelkanth Kingdom is spread over more than 25 acres. Phase 1 of the project comprises of 7 (seven) residential buildings, Awadh, Magadh, Avanti, Takshashila, Nalanda, Mithila and Kalinga.

This was not the first time that the buildings’ bank accounts have been blocked. In 2018, Cosmos Co-operative Bank had closed the bank accounts of these buildings when investigations were initiated by the Reserve Bank of India (RBI) on the complaint received by it with respect to the irregularities in bank account opening process. The RBI in its written investigation mentioned that “Action will be taken against it and if necessary will take action against bank too.”

Stuti Galiya, Solicitor & Advocate familiar with the case said, “As of date, there is no cooperative housing society which is registered with the Dy. Registrar’s office nor any application for such formation has been made for any of the 7 (seven) buildings of the residential complex. Few members have flouted the rules for opening bank accounts with PNB and earlier with Cosmos Bank. She claimed that this is a clear violation of Section 145 of Maharashtra Cooperative Societies Act, 1960 (MCS Act) which says that no person other than a registered cooperative housing society can use the words cooperative.”

When there is no such registered housing society in place, it is strange that these associations have still managed to illegally open the bank account in the name of ‘cooperative housing society’. She explained that there is a procedure which needs to be followed under the MCS Act for opening a bank account in the name of the (proposed) cooperative housing society. A bank account in the name of (proposed) cooperative housing society can only be opened based on the written instructions of the jurisdictional Dy. Registrar’s office and on the basis of the name reservation approval specifically granted by the jurisdictional Dy. Registrar. The banks should have not in the first place opened these accounts, without the mandatory KYC documents.

She further added, few residents of all the 7 (seven) buildings of the residential complex have ganged up and have been misrepresenting themselves in the name of (proposed) cooperative housing society and illegally extorting money from flat owners, by creating social pressure for residents. Huge sums of money have been collected from flat owners by these residents’ group, since past more than 5 years. These amounts have been collected by the residents’ groups from the flat owners on the pretext of betterment and beautification of the residential complex.

Some of the buildings of this complex have been threatening to discontinue housekeeping and other essential services to flat owners who do not pay. This is despite the fact that they have no such right to collect such funds, specifically considering that the developer/builder has till date been maintaining the entire residential complex (including housekeeping services) from the corpus funds collected from residents and other accrued funds for which the builder has been from time to time raising bills to all the flat owners, Galiya added.

She informed that “These residents’ groups are flouting relevant income tax laws as well. No taxes are being paid nor returns are being filed by any of these residents’ groups. Further, none of them has even obtained mandatory permission from the Charity Commissioner’s office, as required under the Maharashtra Public Trust Act, 1950, before such funds are collected by such unregistered associations. By violating the mandatory laws, the people behind this have made themselves liable to civil as well as criminal sanctions under various laws”.

With the PNB freezing the bank account, the current committee of Avanti Building has resigned and called for an election on March 31.

Building committee members did not reply to the e-mail inquiry until it was updated on the website.

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One thought on “PNB freezes bank account of fake Housing Societies in Vidya-Vihar West

  1. Accounts of all these unregistered societies were operational for last 4 years with Cosmos Cooperative Bank Ghatkopar West Branch without having any mandatory KYC documents.
    It is a serious concern that when we as an individual are asked to resubmit our KYC documents on regular intervals, how such societies were never asked to submit KYC documents and accounts were operated by COsmos Cooperative Bank flouting all KYC norms without any accountability on their part!
    Also it seems RBI has no such scrutiny or is not so keen on looking in such matter as a detailed complaint was submitted to RBI officials long ago and they failed to take immediate action, which helped these account holders to withdraw all cash and close bank accounts instead of getting these accounts freeze.
    If this is how cosmos bank operates, it is very easy for any person to create misleading identity and fool general public.

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