VARIOUS KIND OF
FRAUD SCENARIOS AND HOW TO OVERCOME THEM
Data on frauds
in the Banking System compiled by Reserve Bank of India detected during the
Financial year period 2009-2010 to 2012-2013 mentions a cumulative loss of a
sum of Rs.29,910 Crores based on the Information furnished by various Banks.
Out of this amount, a total of Rs.24,828 Crores pertains to 29653 Cases of
frauds detected in India’s Nationalised Banks during the period 2009 to 2013.
State
run Banks had been soft targets for frauds. Unfortunately the Officer in a
Nationalised Bank handling title deed documents are not given specialized
training on how to Identify Original Documents and to compare the same with a
Certified Copy of Document and also for distinguishing the Original Documents
from Fake Documents resulting in easy commitment of frauds by unscrupulous
elements intending to cheat the Bank. A vast majority of them are also ignorant
about the various existing online mechanisms available in many States to cross
check the authenticity of the genuineness of loan borrower and his/her title to
the Property.
Some of the
fraud scenarios and how to overcome them are suggested hereunder:
Scenario I – One Original and many fake
duplicate documents
In
this scenario, there would be one Original Document which would have been
registered. While applying Encumbrance Certificate from Sub Registrar Office, the
name of the owner and the sale deed document details would be reflected (Since
the Original would have been registered). However many fake duplicate copies of
the Said Original document would have been created so as to easily avail loan
from many Banks over the same Property. This kind of fraud practice had been
predominantly followed by many Criminal and unscrupulous elements who had
availed loans from many Banks over the same property. In many such cases, they
would have made use of Sec 41 of Stamp Act which permits payment of stamp
duties by Demand Draft (ie in case if the Stamp duty is say Rs.100000, in the
Original Document, stamp papers would have been purchased only for Rs.5000/-
and DD for remaining Rs.95000/- would have been taken). The Criminal
unscrupulous elements fabricated many duplicate sale deeds by just buying lower
stamp duty papers and forging the Section 41 seal in the reverse side of the
forged documents.
How to overcome fraud Scenario I
The
Certified Copy of the last title deed document should be obtained and kept on
record. This should tally with the Original title deed document in all
respects. Such kind of frauds can be detected only when Certified Copy of
Documents are obtained from the records of the Sub Registrar Office and the
same should be compared with the Original document and both should tally in all
respects. The genuineness of any
document can be ascertained only when Certified Copy of document obtained from
Sub Registrar Office is compared with the Original Document (Detailed Procedure
for comparing Certified Copy of Sale Deed Document obtained from Sub Registrar
Office with Original Sale Deed had been mentioned in Page number of this book) Likewise the
Original Receipts issued by Sub Registrar Offices for payment of stamp duty
under Section 41 should be obtained and kept along with the Original title deed
documents.
Scenario II – Fabrication of revenue
records
In
this scenario, there would be no parent title deed documents to support the
ownership of an Individual except a land revenue record. The revenue record in
possession would be a fabricated one. These kind of frauds usually take place
over Government lands, temple lands etc.
How to overcome fraud Scenario II
The
revenue record should be cross verified online and in case if no online
facility is available, the same should be cross verified with the revenue
department authorities to ascertain the genuineness of the land revenue record
submitted.
Scenario III – Fabrication of death and
legal heirship records
In
this scenario, the `real owner’ would be alive. However fake death certificates
and legal heirship records would be created by fraudsters stating that the real
owner has passed away and that X is the legal heir. Based on this fake legal
heirship certificate, the Property would be sold by X to unintentional buyers
who will be duped. Usually in these kind of frauds, the Original Parent Documents
will not be available. Instead a Newspaper Advertisement in a lesser known
Newspaper with limited circulation would be made available for losing of the
Original Document
How to overcome
fraud Scenario III
One
has to be very careful in dealing with such kind of a scenario. Wherever
possible the Death Certificate should be cross verified online (Chennai
Corporation has facility for online cross checking Birth and Death Certificates
for the last 84 years ie from 01.01.1930). In case if the Death Certificate
could not be verified online, it should be verified from the records of the
concerned issuing authority office. Also in this case, the Legal Heirship
Certificate issued by the concerned authority (in many states, Tehsil offices)
should be cross verified to ascertain its genuineness. Also one has to ensure
that the below mentioned procedure is followed for losing of the Original Sale
Deed Document (or) Original Sale Deed Parent Document of same extent of land (not
larger extent)
a) Lodging
Police Complaint
b)
Obtaining
Non Traceable Certificate issued by Police
c)
Publication
of Newspaper Advertisement in 2 reputed Newspapers with decent readership base
(One in English and One in local vernacular language)
d)
Undertaking
Letter or Affidavit from the Present Owners stating that the Originals have
been lost (incl reasons) and that it has not been misused and that as and when
the original is traced, the same would be immediately handed over to the intending
Purchaser
Scenario IV –
Impersonation of `real owner’
In
this scenario, the fraudster would impersonate the actual owner by executing a fraudulent
general power of attorney (based on it,
the Power Agent would subsequently execute a sale deed in favour of
unsuspecting buyers) or by executing a fraudulent settlement deed impersonating
the actual owner. In these kinds of frauds, the fraudster will usually
fabricate the title deed document of the real owner (ie prepare a fake
document) or claim that Originals are lost.
How to overcome
fraud Scenario IV
These
kinds of frauds can be detected only when Certified Copy of relevant title deed
document are obtained from the records of the Sub Registrar Office and compared
with the Originals document in all respects. Always there will be certain clues
left behind by any criminals while creating a fabricated document like mismatch
of signature styles, seals etc. Moreover in case if the seller claims that the
Originals are lost, then the procedures listed above for losing of Original
documents should be followed. Also the intending buyers should insist on the
production of PAN CARD and Voter ID Card of the owner and the same should be
cross verified online (Steps for online verification of PAN Card and Voter ID
Card is mentioned under the heading “Procedure for Online Verification of
certain KYC requirements” in Page number of this book). Also in case if Power
of Attorney had been granted, it is also suggested that the owner (Principal)
may be personally approached in the address mentioned in the Power of Attorney
document to ascertain the genuineness of the Power of Attorney.
Scenario V –
Builder – Bank Borrower Nexus Fraud
These
kind of scenario are very rampant in most cities in India. In this kind of
fraud, the builder would have got approval for construction of say 10
Apartments. But he would have deliberately executed the Sale Deed for 20 Apartments
by showing the same Apartment as `A’ in one sale deed document and `1’ in
another sale deed document. Many of the Bank loan Borrowers would have been his
benamies.
How to overcome
fraud Scenario V
To
overcome this kind of a fraud, the Encumbrance Certificate for the entire
extent of land should be obtained. This will throw light whether the undivided
share of land being conveyed exceeds the total area of the land. The land area
sold under various Sale Deeds should be totaled and the same should be tallied
with the total land area. Also the sanctioned Approved Building Plan should be
obtained and the total number of Kitchens reflected in the drawings should be
ascertained (For each Apartment, only one kitchen is allowed) to know the total
permissible Apartments which can be constructed. This should be tallied with
the total numbers of Apartments already sold and Apartments which are yet to be
sold.
Scenario VI –
Ignorance of Bankers and Borrowers (ie Buyers) on certain basic rules leading
to easy exploitation by many Builders (Observed by the author of the Book in
his home state of Tamil Nadu)
The
normal permitted FSI (Floor Space Index) in Tamil Nadu for buildings is 1.5.
This means that for every 2400 Sq.ft of land area, up to 3600 Sq.ft of plinth
area of building can be constructed (Car parking area is separate) . The
Approved Building Plan drawings (with seal) will clearly reflect the extent of
permitted FSI for that Property.
However
I had observed that many Bankers and Borrowers are ignorant about this issue.
If a Builder is constructing say 1000 sq.ft of plinth area of an Apartment with
an FSI of say 1.4, then the proportionate Undivided Share of land (UDS) to be
conveyed shall be 1000/1.4 which is equal to 714 Sq.ft of UDS. However since
the buyers are not fully aware of this rule, many builders tend to flout the
extent of Undivided Share of land which should be conveyed by deliberately
reducing the quantum of extent of UDS conveyed to ridiculously low extent to as
low as 300 Sq.ft or 400 Sq.ft for a 1000 Sq.ft Apartment. Normally when low UDS
are offered, the builder would have deliberately constructed an Unauthorised
Apartment in the Said premises. Hence to give UDS for the unauthorized
Apartment, the other buyers are taken for a ride by deliberate reduction in
their UDS extent. Another reason which I have found out is that some builders
would have retained one or two Apartments in the constructed premises for their
own use and would have deliberately retained a very higher extent of UDS over
and above the permitted extent of UDS for the retained Apartment. This is
deliberately done to ensure that they get a higher price for sale of such
Apartments in future.
Shyam Sunder
Advocate, Chennai
09841136901
(Shyam Sunder - Author of Book titled `Property
registration, land records and Building Approval Procedures followed in Various
States in India- First of its kind Book being Published in India)
Books available in:
Flip
Kart (Online)
Land
Mark (in all major cities in India)
Chennai
– Sitaraman
& Co (044-28111516, 28117069), Higginbothams and Odessey
Sri Vidya Devi Publishers
(044-24936193/9841136901)
Coimbatore
–
Odessey (Brooksfield Mall)
Bangalore
– MPP
House (080 – 41136866, 22260706)
Hyderabad
–
Asia Law House (040 – 24742324)
Mumbai
– Students
Book Centre (Snow White Publishers – 022 – 22050510/22080668)
The Hindu – Habitat (Property Supplement) – 14th Dec,
2013 - Book Review
Economic Times – 4th Dec,
2013
Only a few states follow good property registration procedures:
G Shyam Sunder
G Shyam Sunder, a Chennai-based advocate, points out to the benefits of standardising procedures.
G Shyam Sunder, a Chennai-based advocate, points out to the benefits of standardising procedures.
This article can also
be accessed if you copy and paste the entire address below into your web
browser.
http://economictimes.indiatimes.com/markets/real-estate/news/only-a-few-states-follow-good-property-registration-procedures-g-shyam-sunder/articleshow/26851644.cms?intenttarget=no&mailtofriend=yes
http://economictimes.indiatimes.com/markets/real-estate/news/only-a-few-states-follow-good-property-registration-procedures-g-shyam-sunder/articleshow/26851644.cms?intenttarget=no&mailtofriend=yes
Times of India – 1st Dec, 2013
The New Indian Express – 21st Nov, 2013
Business Line – 23rd Nov, 2013
Nanayam Vikadan – 15th Dec, 2013 (leading Tamil
Financial Weekly)
Dinamalar – 19th Nov, 2013, 19th Dec, 2013
and 12th Jan, 2014 http://www.dinamalar.com//district_detail.asp?id=852526&dtnew=11/19/2013
