In a rare move, the Registrar of Cooperative Societies (RCS) has ousted 11 directors of the Health and Family Welfare Department Employees’ House Building Cooperative Society in connection with a Rs 180-crore land scam.
The action — which comes as a huge relief to at least 2,781 affected investors — was taken after the directors were found running the cooperative society as their “private business”.
An order dated June 3 stated that the RCS has also disqualified the directors, including society’s chairman Shankar Naik under Section 29-A of the Karnataka Cooperative Societies (KCS), Act 1959. Before issuing the order, the department conducted a thorough probe where it found at least 25 serious administrative lapses.
The directors are barred from contesting elections to the cooperative society for five years. For the smooth functioning of the Board, the government has posted Manjunath Singh, Deputy Registrar of Mysore, as the special officer of the cooperative society for a tenure of six months. He is expected to fix the lapses as it comes at the cost of site deposits collected from members and associate members.
Lapses
When the RCS launched the investigation under Section 64 of the KCS Act, it found the cooperative society passing orders in favour of the builder who was roped in to develop three residential layouts, one in Mysuru and two in Bengaluru.
More importantly, the land bought to develop the sites were registered in the builder’s name, although the society paid around Rs 180 crore by collecting deposits from the members. The report also sought criminal action against the Board.
Its findings reveal that the society signed the first agreement with M&M Bangalore, a private firm with not-so-impressive records, in June 2011 to develop sites in Mysuru.
In June 2012, the society entered into a second agreement with the same firm to develop layouts at Doddaballapur Road and Devanahalli. This decision raised concerns among the investors who questioned why the society chose to work with a firm that had not delivered its first project.
The revised agreements, approved without the Board’s consultation, could also land some directors in trouble due to changes made in the pricing of the sites. The developer also faces accusations of mortgaging or signing joint development agreements on properties that the society had acquired for forming sites.
Manjunath Singh assured DH that he would resolve the discrepancies and ensure the sites are delivered to investors at the earliest.