Karnataka housing cooperative society implicated in Rs 316-crore scam

A housing cooperative society claiming to represent postal and telecom employees has collected deposits from thousands of site aspirants and left them in the lurch.

The Karnataka Postal and Telecom Employees Housing Cooperative Society has collected deposits from 3,391 members since 2007 when the land it had acquired was enough only to carve out 1,438 sites. And it hasn’t allotted those sites either.

The society had announced layouts in Nelamangala, Varthur and Devanahalli. It is now implicated in a scam whose extent is estimated at Rs 316 crore.

Also Read | RR Nagar MLA Munirathna, 3 others booked for 'illegal stone mining'

A staggering 92 per cent of the society comprised of associate members, when a 15 per cent cap on such memberships was in force prior to September 2014. Associate members, unlike full-fledged members, can’t vote and are not invited to the annual general body meetings. Possibly aware of the scam, a majority of its 799 full-fledged members did not invest in the sites, data provided by the audit report shows.

Applicants raised complaints of large-scale irregularities in 2021, and the Registrar of Cooperative Societies (RCS) conducted four levels of inquiry. All four reports flagged glaring lapses, with one of them suggesting criminal action, and another recommending dissolution of the board and barring current directors from contesting elections for five years.

The latest investigation, conducted under Section 29(C) of the Karnataka Cooperative Societies Act of 1959 and concluded in February 2023, found at least 10 lapses. This, was after the society was allowed two years to take corrective measures.

The society allegedly bypassed the tendering process and roped in four developers to form seven layouts. It did not sign an agreement at the sub-registrar’s office. The office-bearers went ahead and released funds to the developers without taking any collateral from them.

The lapses pile up: the society paid no heed to the rule that it had to engage a third-party agency to monitor the status and quality of work. “The board failed to protect the interest of depositors,” a report states, holding the developers equally responsible for delaying the project.

The investigation also found a violation of ‘seniority order’ as the society allotted some sites selectively. In one instance, it allotted a site to a woman just six months after she made the deposit in 2018. There were at least six instances when the sites allotted were way bigger than the dimensions paid for. In two cases, members of the same family were allotted more than one site.

The sale of four acres and 37 guntas belonging to the society in Nelamangala is suspect. While registering the sale deed, the society had claimed it was getting five acres and 18 guntas in Dasanapura in exchange. Audit and investigation reports show the society got no land in exchange.

No response

Jayaramaiah, president of the society, did not pick calls or respond to text messages. He was a former employee with BSNL. Capt Dr K Rajendra, the registrar of cooperative societies, said the matter was sub-judice. “You cannot ask about it,” he said.

Some who invested in the project are distraught. “At least four levels of investigations have found serious lapses. An order was passed to dissolve the board in February, but there has been no action. To our disbelief, our request to be impleaded in the case being heard by the RCS, who is a quasi-judicial authority, was rejected although we are the most affected,” a senior citizen said. Some who had deposited their hard-earned money with the society have passed away, he lamented.