Massive FSI Scam Worth Thousands of Crores.
Unmesh Gujarathi
Sprouts Exclusive
In a shocking revelation, a former BJP MLA and builder, Parag Shah, has been implicated in a massive FSI (Floor Space Index) scam involving thousands of crores of rupees. Sprouts obtained the information through the Right to Information (RTI) Act. Senior journalist Unmesh Gujarathi presents this special report.
Parag Shah, a former BJP MLA and builder, has allegedly manipulated the system for his financial gain by creating a bogus association with his chosen tenants. This association was formed without informing the remaining tenants. Using this illegally formed association, Shah’s company reportedly executed a massive scam worth over ₹5000 crores, according to ‘Sprouts’ Special Investigation Team (SIT), which obtained the information through the RTI Act.
The FSI Scam Explained
Parag Shah and his company MAN Infraconstruction Limited (MICL) are in charge of redeveloping 14 buildings in the Naidu Colony, located in the Pantnagar area of Ghatkopar, Mumbai. The redevelopment project involves nearly 448 flats, originally built by MHADA. Shah, who is also a BJP candidate from the Ghatkopar East constituency, allegedly deceived the tenants in the process.
According to ‘Sprouts’, Shah created an association with only a select few tenants, disregarding the remaining ones. These select tenants were appointed as office bearers of the association. The society, named ‘Ghatkopar Avenue Aradhya 10’, was formed in their names, and the project was approved under the name of this bogus society. The society then applied to MHADA for FSI approval, and within a short time, a 3.0 FSI was granted to them. Shah’s company, however, gave only a 2.0 FSI to the tenants, pocketing the difference through corruption. The matter was reported to MHADA by disgruntled office bearers of the association, but no significant action has been taken so far, according to ‘Sprouts’.
The total area for the 448 flats in the society is considerable, and the value of the FSI fraud is pegged at over ₹650 crores. The FSI in the Pantnagar area is approximately ₹25 lakh per unit, meaning the total value of the scam is around ₹650 crores.
Residents’ Discontent with Builder Shah
The 14 buildings in question cover an area of around 13,000 square feet. Shah allegedly constructed only five towers for the original tenants, using just 2,000 square feet for them, while selling off the rest of the area to commercial developers. New residents were given an additional 10,000 square feet of amenities, including a Jain temple and a swimming pool, while the essential services for the original residents were crammed into the five towers. This has led to growing resentment among the original tenants, who now regularly voice their displeasure at Shah’s actions.
Fake Meetings and Deception
Shah is also accused of holding a fake meeting in July 2019, during the peak of the COVID-19 pandemic, when such gatherings were banned by the government. Official records show that a general meeting was held for forming the association, but in reality, no such meeting took place. This is a clear violation of legal norms, as such meetings were not only unauthorized but also illegal under the prevailing government restrictions at the time.
Shah’s Fraud of 14 Handpicked Office Bearers
Shah is further accused of selecting just 14 tenants as office bearers to represent the interests of the entire society, which includes 448 tenants. These selected representatives were later upset when they found out they were being used by Shah. They filed complaints with MHADA in October 2023, stating that Shah had taken their signatures on blank letterheads, later misusing them for fraudulent purposes. Despite sending multiple letters to MHADA, these tenants have not received any responses or action.
Rules Violated in Forming the Association
The 14 societies involved were supposed to conduct Special General Body Meetings (SGMs) where resolutions would be submitted with signatures from all office bearers. However, only the signatures of the president and secretary were present, and all the resolutions appear to have been copy-pasted. Furthermore, no such SGM was ever conducted, and the minutes of the meeting were fabricated. These false documents were then submitted to MHADA for approval, leading to the formation of the fraudulent association.
Also Read: Fraudster Adani’s Project Gets Additional 56 Acres of Land.
Demand for Action Against Builder Shah
Many of the development agreements for these societies were signed between 2009 and 2012, during which an FSI of 2.0 was agreed upon. However, after 2012, the societies that registered their agreements were allocated an FSI of 2.7. The total area involved in this scam was 11,517.37 square meters, which would have allowed for 23,034.74 square meters of construction. According to a 2012 circular issued by the Municipal Corporation of Greater Mumbai (MCGM), tenants were entitled to a 0.35 FSI for free, while builders were allowed to use the same FSI by paying premium charges. But Shah reportedly claimed this FSI for his benefit.
Exploiting Cluster Development for Profit
Instead of developing the plots individually, Shah allegedly changed the development plan to “cluster development,” a scheme that allowed him to receive an FSI of 6.0. In addition to this, he was allowed to construct 1500 square meters of commercial space. Shah also managed to include 1900 square meters of internal roads in the project, using the association’s letterhead to benefit from this illegal act. Despite complaints to MHADA, no action has been taken due to alleged financial ties between MHADA and Shah.
Special FSI Benefits from MHADA
Typically, redevelopment projects in Mumbai are allocated an FSI of 2.7. However, in Shah’s case, MHADA has granted him an exceptionally high FSI of 6.9. This is a cause for concern among residents, who fear that in case of a natural disaster such as an earthquake or flood, the buildings could be at risk, and reconstruction may be impossible. ‘Sprouts’ will continue to follow this story closely and bring more updates as they develop.
Who is Parag Shah?
• Parag Kishorchandra Shah is a current BJP MLA from Ghatkopar East. He was elected in the 2019 Maharashtra Legislative Assembly elections.
• Shah, a builder by profession, is the founder of ‘MAN Infraconstruction Limited (MICL)’. He has been a controversial figure in the past, particularly after he compared journalists to “dogs” in 2022, for which he later apologized publicly. Shah’s sudden nomination as a BJP candidate in 2019, replacing the popular leader Prakash Mehta, raised eyebrows.
Unmesh Gujarathi
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