The Chairman and Managing Director of MARG Group, GRK Reddy, was arrested on Wednesday by the Chennai police following a complaint by one of the many customers, who had booked flats in the group's delayed real-estate projects.
Many of MARG's real-estate projects - including Savithanjali, a 679-flat project on the Old Mahabalipuram Road; Marg Swarnabhoomi, a 612-acre Special Economic Zone (SEZ), where over 14000 homes were planned, and Marg Brindavan, a 1848-apartment project in Kanchipuram - remain incomplete several years after the promised date of delivery.
Exasperated customers have spoken up more than once and have even launched petitions demanding action against Marg on online forums like change.org.
The Central Crime Branch of the Chennai police in a press release said GRK Reddy was arrested on a complaint by E Abul Mansoor, who claimed to have paid Rs 25 lakh to book a flat at MARG Swarnabhoomi, near Kalpakkam, and who is yet to gain possession of it. Mansoor further claimed that he realised only later that Swarnabhoomi was a SEZ and the apartment was being offered with a 99-year lease.
The Crime Branch in its investigation found that Marg ProperTies stood in violation of Special Economic Zone rules, which allow apartments only to be sold to be people working in it. They were also found to have collected close to Rs 11 crore from various buyers for this yet-to-be-completed project.
The MARG group has been facing financial distress for the past few years.
In 2015, the Edelweiss Asset Reconstruction Company bought 97% of Marg's Karaikal Port from banks to whom the group owed Rs 1800 crore.
A year before that, in 2014, Marg Group's Marg Junction, had been slapped with a possession notice by the State Bank of Patiala after non-payment of a total of Rs 250 crore in debts. Marg then owed State Bank of Patiala about Rs 75 crore, LIC Housing Finance Rs 117 crore and Syndicate Bank Rs 58 crore, the Economic Times had reported.
India's premier rating agency Crisil, which had given MARG Savithanjali (started in April 2010) a 5-star rating initially, went on to withdraw the rating in 2015.
MARG had recently informed the BSE that a meeting of the Board of Directors of the Company is scheduled to be held on November 13 2017 to consider and approve the unaudited Financial Results for the Quarter and half year that ended September 30, 2017.