400 flat, shop buyers in Ctg left in limbo as 2 companies default on bank loans

Infograph: TBS

In 2011, Ferdous Ara booked a flat in an apartment complex within the Ehsan City residential area adjacent to Bakalia Syed Shah Road in Chattogram city. She and her family moved to the apartment in 2015 upon its completion.

Later, she found out that the land on which the building was erected had been mortgaged to the Khatunganj branch of the National Bank by the Ehsan Group, the project owner, to secure loans that have already been defaulted.

"Even a decade after booking the flat, I have not yet received the registration for my unit," said Ferdous Ara.

She is not the only one, around 150 flat owners in seven apartment complexes within the residential area have faced the same fate due to the mortgage of the land and loan default issue of the Ehsan Group.

In a separate case, over 200 customers who acquired commercial spaces at Ali Plaza in the city's Steel Mill area, owned by the defaulting company Imam Group that mortgaged the property to Prime Bank, are now uncertain about retaining ownership of their shops.

The case of Ehsan Group

In 2013, the Ehsan Group obtained loans from the Khatunganj branch of the National Bank, mortgaging 1,300 decimals of land, on which the Ehsan City was constructed, to invest in the steel industry.

According to National Bank documents, however, the group diverted these funds to purchase additional land. But it failed to repay the loan to the bank over the past decade. The bank has initiated legal proceedings against three companies within the Ehsan Group for non-repayment of loans with the Chattogram Money Loan Court.

Court documents reveal, the National Bank filed a loan case in 2017 due to default of four companies of Ehsan Group – Ehsan Steel Re-Rolling Tk242 crore, Ehsan Re-Rolling Mills Tk145 crore, Messers Bangladesh Enterprise Tk48 crore and Tk48 crore to Messers Alam Enterprise.

In these cases, Ehsan Group chairman Abu Alam, his wife Parveen Akhtar, brother Shafiul Alam, Md Shahidullah and brother-in-law Abu Bakar have been made defendants. After verdict of the money loan court, the cases are ongoing as execution cases.

Speaking on the condition of anonymity, an official from the Khatunganj branch of the National Bank told TBS, "Despite the court establishing a repayment schedule, the group is unable to meet the financial commitments in installments. Currently, the Ehsan Group carries an outstanding loan balance of around Tk620 crore with the National Bank."

Buyers of flats have reported that the company has sold over a hundred flats across seven buildings within Ehsan City. The prices for each of these flats ranged from Tk35 lakh to Tk40 lakhs, depending on size and quality.

Mujibul Haque, another flat owner in Ehsan City, said the bank, as a creditor, auctioned many properties of Ehsan Properties in 2017 due to defaulted loans. However, legal complications hindered the bank from finding suitable buyers for the flats.

"Moreover, despite having paid the full amount, we are unable to obtain the registry for our flat due to the mortgage with the bank. Many flat owners here have invested their life savings in these properties. If these buildings are auctioned, over 150 flat buyers will face financial hardship," he said.

Md Shahadat Hossain, former manager of the National Bank Khatunganj branch, said, "The company initially borrowed funds with the intention of investing in the steel sector but diverted it towards housing. Despite numerous efforts, we have been unsuccessful in recovering the loan amount from this customer."

Addressing the loan concerns, Abu Alam, chairman of the Ehsan Group, said the housing business has faced a downturn in recent years. He cited a stagnation in land and flat sales, causing a halt in his investments.

"Efforts are currently underway to settle the bank's debt by selling the company's assets," he added.

Plight of Ali Plaza shop owners

In 2011, Imam Group constructed the building in the city's Steel Mill area and sold commercial spaces to more than 200 customers. Each shop was sold at prices ranging from Tk20 lakh to Tk30 lakh, depending on size and location.

Despite conducting business since 2016 upon acquiring possession of the shops, the shop owners are currently facing uncertainty. This is due to the chairman of Imam Group fleeing abroad after defaulting on loans, leading the creditor bank to auction the building.

Riyad Hossain, proprietor of Satkania Cosmetics at Ali Plaza, said, "I became aware of the issue when it was revealed that the building had been mortgaged to the bank as collateral for a loan. On 13 September, we were compelled to shut down our shops following a court order. We have resumed operations from 15 November, with authorisation from the High Court."

He further added, "Throughout the closing period, each store incurred substantial financial losses due to product spoilage and additional expenses."

Muhammad Osman, another proprietor at Ali Plaza, said, "If we face eviction due to the building owner's defaulted bank loans, we will endure significant hardships."

According to Prime Bank, various properties of Imam Group, including Ali Plaza, serve as collateral at Prime Bank's Jubilee Road branch for loans. In 2012, following the default of loans amounted to Tk62 crore, a money loan case was filed which is currently ongoing as an execution case.

Rezaul Karim, bench assistant at the Chattogram Money Loan Court, said in light of Imam Group's chairman, Muhammad Ali, leaving the country, the court appointed a receiver for Ali Plaza. Subsequently, when the bank sought the High Court's intervention to close the market, the court directed the shops to remain open to prevent losses for the shop owners.

Simultaneously, the court mandated the shopkeepers to pay rent to the bank and employ security for the market, he said.

Speaking on the condition of anonymity, an official from Prime Bank revealed that since the land was mortgaged and the subsequent construction of the building, the bank has displayed a warning signboard on the premises.

"If someone purchases the mortgaged property without the bank's knowledge, the bank holds no liability," he said.

Mohammad Ismail, president of the Ali Plaza Shop Owners and Traders Association, said, "The building owner has earned a profit of around Tk50 crore by selling the shops. We invested lakhs of taka in buying the shops. Now the bank is attempting to evict us. We are committed to legally fighting to retain control and ownership of our businesses."

TBS attempted to contact officials from the Imam Group for a comment but was unsuccessful in reaching them despite making repeated phone calls.