Haryana Rera Gurugram

Haryana Rera’s Gurugram bench issued a notice on Friday to blacklist and disqualify a real estate company, Empire Realtech, and its developer, CHD Developers, from the launch of any new projects until the completion of the existing ones. The regulator has taken such a tough step for the first time, as delays in-home delivery have become a serious problem in both the city as well as in other parts of the struggling but large real estate sector of NCR.

In 2011, Golf Avenue in Sector 106- CHD Developers started a housing project under Empire Realtech with a promise to give ownership by December 2016. The apartments, however, still have not been provided. The developer told H-Rera of the modified completion date of 30 June 2021 at the time of registration in 2016. The bench containing Chairman KK Khandelwal and members SC Kush and Samir Kumar stated that, while resolving to issue a notice asking why the company must not be blacklisted and disqualified from launching new projects before it completes existing ones, “But taking into consideration the present situation of funds and overall construction, there is little chance of further delay of the project.”

“The developers have not submitted the quarterly progress reports (as needed under Rera rules) either,” Khandelwal said. The notice asks why criminal proceedings should not be instituted and a penalty should not be levied that may be up to 5% (Rs 28 crore) of the cost of the project. In consultation with the association of allottees, the promoter was requested to apply a contingency plan for the completion of the project within a month. The Authority also provided the Association of Allottees with an option to take over the project for completion, Khandelwal added.

In the project, there are 642 units, of which 600 have been sold. Nearly Rs 500 crore from homebuyers has been received. A loan of Rs 150 crore was also taken from the promoter, of which Rs 36 crore is outstanding. Since the promoter had not opened a separate Rera account for the project, the bank said that installments paid by homebuyers were collected in the escrow account of the bank and the money deposited in the account was withdrawn by the lender against the loan. Consequently, no funds for construction were left.

The bank said that 70% of the money from homebuyers should have been deposited in a separate Rera account to be used for building only. “This is a direct breach of Section 4 of the Rera Act and warrants disciplinary action against the promoter under Section 60 of the Act,” the bench said.

In October 2018, construction ended. Many of the allottees have already charged 90% of the apartments’ prices. “It seems that the promoter has siphoned off funds as only Rs 168 crore was spent on construction even after collecting more than Rs 600 crore from the allottees and lending institutions,” the bench noted. To investigate what had happened to the funds, it requested a forensic audit.

The association of allottees, whereas, has suggested taking over and completing the project. The premise has been examined by the regulator. The developer was requested to incorporate the project, which is estimated to be Rs 104 crore, with funding to complete the project. The developer’s other incomplete projects include CHD Van highrise apartments (10 acres) and CHD Rosertico (10 acres).