Stringent norms under the much-awaited Real Estate
(Regulation and Development) Act, 2016, or RERA, are expected to prevent the recurrence of Unitech-like cases, experts say.
The construction firm’s managing directors, Sanjay Chandra
and Ajay Chandra, were arrested last week by the Economic Offences Wing (EOW) of the Delhi Police for alleged fraud related to a Gurugram-based real estate
project. A Delhi court on Monday extended the police custody of Unitech
Ltd promoter Ajay Chandra
and Sanjay Chandra
by three more days in an alleged fraud case related to a Gurugram-based real estate
According to EOW sleuths, the Chandras allegedly siphoned Rs 200 crore off the Gurugram project and stashed it in an offshore account. They have also been accused of duping buyers who booked flats in their Greater Noida residential project, to the tune of Rs 35 crore. Industry experts said RERA
rules, such as keeping 70 per cent of sales receipts from customers in an escrow account, would help prevent such cases.
“The importance of RERA
is to bring in discipline. There is a lack of consumer confidence in the market which has been caused by such cases. Things such as creating an escrow account for every project would help bring back that confidence,” said Samantak Das, chief economist and national director - Research, Knight Frank India.
Under the Act, cleared by Parliament in March last year, real estate
companies, perceived to be a non-transparent lot, would have to submit various details to the regulator. Violations are likely to attract stringent penalties, which are scaring company owners and even prompting directors on their boards to quit.
From small property dealers to board directors of realty firms, all can face punishments under the provisions of RERA.
Experts say the Act would wipe out the very existence of developers who are inconsistent with deliveries. Developers, however, said RERA
should not be enforced retrospectively, or else builders should be given some time to complete projects. “While RERA
would help prevent Unitech-like situations, it should either not be enforced retrospectively or builders should be given some time,” said Parveen Jain, President, National Real Estate
Development Council (NAREDCO).
EOW sleuths investigating the Chandras said they are trying to ascertain the expenditure on various projects, as the alleged company has not provided the details. Police are also trying to recover the project-related original documents and ascertain the money trail. According to police, Unitech
allegedly collected Rs 363 crore from 557 customers and banks. However, the company’s account balance is almost nil.
In a reply to stock exchange, Unitech
said it is business as usual for the developer. “We will be availing appropriate remedy in accordance with law. Since the matter is sub-judice, the company cannot comment further at this stage. But we wish to clarify that day-to-day operations of the company are fully functional. It is our endeavour to deliver apartments to our valuable customers as soon as possible,” it said.