Unitech to keep escrow accounts open

Funds to be used for incomplete projects though SC stayed meetings with homebuyers

Realty-major Unitech will continue to operate the escrow accounts opened in September as part of the Delhi High Court monitored compromise scheme with homebuyers. Though the Supreme Court on Friday stayed the meetings with homebuyers that were to commence on Sunday, the funds in the escrow account would continue to be utilized.

“The Company shall continue to operate the escrow accounts opened pursuant to the directions of the Delhi High Court order dated 02.09.2016 and all the inflow and outflow of funds of the company in respect of the pending projects shall be strictly monitored by the registrar of Delhi High Court, who has been appointed as Court Commissioner as mandated by the Delhi High Court,” a Unitech spokesperson told Business Standard.

The Company shall utilise its funds strictly according to the orders passed by the Delhi High Court and utilise its funds in the escrow accounts for the completion of the incomplete projects, the spokesperson added.

The compromise and settlement scheme, proposed by a group of 11 homebuyers and supported by the company, covered a time bound delivery plan covering over 13,000 homebuyers and 41 unfinished projects of the Delhi-based company. As per the scheme, three escrow accounts were to be created, viz., i) Project sales escrow account, ii) Development escrow account and iii) General escrow account.

The project sales escrow account would receive sale proceeds in these projects. The Development escrow account would be used exclusively for the completion of the units/flats in these projects.

The General escrow account would be for receiving proceeds from any sale of land and withdrawals will be used for completing the unfinished projects and meeting the working capital requirements.

These accounts were to be monitored by a court commissioner appointed by the court. Separately, a designated refund account was created for each project in which 10% of the proceeds from the customers are transferred. This account was to be used for refunds to these customers in 12 equal instalments after zero period of 12 months from the date of approval of Scheme.

The homebuyers were to meet and approve the scheme in meetings to be held in Mohali, Chennai, Gurgaon and Noida over the next couple of weeks. Homebuyers said efforts were on  in some cities to gather support for the scheme by collecting proxies.

On Wednesday, Business Standard reported that Ingovern, a proxy advisory firm, has advised homebuyers against voting for the scheme citing clauses that favour the company more than the homebuyers.

On Friday, the Supreme Court of India stayed the court convened meetings to be held on 20 and 27 Nov, 2016; 4 and 11 Dec 2016 till further orders. Unitech reiterated that it shall fully abide by the directions.   

Due to non-completion and non-delivery of flats within the stipulated time, the company faces litigation from many home buyers. As many as 958 cases are pending against Unitech at the National Consumer Disputes Redressal Commission.