New Delhi: The Supreme Court on Monday froze the bank accounts of real-estate developer Parsvnath’s two subsidiaries, Parsvnath Hessa Developers Ltd and Parsvnath Developers Limited, its managing directors, directors and officers, after finding the company had blatantly disregarded orders of Haryana Real Estate Regulatory Authority’s (RERA) to compensate buyers whose flats were not constructed within the promised timeline.
A three-judge bench led by Chief Justice of India (CJI) Surya Kant took note of the inordinate delay in handing over the possession of flats in the Parsvnath Exotica project in Gurugram, issuing bailable warrants against the companies’ directors.
The Supreme Court’s stringent ruling came on two separate petitions filed by senior citizens who have not yet received possession of their flats that were booked more than two decades ago with Parsvnath. The proposed site of the project was on Golf Course Road, Gurugram. The cases “exposed systemic deficiencies in the implementation of the RERA law” as the “effectiveness of the statutory mechanism depended on the enforcement of orders passed under it”.
Observing the Gurugram administration and the state police had either colluded with the developer or failed to discharge their statutory duties under the law, the CJI’s bench learnt from the official records that Parsvnath had on several occasions avoided execution orders issued by RERA requiring the company to comply with the authority’s direction.
It imposed a binding direction on Haryana Chief Secretary, the Director General Police of the State, and police commissioners of the division where the offices of the two subsidiaries are located to ensure the top court’s orders are followed. The court fixed 17 July to hear the matter again.
Senior advocate Priya Hingorani, appearing for the two petitioners, told the court that both had paid the entire sale consideration. They were provisionally allotted the flats in 2000, and a formal agreement was signed in early 2007. Each flat was priced over Rs 1 crore, and as per the agreement 2013 was fixed as the year for possession.
Upon perusal of the case documents, the bench learnt that upon a site visit the petitioners saw the construction of their respective flats was far from completion. Eventually, the two separately approached RERA in 2021 and got a favourable order from there in the same year. As per the order Parsvnath had to pay over Rs 1.5 crore to each petitioner.
Even though the company did not challenge the orders, it did not honor them, forcing the petitioners to return to RERA, asking it to order the authorities such as the Gurugram collector and the state police to execute its order. However, none of them could recover “a single penny” from the developers, noted the Supreme Court, despite a recovery certificate issued by RERA, Gurugram to the Collector.
“Builders continue to defy and disregard directions issued by HRERA. Consequently, neither possession was issued nor compensation paid,” the court noted in its Monday order. The Chief Justice also found serious lapses in the enforcement of warrants issued by RERA against the developer and its directors.
The court recorded the manner in which the company blocked service of RERA’s orders, resulting in their non-execution. “We are perturbed to note that in one case, the bailiff was not allowed to enter the companies, necessitating police assistance. However, in the absence of effective assistance, even those directions were not complied with. No coercive measure would be implemented, and thus petitioners are still running from pillar to post seeking execution of the 2021-22 orders in their favor,” said the order.
Despite two recovery certificates issued by RERA, the petitioners before court neither got their flats nor the compensation money as ordered. In addition to freezing the bank accounts, the Supreme Court also restrained the company from creating any third-party rights in the project or handing over possession of any units until further orders.
On the larger issue about RERA’s failure to regulate real-estate developers, the bench observed in the order: “Prima facie, we find that these proceedings raise concerns extending well beyond the present petitioners.” Though RERA provided for a mechanism to protect the homebuyers’ interest, its efficacy strongly depended on the law’s ability to secure compliance of orders issued by the authority designated to provide relief to homebuyers.
The present case, the court felt, showed RERA law had failed to give homebuyers quick relief, defeating its purpose. This was because the tribunal had no penal powers to execute its own orders. In a reflection of how the government too had failed the citizens in such matters, the court said : “We are prima facie further satisfied that state authorities, especially the collector and the local police, are either colluding with the builder or have failed to discharge their official responsibilities.”
(Edited by Nardeep Singh Dahiya)
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