UP RERA issues notices to Ansal API for diverting Rs 606-crore funds

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In the first of a kind, Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has issued show cause notice(s) under Section 35 along with Section 7 (2) for violation of Section 4, 7 and 11 of the Real Estate (Regulation and Development) Act, 2016 to “Ansal Properties & Infrastructure Limited” (Ansal API) to begin with on their four projects in Lucknow covering 3151 total units for alleged fraud and diversion of funds etc.

In October 2018, the Authority ordered direction for forensic audit in registered projects with a view to investigate into the affairs, especially the accounts of Ansal API to find out the possible diversion of funds, causes of inordinate delay, assign responsibilities etc. Authority appointed Currie and Brown (C&B) for conducting the forensic audit.

The show cause notice(s) have been issued to the developer following a report submitted by forensic auditor that had investigated 91 projects of Ansal API over the last three months for financial misappropriation. The auditor had submitted its report where it has stated that under Ansal API, the projects have found to be in breach of RERA compliances, managing separate accounts, half yearly project account audit and a possible diversion of over Rs 600 crores from the projects to other purposes.

Initiating process of action, four projects were finalized for notices. The four projects are EWS/LIG-PKT 2-Sec K-SGC, Bliss Delight, Block 1,2,3 & 4, GH-2,Sec, Pocket-2, Sector-J, Sushant Golf City and Pocket 3 Sector A, Sushant Golf City.
UP RERA Chairman Mr. Rajive Kumar said, “A large number of complaints were filed against these projects before us in respect of non-delivery of units/plots, failure to refund money advanced by buyers, violation of various approvals etc. Further, some serious allegations of mismanagement, diversion of funds etc. were also made by the complainants. Hence, this was needed to protect the interest of the Allottee(s) and to identify the ways and means to ensure the requisite fund flow for the completion of the projects”.

UP RERA Member Mr. Balwinder Kumar said, “We would give the developer 30 days’ time to reply and deposit the amount in the concerned separate account. If the developer fails to respond, we might revoke the project registration with the Authority, impose penalties and other necessary restrictions”.

Mr. Abrar Ahmed UPRERA Secretary also clarified that the notices have been issued to Ansal API’s full-time directors Mr. Sushil Ansal, Mr. Pranav Ansal and Managing Director Mr. Anil Kumar.