In a bid to protect the interest of home buyers, the Uttar Pradesh government is likely to take legal action against developers who have diverted funds collected from buyers. “The chief minister has directed us to address issues of home buyers…Those developers who have diverted funds collected from buyers will face legal action,” a senior official at the Greater Noida Authority said. The authority is likely to hire a private agency to find out whether builders have diverted funds and the reasons for delay. “If survey finds out builders are guilty, then law will take its own course,” the official said, adding that buyers have accused builders of diverting funds collected from them.

Currently, about 203 housing projects are being constructed in Greater Noida. Recently, insolvency proceedings have been initiated against Jaypee Infratech’s 27 housing projects for defaulting on approximately Rs 526-crore of loans. The National Company Law Tribunal has also admitted an insolvency plea from Bank of Baroda against Amrapali Group’s firms, Ultra Homes, Silicon City and Amrapali Infra, which have projects in Noida as well. The move has triggered panic among home buyers, who fear they will lose the money paid upfront and not get the promised homes. Last week, Uttar Pradesh chief secretary Rajiv Kumar had chaired a meeting with officials of housing and industrial departments on the issues faced by the realty sector. Earlier this month, the Noida Authority had written to the state government for a forensic audit on the funds flow of all defaulting builders having projects in Noida. Home buyers have been suffering for the last three to eight years due to late delivery of flats in sick housing projects, and had urged the state government to order a forensic audit of accounts of each of the builders. A forensic audit is an examination and evaluation of a firm’s or individual’s financial information for use as evidence in court. The objective of the audit is to ascertain whether the builder diverted funds collected from buyers to other housing projects/businesses.

The Real Estate Regulatory Authority has powers to do forensic audit. However, Uttar Pradesh is yet to have a proper body and office bearers to carry out the job. Since, RERA does not have a body and staff, the state government can direct any other agency for an audit, officials said. Meanwhile, about 82 housing projects in Greater Noida have not submitted their action plans regarding delivery of their respective projects. The official, however, refused to share the names and details of these builders or their projects.

By Surbhi Prasad