Khar Project Builder Failed To Give Info Sought For Audit, ET RealEstate
MUMBAI: The economic offences wing (EOW) of the city police has initiated a probe against Highstreet Paramvir Developers for financial irregularities after a complaint by the Maharashtra Real Estate Regulatory Authority (MahaRera).
The irregularities are centred on a project on a 6,525 sqft plot in Khar, and MahaRera filed a complaint after running a forensic audit of the project. It is the first time the real estate monitor is acting against a financial irregularity.
“From the (forensic) audit report, it appears there is prima facie evidence of misuse/diversion of funds of the allottees as well as the funds borrowed from lenders. We have initiated a preliminary probe against the developer,” a senior EOW official said.
When contacted, the developer directed the correspondent to the company lawyer, who refused comment.
Khar project builder failed to give info sought for audit
According to the forensic audit of Highstreet Paramvir Developers’ Khar project conducted by the veteran bureaucrat Ajoy Mehta-led MahaRera, there were both financial and regulatory irregularities on nine counts. “MahaRera has reasonable grounds to believe the funds with respect to the project, Highstreet, have been dealt with in a manner which is detrimental to the interest of the allottees and the promoter has violated the Rera Act,” a senior official told TOI.
The irregularities listed include non-deposition of funds into a separate project bank account, misuse of funds, including lender funds, loans and advances of questionable parties, loss resulting from sale of land, nonsubmission of project progress reports, construction of unsanctioned floors, delay in project completion, and non-submission of required information for forensic audit. “During the course of the audit, the auditors had multiple follow-up visits, sent emails and held multiple rounds of discussion, requesting the data required for audit, but the information was not provided for review,” said a senior official.Highstreet CEO K M Mordani was not available, his office said, and directed queries to the company lawyer, who instead of responding to TOI’s questions, sought details about the source of the information and documents. There was no response from Mordani’s office. Since its establishment in 2016, MahaRera has initiated action for violation of rules, but it’s the first time it has sought action for financial irregularities. It was found that Rs 13.7 crore was collected from the allottees, of which Rs 2.3 crore was not deposited in a separate bank account, resulting in contravention of the MahaRera Act.
Moreover, since funds were collected in accounts other than the designated account, there is a shortfall in deposit of the total amount. “It was found there was misuse of Rs 76 crore for making non-project-related payments. Majority of loans and advance transactions were with related parties, there was an absence of documentation.
These loans and advances resulted in potential diversion of funds,” said the official. Moreover, construction of unsanctioned floors without consent of two-thirds of the allottees results violated the MahaRera law. The project was to be completed on December 23, 2022, but only 31% work had been completed till March 23, 2023. The audit report also says the promoter accepted payment from allottees in excess of 70% of the agreement value, amounting to Rs 2.7 crore.