The Bombay High Court on Wednesday asked an official liquidator to seize all the assets, books and records of city based developer Mantri Realty in connection with cheating and fraud cases filed by a bunch of investors and lenders.
The order said the company’s chairman and managing director Sunil Mantri has allegedly misrepresented facts and directed him and three other directors to not leave the country. The court has also asked the company to not sell any of its assets or create any third party right on it.
The company allegedly owes dues running into crores to its creditors. The court noted that it had adjourned the cases time and again on assurance that dues would be settled and big creditors would be given flats in lieu of payment. However, that has not happened.
"The conduct of Sunil Mantri smacks of utter dishonesty and disrespect to the court. The indulgence that was granted from time to time has only been abused," said the court.
The company and its directors have been ordered to submit details of all the assets and transactions within two weeks.
“He might have gone wrong with his business forecasts. But I sense the whole thing is politically motivated. There is a turf war going on between the industry body he represents and other such organisations. They don’t see eye to eye and I suspect it has its linkages to that,” said a Mumbai based real estate analyst who did not wish to be identified.
In a related news, a Delhi court on Monday sent Unitech Ltd chairman Ramesh Chandra and two managing directors to 14-day judicial custody in alleged cheating cases filed by two investors.
The news of regulatory and judicial bodies tightening noose against defaulting realtors has given a sign of relief to homebuyers. Homebuyers have always been at the receiving end with several cases of cheating, fraud and duping coming to the fore every now and then. They are fighting builders across various platforms and have even taken to streets as projects remain delayed by years.
The complaint against Unitech was filed by chartered accountant Sanjay Kalra and his business partner Devesh Wadhwa, who had claimed to have booked a property in Habitat Apartments in Greater Noida developed by Unitech but were not given possession.
Despite the court's earlier order, Unitech has not refunded them the complete payment, they said in the complaint.
In the wake of the incident, industry body CREDAI has communicated to its members to give real time information to the buyers about the projects which are delayed and honour delivery commitment to avoid legal cases.
"We will tell our members to communicate with buyers and give them the real-time delivery status so that customers are not pushed into a situation that they have to take legal recourse," said Getamber Anand, president, CREDAI.
There are genuine cases of delays due to land acquisition issues, etc. "But where delays are because of reasons which are attributable to developers, then they should communicate to the customers. Builders should give a firm date of delivery of the delayed project and honour the commitment. Otherwise, consumers will take legal recourse and the law will take its course," Anand added.
Industry watchers say there will be many more such cases in 2016 and developers will go belly up.
“We will see a lot of such cases in NCR, especially in Noida in the coming quarters. Developers are over-stretched and over-leveraged. Projects are running late by months and there is no sign of sales momentum reviving in the near future. Developers are also sitting on piles of dues that they owe to Noida Authority,” said a chief financial officer of a Gurgaon-based developer. He did not wish to be named.
Developers are facing headwinds on sales leading to a heavy cash flow crunch. Recently, CRISIL, in a scathing report, said that top 25 developers are sitting on a debt bomb of Rs 30,000 crore and servicing it will be an uphill task.
The upcoming real estate regulatory bill should bring cheer for homebuyers as it is aimed to promote transparency and accountability in all the transactions. The bill mandates all projects to be registered with the regulator and as much as 80 per cent of the advances to be kept in a separate escrow account for construction purposes.
In another similar incident, the Mohali District consumer court has asked real estate firm Omaxe to refund Rs 1.26 lakh and compensate Rs 25,000 to a complainant—Abhinav Jindal—who alleged that the construction of his flat was delayed by years and the developer arbitrarily increased the price by Rs 1.26 lakh.