Noida homebuyers question UP government for not ordering forensic audit of builders

Buyers allege most builders have diverted the money for the construction, thereby, delaying the housing projects.

Homebuyers who have been suffering for the last three to eight years due to late delivery of flats in sick housing projects have questioned why the Uttar Pradesh government is yet to order a forensic audit of each builders’ accounts.

Jaypee incomplete projects in Noida. (Sunil Ghosh/HT Photo)

A forensic audit is an examination and evaluation of a firm’s or individual’s financial information for use as evidence in court.

The Noida authority had, on multiple occasions, promised homebuyers that an audit of each builder’s accounts will be conducted. The objective of the audit is to ascertain whether the builder diverted the funds collected from buyers to other housing projects/businesses.

Buyers alleged that most builders have diverted the money collected from buyers, for the construction, thereby, delaying the housing projects.

There are 94 sick realty projects in Noida and the builders developing these housing projects owe Rs10,205 crore to the Noida authority. Since the builders failed to clear land dues to the authority, they have been put under the category of defaulters.

“Housing projects are incomplete and builders have failed to clear dues of the government and banks. Then, where have they spent the money collected from homebuyers? The Noida authority in April promised of a forensic audit and the Bharatiya Janata Party (BJP) leaders also made assurance of an audit and justice. Why is the UP government and the Noida authority still hesitating to conduct an audit and take legal action against the builders for cheating?” said Vijay Kumar, a buyer in Amrapali Group’s projects.

RK Singh, a buyer in Amrapali’s Silicon City, said, “The Interim Resolution Professional (IRP) will not prosecute a builder for fund diversion. Those who have diverted the money for purposes other than the completion of the project will face legal action if a forensic audit is done. The state government must conduct forensic audit without further delay.”

Jaypee Infratech and Amrapali Group’s three firms --Ultra Homes private limited, Infrastructure private limited and Silicon City -- are facing insolvency proceedings at the national company law tribunal thereby causing panic and anger among middle class homebuyers, who have invested their lifesavings in buying flats. Now, buyers stare at uncertainty while the builders do not face any legal action for cheating and fraud that they committed, said buyers.

“I have lived in a rented house for the last 20 years and bought a flat in Jaypee Wish Town in 20010, investing my lifesavings with the hope that one day my family will move into our own house. But now I have no clue for how long I will have to suffer. The sad part is that the government cannot even do justice by probe as to why this happened when most of us paid total cost of a house. Why should there not be a probe?,” said Sachin Sharma, a chartered accountant.

Uttar Pradesh chief secretary Rajiv Kumar held a meeting on August 14 with principal secretary urban housing Mukul Singhal, principal secretary UP industrial development department Alok Sinha and the Noida authority chief executive officer Amit Mohan Prasad among others officials on the issues faced by the realty sector. The chief secretary asked Noida CEO to revive sick projects but did not specify how it will happen.

“We will discuss issues of each project on case to case basis and try to solve issues to revive a project. As far as the issue of forensic audit is concerned, real estate regulatory authority (RERA) will do that because it has got powers for the same,” said Sinha, who is also chairman for the Noida authority.

RERA, however, is yet to have a proper body and office-bearers in UP to carry out its job.

Mukul Singhal, principal secretary is appointed as chairman of RERA for the time being by the UP chief Minister Yogi Adityanath.

“When RERA does not even have an office in Noida and any officer then how will the audit happen? The UP government is making tall promises but doing nothing to solve our issues and bring justice in realty sector. And how RERA will do justice in old projects?,” said Indrish Gupta, founder member of Noida Extension flat buyers association.

“Since RERA does not have a body or staff then it can direct any other government agency for an audit,” said Sinha.