News on Real estate

On Friday January 18 th , the Supreme Court has ordered forensic audit of Unitech, after a real estate giant Amrapali. The SC ordered also ordered audit for its subsidiaries to probe diversion of funds of home buyers by its directors and promoters and alleged financial irregularities, which led the company to fail to complete real estate developments. Unitech Group is involved in building 74 residential projects and over 17000 home buyers have been involved in its projects.

The developer failed to complete the projects because of financial crisis and buyers ended up in the lurch. Since April last year, Sanjay Chandra, the managing director, and his brother Ajay Chandra have been in jail when they were arrested by Delhi Police’s Economic Offences Wing (EOW) as they failed to handle the possession of flats despite buyers paid money to the company. The aggrieved home buyers filed a complaint against them.

A bench of justices M R Shah and DY Chandrachud said that it is vital to know how the funds collected from home buyers as well as financial institutions to be used by the developer. According to the judges, it was quite vital to trace the money which was received for construction to allow the court to take matter to its conclusion.

It is said that company couldn’t provide all the information about use of money of home buyers and court ended up to order forensic audit to get the truth. The court assigned Grant Thornton and asked the same to test all the documents as well as details of bank accounts of all the companies, their directors, and promoters from 2006.

A M Singhvi, Senior Advocate, for Chandra brothers, pleaded to release them and asked for bail so they could offer all the information and documents to the auditors. But this plea was opposed aggressively by M L Lahoty, home buyers’ counsel. The audit firm told that there are over 300 sister concerns of the company and around 11 weeks were required to finish the task. According to the court, the two directors and three officials would meet auditors with chief financial officer on daily basis.

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