SC freezes accounts of Parsvnath directors, issues warrants

THe sublime margaret court on mon ordered the freezing of camber accounts of the managing directors, directors and all senior officials of Parsvnath Developers Ltd and Parsvnath Hessa Developers Pvt Ltd, reticent the companies from creating any third-party rights in the project, and issued bailable warrants against their directors, expressing strong displeasure over the builders’ continued failure to comply with Haryana RERA orders directing delivery of flats to two homebuyers.A bench comprising Chief Justice of India Surya Kant and justices Joymalya Bagchi and V Mohana directed the directors to remain personally present before the court on July 20, warning that non-appearance would invite non-bailable warrants.The court also directed the Haryana chief secretary, director general of police, all collectors, superintendents of police and banks to ensure strict implementation of its directions.“They should have been arrested by now,” the bench observed during the hearing, while expressing anguish over the repeated defiance of statutory orders passed by the Haryana Real Estate Regulatory Authority (RERA).The proceedings arose from a petition filed by senior citizens Rita Tikku and Lokaish Tikku, who invested their life savings in flats at Parsvnath Exotica in Gurugram’s Sector 53. Represented by senior advocate Priya Hingorani, they sought enforcement of Haryana RERA’s November 26, 2021 order directing the builders to hand over possession of their flats and pay delay compensation with interest. They also sought directions for a criminal investigation into the alleged cheating, fraud, siphoning of homebuyers’ funds and the alleged nexus between the builder and statutory authorities.The petitioners were allotted flats in 2006 and executed buyer agreements in 2007. Each flat was priced at about ₹1.7 crore, with possession promised within 36 months, making February 2013 the stipulated delivery date. According to the court, the petitioners paid the entire sale consideration between 2003 and 2014, yet construction remained far from complete.Recording the chronology of the dispute, the bench noted that Haryana RERA had ruled in favour of the homebuyers in November 2021, directing the builder to pay interest at 9.3% per annum from the promised date of possession until actual delivery. Since those orders were never challenged, they had attained finality.“However, this has not happened in these cases as builders continue to defy and disregard the directions issued by RERA. Consequently, neither possession was given nor the due amount was paid,” noted the court in its order.Lamenting that execution proceedings before RERA had turned into “a painful and unending exercise in futility”, the bench added that despite repeated show-cause notices, recovery certificates and even arrest warrants issued by RERA against the company’s directors, “not a single penny” was recovered through the Gurugram collector between 2021 and 2024.The court further recorded that bailiffs were prevented from entering the builder’s premises and even police assistance failed to secure compliance.Observing that the matter extended well beyond the grievances of two homebuyers, the bench said the case raised larger concerns regarding the effectiveness of the statutory enforcement mechanism under the Real Estate (Regulation and Development) Act.“Prima facie these proceedings raise concerns extendable beyond individual grievances of petitioners. The RERA Act provides a statutory mechanism for protecting the interests of homebuyers. However, these cases reveal that execution of these mechanisms depends on the ability of the law to secure compliance with orders passed thereunder,” said the court.The bench also took serious note of the conduct of the district administration and police, observing that it was “prima facie” of the view that the Gurugram collector and local police were “either colluding with the builder or have failed to discharge official responsibilities”.Pending further consideration, the court directed that no third-party interests shall be created in respect of the project and froze not only the companies’ bank accounts but also the personal bank accounts of their managing directors, directors and senior officials.It directed that the bailable warrants be issued upon furnishing bonds of ₹25,000 each and made it clear that failure of the directors to appear on the next date would compel the court to issue non-bailable warrants.