The Ministry of Corporate Affairs is planning to crack the whip on all errant developers who have been involved in fraud, including Amrapali, 3C and Jaypee Infratech, after the election process is over and the new government takes office.
“We have received formal complaints against these developers. Apart from the reported case of money laundering and diverting funds to other companies, there are also reports of other serious offences about a dozen developers regarding corporate governance. The Ministry will soon initiate action against them post the electoral results,” a senior official from MCA told this publication.
So far, over one lakh homebuyers have been duped by various builders like Amrapali, Unitech, Jaypee, 3C, Ansals API, etc. In the National Capital Region (NCR) alone, 46,000 buyers in Amrapali projects had paid more than Rs 11,000 crore to the firm, while another 17,000 homebuyers in Unitech’s 74 housing projects and 32,000 homebuyers of Jaypee Infratech have paid up around Rs 14,000 crore each to both companies.
All these projects, and most other similar projects peppered across the country, are stuck due to a lack of funds as homebuyers run from pillar to post for justice. Initial probes by various investigative agencies into these cases show that there were clear violations in corporate governance norms.
The MCA’s decision comes amid widespread criticism, since those affected have seen little action taken despite several complaints from defrauded customers and suggestions from the courts. A group of homebuyers even went to meet Injeti Srinivas, Secretary, Ministry of Corporate Affairs, recently after forensic auditors examining the Amrapali group said around Rs 9,500 crore worth of their money can still be recovered. Earlier this month, even the Supreme Court had asked the government to step in.
“Government should deal with these issues. We would ask the government to step in to protect the interest of homebuyers. The government is obliged to protect the middle-class homebuyers. These people have invested their hard earned money. They are paying interest on home loans but are not getting their homes. We have no solution on their plight. What can we do? We are saying so with great sense of anguish,” Justice Chandrachud said while hearing Amrapali case.
The apex court has already asked the Attorney General to assist the court on the issue and requested him to hold consultations with concerned departments to frame a mechanism to protect the interest of buyers.
According to the MCA official, political patronage is also one of the reasons for action has been slow to come. However, there are some serious charges like heavy cash transfers during demonetisation and the ministry is likely to initiate action on such cases once the results are out.
“During elections, everything is being perceived as politically motivated. We are aware of the charges and once the results are out and new government is in office, action will be swifter,” another official from the MCA added.
Meanwhile, the ministry is also working on updating the database of developers and their group companies. Currently, the database is not updated, which sources say creates a lot of problems for investigators. Officials claim that the new Version 3 of the MCA-21 database will address many of the current flaws.