The Supreme Court on Monday ordered freezing of the bank accounts of the managing directors, directors and all senior officials of Parsvnath Developers Ltd and Parsvnath Hessa Developers Pvt Ltd, restrained the two companies from creating any third-party rights in the project, and issued bail orders against their directors, expressing strong dissatisfaction with the continuing failure of builders to comply with Haryana RERA orders directing delivery of flats to two homebuyers.
A bench comprising Chief Justice of India Surya Kant and Justices Joymalia Bagchi and V Mohana directed the directors to remain personally present before the court on July 20, warning that failure to appear would invite non-bailable bench warrants.
The court also directed the Haryana Chief Secretary, Director General of Police, all collectors, police and bank superintendents to ensure strict implementation of its directions.
“They should have been arrested by now,” the bench observed during the hearing, expressing concern over the repeated defiance of legal orders passed by the Haryana Real Estate Regulatory Authority (RERA).
The proceedings arose out of a petition filed by senior citizens Rita Tiko and Lokesh Tiko, who had invested their savings in apartments in Parsvnath Exotica in Sector 53 in Gurugram. Represented by senior advocate Priya Hingorani, they sought implementation of the Haryana Rera order issued on November 26, 2021 directing builders to hand over possession of their flats and pay delay compensation with interest. They also sought directions for a criminal investigation into the allegations of cheating, fraud and misappropriation of homebuyers’ funds and the alleged nexus between the construction company and the legal authorities.
The petitioners were allotted flats in 2006 and the purchase agreements were executed in 2007. Each flat was priced at approx. $1.7 lakh crore, with possession promised within 36 months, making February 2013 the scheduled delivery date. According to the court, the petitioners paid the full sale price between 2003 and 2014, but construction remained far from completion.
Recording the chronology of the dispute, the bench noted that Haryana RERA ruled in favor of homebuyers in November 2021, directing the builder to pay interest at the rate of 9.3% per annum from the promised date of possession till the actual delivery. Since those orders were never challenged, they came to an end.
“However, this has not happened in these cases as the builder continues to defy and ignore the directions issued by RERA. Hence, possession has not been handed over and the amount due has not been paid,” the court noted in its order.
The bench expressed regret that the enforcement proceedings before RERA had turned into a “painful, endless exercise in futility” and added that despite repeated notices, recovery certificates and even arrest warrants issued by RERA against the directors of the company, “not a single penny” was recovered by the Gurugram collector between 2021 and 2024.
The court also recorded that bailiffs were denied entry to the company’s premises, and even police assistance failed to ensure compliance.
Noting that the matter extends beyond the grievances of two homebuyers, the bench said the case raised broader concerns about the effectiveness of the legal enforcement mechanism under the Real Estate (Regulation and Development) Act.
“Prima facie, these actions raise concerns that extend beyond the individual grievances of the petitioners. The RERA Act provides a legal mechanism to protect the interests of homebuyers. However, these cases reveal that the implementation of these mechanisms depends on the ability of the law to ensure compliance with orders issued under it,” the court said.
The bench also took serious note of the conduct of the district administration and the police and observed that it was “prima facie” of the view that the Gurugram Collector and the local police were “either in collusion with the construction company or failed to discharge their official responsibilities”.
Pending further consideration, the court ordered that no third party interests should be established in connection with the project and that not only the companies’ bank accounts but also the personal bank accounts of their managing directors, directors and senior officials should be frozen.
It was directed that bail orders be issued upon submission of bonds $25,000 each and explained that failure of the board members to appear on the next date would force the court to issue non-bailable orders.
