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The forensic audit of the Khar project undertaken by Highstreet Paramvir Developers, by the MahaRERA has revealed a multitude of financial and regulatory irregularities. These discrepancies, numbering nine in total, have raised concerns about the handling of funds related to the Highstreet project, and they suggest a violation of the RERA Act by the project's promoter. The project is being built on a 6,525 sqft plot in Khar.
The audit exposed a range of issues, including the failure to deposit funds into a separate project bank account, the inappropriate utilisation of funds, including lender funds, loans, and advances from questionable parties, and losses stemming from land sales. Other grievances include the failure to submit project progress reports, the construction of unsanctioned floors, delays in project completion, and the non-submission of essential information for the forensic audit.
Throughout the audit process, the auditors made multiple attempts to gather necessary data, employing follow-up visits, emails, and discussions. Regrettably, the requested information was not provided for review, as noted by a senior official.
Established in 2016, MahaRERA has, in the past, initiated actions against rule violations. However, this marks the first time they have sought action for financial irregularities.
The audit uncovered that Highstreet Paramvir Developers collected a total of Rs 13.7 crore from allottees. Shockingly, Rs 2.3 crore of this sum was not deposited into a separate bank account, a clear breach of the MahaRERA Act. Furthermore, since funds were channelled into accounts other than the designated one, there is a deficit in the total deposited amount. This raises concerns about the allocation and usage of these funds.
The audit also disclosed a misuse of Rs 76 crore for non-project-related payments. Most loans and advance transactions were conducted with related parties, and there was a distinct lack of documentation for these financial dealings. This is seen as diversion of funds and further deepens the financial irregularities.
Moreover, the unauthorised construction of floors without the consent of two-thirds of the allottees constitutes a violation of the MahaRERA law. The original project completion deadline was set for December 23, 2022, but by March 23, 2023, only 31% of the work had been completed. This significant delay in project completion raises concerns about the adherence to timelines and the management of resources within the project.
The audit report also raises eyebrows over the promoter's acceptance of payments exceeding 70% of the agreement value from allottees. This excess payment amounts to Rs 2.7 crore, suggesting financial impropriety and mismanagement within the Highstreet project.
The case has now been taken up by the economic offences wing (EOW) of the Mumbai Police.
With unaccounted funds, diversion, unauthorised construction, and delayed timelines, it's evident that a thorough investigation and rectification are imperative to restore transparency and trust in this project. The forensic audit conducted by MahaRERA led by Ajoy Mehta on Highstreet Paramvir Developers' Khar project marks the first time the organisation has acted against financial improprieties. This represents a significant milestone in their efforts and serves as a stern warning to the real estate industry, emphasising the importance of adhering to regulations and ensuring the responsible use of project funds.
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