The Enforcement Directorate (ED) has uncovered an alleged regulatory loophole that private developers in Punjab are using to alter layout plans in ongoing real estate projects by exploiting provisions under the Real Estate Regulatory Authority (RERA). According to agency sources, this practice enables them to bypass safeguards under Section 14 of the RERA Act.
Comparison with Other States
Sources in the central agency claimed that, unlike Tamil Nadu and Maharashtra, where mid-project layout changes are tightly regulated, Punjab’s mechanism has allegedly been misused to benefit developers at the expense of homebuyers.
Origin of the Probe
The issue surfaced during the ED’s money laundering probe into the alleged fraudulent issuance of change of land use (CLU) clearances for the Suntec City project in Mullanpur. The investigation has already led to the arrest of Ajay Sehgal, promoter and secretary of the Indian Cooperative House Building Society (ICHBS).
Alleged Nexus and Violations
According to the ED, the probe has revealed an alleged nexus between certain developers and officials of the Greater Mohali Area Development Authority (GMADA). Investigators also found that physical possession of plots was handed over to buyers without mandatory completion or occupancy certificates. The agency said such possession violates the Punjab Building Rules, 2021, and provisions of the RERA Act, which prohibit possession before partial or full completion certification.
Fund Tracing and Collusion
With Sehgal in judicial custody, the ED is tracing the alleged laundering of funds while investigating the alleged collusion involving GMADA and RERA officials. The probe stems from allegations that forged documents were used to obtain CLU permissions, enabling illegal plot sales and development violations.
Forged Documents and Legal Violations
According to the ED, forged consent letters submitted for the Suntec City project should have invalidated the CLU application. Instead, officials allegedly excluded only a small portion of the disputed land from the approved layout without examining the viability of the remaining project, which the agency says violates Section 85 of the Punjab Regional and Town Planning and Development Act. The ED also alleged that the promoter failed to surrender land reserved for the economically weaker sections (EWS) to GMADA, violating licence conditions.
