Shimla (Himachal Pradesh) [India], April 19 : The Himachal Pradesh Real Estate Regulatory Authority (RERA) has imposed a total interim penalty of ₹70 lakh on promoters of the Chester Hills-2 and Chester Hills-4 housing projects in Solan district, following detailed investigations that revealed serious financial irregularities, alleged fund diversion, and possible violations of state land laws.
The Authority levied ₹35 lakh each on the two projects, Chester Hills-2 and Chester Hills-4, holding the promoter M/s Chester Hills and landowner Hansraj Thakur responsible for non-compliance with provisions of the Real Estate (Regulation and Development) Act, 2016.
The action follows suo motu proceedings initiated by the regulator, which uncovered lapses in maintaining mandatory project-specific bank accounts and improper handling of funds collected from allottees.
Audits conducted by RERA-approved chartered accountants found that, in the case of Chester Hills-2, nearly ₹19.95 crore in receipts were routed through a common bank account instead of the designated RERA account after cancellation of a Joint Development Agreement (JDA) in 2024. Around ₹6.50 crore in receipts could not be verified due to missing records, while project-wise financial transparency was found lacking.
In Chester Hills-4, the audit pointed to the diversion of funds, including loans amounting to ₹1.23 crore, extended to a related entity. The promoter also failed to provide updated audited financial statements and construction expenditure details. While ₹6.74 crore was collected from 44 allottees in this project, total collections across multiple linked projects were reported at ₹29.38 crore.
Site inspections revealed slow or minimal construction activity in both projects. Chester Hills-2 was found to be only about 36 per cent complete, with several components yet to be initiated, while Chester Hills-4 showed negligible progress, along with the absence of mandatory RERA display boards.
The Authority also flagged unauthorised revisions in building plans without prior approval and the absence of consent from two-thirds of allottees, as required under the Act.
Reports from local revenue authorities, including the Sub-Divisional Magistrate (SDM) and SDO (Civil), Solan, suggested that the projects may be structured as "benami" or "colourable devices" to bypass Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, which restricts land purchase by non-agriculturists.
Investigations indicated that although the land was held in the name of the landowner, operational and financial control rested with non-agriculturist promoters. The acquisition of nearly 275 bighas of land by the landowner's family between 2015 and 2023 was termed "highly improbable" given declared income levels, prompting calls for further inquiry by Income Tax and vigilance agencies.
HP RERA has directed the promoters to deposit the penalty amount within 30 days and has frozen updates to project registration records pending further verification. The Authority has also not accepted the cancellation of the Joint Development Agreement, stating that the matter remains under examination.
Further action may follow based on reports awaited from the Deputy Commissioner, Solan, particularly regarding land ownership compliance and other statutory violations.
The Authority podcherkRt that ensuring transparency, statutory compliance, and protection of homebuyers' interests remains its "fundamental and most vital responsibility," indicating that the proceedings in the case are ongoing and additional penalties may be imposed.
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