PIL alleges Rs 5,000-cr collections by Spectra firms; Telangana HC issues notice

The Telangana High Court has directed three Spectra Group companies to file counter affidavits in response to allegations of large-scale financial irregularities, diversion of funds and violations of RERA provisions. Hearing a PIL, the court was told that over Rs 5,000 crore had allegedly been collected from prospective plot buyers and diverted to other group entities, affecting nearly 10,000 families.

By Our Legal Correspondent

Hyderabad: The Telangana High Court on Wednesday directed Spectra Group companies, including Spectra India Eco Projects Pvt. Ltd., Spectra India Housing Pvt. Ltd. and Spectra India Mega Projects Pvt. Ltd., to file counter affidavits responding to allegations of large-scale financial irregularities, diversion of funds and violations of the Real Estate (Regulation and Development) Act (RERA).

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A Division Bench comprising Acting Chief Justice P. Sam Koshy and Justice Suddala Chalapathi Rao was hearing a public interest litigation (PIL) filed by The Right Society, alleging that the Spectra Group companies had collected more than Rs. 5,000 crore from thousands of prospective plot purchasers by promising to develop layouts and register plots, but had allegedly diverted the funds to other group companies.

Senior counsel Rachna Reddy, appearing for the petitioner, submitted that the companies had collected substantial amounts from the public without complying with the statutory requirements under RERA Act and the regulations of the Hyderabad Metropolitan Development Authority (HMDA).

She alleged that several projects had either been abandoned midway or faced cancellation of layouts, non-execution of sale deeds and failure to provide basic infrastructure. In several instances, plots existed only on paper and not on the ground, she alleged.

The petitioner further alleged that the companies had mortgaged non-existent plots, thereby misleading financial institutions and the public. It was submitted that funds collected from prospective purchasers had been illegally diverted among group companies, resulting in serious financial irregularities and hardship to thousands of families who had invested their savings in the projects.

The petitioner informed the court that complaints and representations had already been submitted to various authorities, including Telangana RERA, HMDA, the Revenue Department, Home Department, Registrar of Companies, Securities and Exchange Board of India (SEBI) and the Enforcement Directorate (ED), seeking an investigation into the alleged irregularities. It was submitted that nearly 10,000 families had invested in the projects and the petitioner sought directions for a comprehensive investigation into the allegations.

Counsel for the Spectra Group companies sought time to file counter affidavits furnishing complete details in response to the allegations. After hearing the submissions, the Bench admitted the PIL and directed the Spectra Group companies to file their counters explaining their stand on the allegations. The matter was adjourned to December 23 for further hearing.