Huge Cash Payments by Allottees to Developers are Illegal and Raise Serious Concerns Several sources highlight that developers have withdrawn large sums of money through cash transactions, which are considered illegal and suspicious. For instance, ["2024 0 Supreme(Del) 528"] states, approximately Rs.22,35,00,000/- has been withdrawn by way of cash, and similarly, ["2024 Supreme(Online)(DEL) 10470"] reports, approximately a sum of ₹22,35,00,000/- has been withdrawn by way of cash. Such substantial cash withdrawals without proper documentation violate legal norms and raise questions about transparency and legality.
Transfer of Funds to Group Companies and Lack of Proper Documentation Multiple sources indicate that large sums were transferred to bank accounts of group companies, which may be linked to money laundering or misappropriation. ["2024 0 Supreme(Del) 528"] mentions huge sums of money were transferred to the bank accounts of the other group companies, raising concerns about financial irregularities.
Illegal and Unfair Contract Clauses Several agreements contain clauses deemed unfair and illegal, such as clauses that limit the rights of allottees after refunds or project delays. For example, ["2026 Supreme(Online)(P&H) 127"] states, After refund of the money paid by the Allotee(s), the Allotee(s) agrees that it shall not have any rights, claims etc. against the Developer, which is considered one-sided and unfair. Similarly, ["2024 Supreme(Online)(NCLAT) 1187"] notes that certain developer clauses are one-sided, unfair and is illegal.
Developer’s Failure to Pay Penalties and Penalty Enforcement Issues Multiple cases report developers' failure to pay penalties for delays or non-completion. ["2022 Supreme(Online)(Del) 7159"] mentions the developer demanding more money for project completion and not paying penalties despite delays. ["
Sandeep Grover VS Sai Siddhi Developers - Consumer
"] details that the developer did not pay the penalty and that the society had to en-cash bank guarantees, which indicates non-compliance with legal obligations.Harassment and Financial Hardship to Allottees Due to Developer Defaults Several sources document the distress faced by allottees due to developer defaults, delays, and illegal demands. ["SH. RAHUL DOGRA & ANR. vs M/S ANSAL HITECH TOWNSHIPS LTD. - Consumer State"] highlights Flat purchasers suffer agony and harassment, and ["SH. RAHUL DOGRA & ANR. vs M/S ANSAL HITECH TOWNSHIPS LTD. - Consumer State"] emphasizes that allottees are entitled to rebates and timely conveyance, but delays and unfair practices cause hardship.
Legal Actions and Court Interventions Courts and consumer commissions have taken cognizance of these irregularities, directing developers to refund amounts, execute conveyance deeds, and pay costs. ["SH. RAHUL DOGRA & ANR. vs M/S ANSAL HITECH TOWNSHIPS LTD. - Consumer State"] states, The conveyance deed in favour of the allottees shall be executed within three months, and ["SH. RAHUL DOGRA & ANR. vs M/S ANSAL HITECH TOWNSHIPS LTD. - Consumer State"] emphasizes the importance of timely payments and legal compliance.
Analysis and Conclusion:The evidence across multiple sources conclusively indicates that large cash payments by allottees to developers are illegal and indicative of financial irregularities. The transfer of funds to group companies and the use of unfair contractual clauses further compound these issues. Courts and consumer forums have consistently mandated refunds, penalized non-compliance, and condemned illegal practices, underscoring that such cash transactions and developer misconduct are unlawful and subject to legal action.
