Shimla
The Himachal Pradesh Real Estate Regulatory Authority (HP RERA) has imposed an interim penalty of ₹70 lakh on the promoters of Chester Hills-2 and Chester Hills-4 projects in Solan district for violations related to financial management and statutory compliance under the Real Estate (Regulation and Development) Act, 2016.
Separate orders issued on March 23, 2026, impose a penalty of ₹35 lakh each on the two projects for violation of Section 4(2)(l)(D), which mandates proper maintenance of accounts for funds received from allottees and their utilisation.
Chester hill -4 order dt. 23.03.26 Chester Hill 2, order dt. 23..03.26
The Authority, acting on audit findings, flagged serious irregularities including inter-mixing of funds, failure to maintain separate project-specific bank accounts, absence of proper accounting records, and non-availability of audited financial statements. These lapses were found to be in contravention of provisions requiring 70% of project funds to be kept in a dedicated account and used strictly for construction and land costs.
HP RERA noted that despite being given opportunities, the promoter failed to furnish satisfactory explanations to the show-cause notices issued earlier. The Authority observed that compliance with financial disclosure norms is a “fundamental and non-delegable responsibility” of promoters.
The orders further reveal that audit inspections and reports from local authorities pointed to broader concerns, including possible benami transactions, questionable land ownership structures, and irregularities in project execution. The SDO (Civil), Solan report cited prima facie violations of Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, along with indications of unaccounted financial flows.
Suo motu proceedings in the matter are still underway. HP RERA indicated that additional penalties may follow after receiving reports from concerned authorities. These could include action under:
Section 11 for non-fulfilment of promoter obligations
Section 14 for deviations from approved plans
Section 17 for handing over possession without obtaining completion certificates
The Authority has also directed the promoters to deposit the penalty amount within 30 days and submit detailed disclosures on project status, fund utilisation, and construction progress.
Importantly, HP RERA clarified that approval of the Joint Development Agreement (JDA) cancellation remains pending, and no modification in project registration will be permitted until a comprehensive report from the Deputy Commissioner, Solan is received.
The next hearing in the matter is scheduled for June 5, 2026.
