Rajasthan RERA Orders Forensic Audit Of Avalon Royal Park Project, Says IBC Moratorium Not A Bar

The Rajasthan Real Estate Regulatory Authority (RERA) has ordered a forensic audit of the Avalon Royal Park housing project in Bhiwadi after finding significant inconsistencies in the developer's financial disclosures.

It also noted a substantial gap between the expenditure claimed and the physical progress achieved at the project.

Chairperson Veenu Gupta held that the audit could proceed despite insolvency proceedings against the developer. The authority ruled that the exercise would be investigative and fact-finding in nature. It would not interfere with the ongoing Corporate Insolvency Resolution Process or violate the moratorium in force under insolvency law.

The authority ruled, "At this stage, the proposed forensic audit is merely intended to facilitate independent verification of project accounts and examination of compliance with statutory obligations under the Act, 2016 and to provide foundational material for any further action, if warranted, in accordance with law. The same is essentially investigative and fact finding in nature and does not, by itself, interfere with the powers exercised by the RP under the IBC.”

The dispute concerns Avalon Royal Park, a residential project at Sector-14 in Bhiwadi, developed by GRJ Distributors and Developers Pvt. Ltd. The promoter had projected completion by 2020. The project, however, remains incomplete.

The homebuyer's assoctaion had initially sought a forensic audit in 2023 and later in 2025. It alleged discrepancies in project disclosures, questioned the utilisation of funds collected from homebuyers and raised concerns about encumbrances created over project assets.

During the proceedings, the association pointed to differing figures disclosed by the promoter regarding receipts, expenditure and physical progress. The authority compared documents filed by the company and former director Ajay Singal. It found several inconsistencies.

Receipts from allottees were disclosed as about ₹281.48 crore in one document and about ₹297.16 crore in another. Figures relating to loans also varied. The authority noted that total receipts represented 78% of project cost according to one disclosure and 82.29% according to another.

Differences were also found in expenditure figures.

Physical progress disclosures were similarly inconsistent. An engineer's certificate reflected completion of 78.41%, while an architect's certificate placed progress at 48.13%.

The authority also noted that only five of the project's twenty-two towers had been completed. The remaining towers were at different stages of construction.

The authority observed, “The substantial gap between financial outlay and physical progress raises serious concerns regarding utilisation of project funds. In the absence of reconciliation between expenditure and progress, a forensic audit alone can determine whether the funds have been properly utilised for the Project or diverted for other purposes, or whether any financial irregularities have occurred.”

The Resolution Professional appointed in the insolvency process and Invent Assets Securitisation and Reconstruction Pvt. Ltd. opposed the request. They argued that scrutiny of the developer's affairs should take place within the insolvency framework and that a parallel exercise before RERA was impermissible.

The authority rejected that contention. It observed that the insolvency process is directed at resolution of the corporate debtor and examination of transactions relevant to insolvency proceedings. The proposed audit, by contrast, would focus on project-specific regulatory compliance, including utilisation of homebuyers' funds and the accuracy of statutory disclosures.

RERA ultimately concluded that an independent examination of the project's financial records was necessary. It noted that inconsistencies persisted even within documents furnished by the promoter and former director themselves.

The authority directed its Registrar to conduct a limited forensic audit of Avalon Royal Park through an empanelled agency. It also directed the Resolution Professional to facilitate access to records required for the exercise. The audit is to be completed within two months.

For Applicant (Avalon Royal Park Homebuyers' Association): Advocate Mohit Khandelwal.

For Respondents (GRJ Distributors and Developers Pvt. Ltd. and Ajay Singal): Advocates Harshal Tholia and Disha Bohra.

For Respondent (Resolution Professional – Utkrishtha Insolvency Professionals Pvt. Ltd.): Advocate Ekta Choudhary.

For Respondent (Invent Assets Securitisation and Reconstruction Pvt. Ltd.): Shri Ajay Tyagi.