Max Square Exposé

Max Square www.infralive.com 21 Infra LIVE June 15, 2022 crore in NPSL by way of CCDs. On November 23, 2020, NPSL name was changed to Max Square Ltd (MSL) in which Max Estates Ltd has 51 pc stake, and New York Life Insurance Co 49 pc stake. Max Square project launched in questionable circum- stances Located on the Noida-Greater Noida Expressway in Sector 129 of Noida, Max Group on Plot No. C3- C launched a prime commercial project called 'Max Square' in the mid-2020. Max Group in their website claim that their project Max Square is designed to be Indian Green Building Council (IGBC) Gold certified, and a pio- neer in nature, health and well- being. It is set to house a first of its kind 10,000 sq ft central forest that seamlessly connects 'nature with work'. The project will have Super Built-up Area of 671,925 sqft . Project Max Square not regis- tered with UP RERA Max Square Ltd has been advertising the project extensively on its website since 2020. How- ever, the project is not registered with the Real Estate Regulatory Authority (RERA), Uttar Pradesh till date. Section 3 of the Real Estate (Regulation and Development) Act 2016 states that “No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any plan- ning area, without registering the real estate project with the Real Estate Regulatory Authority estab- lished under this Act”. Section 11 (2) of the RERA Act provides that the advertisement or prospectus issued or published by the promoter shall mention prom- inently the website address of the Authority, wherein all details of the registered project have to be entered and include the registra- tion number obtained from the Authority and such other matters incidental thereto. The RERA Act section (2b) also defines that Advertisement “ as any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate pro- ject, or offering for sale of a plot, building or apartment or inviting persons to purchase in any man- ner such plot, building or apart- ment or to make advances or deposits for such purposes.” MSL has not been displaying the UP RERA number on their website while advertising the pro- ject on its website, because they are developing the project illegally without registration. Further, the company is not showing the UP RERA number on the site of the project where construction is going on in full swing. When the matter was taken up with the company a fortnight ago, no response was received. Further, the matter was also taken up with Rajive Kumar, Chairman, UP RERA regarding non-registration of project Max Square two weeks ago but no response has been received. On the other hand, in the FY21 filing with RoC, MSL confirmed that it had bought the land “from a private sector bank at an attractive valuation”. It also claims of having obtained regulatory approvals. It On February 7, 2020 MEL invested Rs 35.70 crore in the form of equity, at par, face value of Rs 10. On the same date, NPSL made the balance payment to Axis Bank and got the transfer deed executed in its favour. The details of the payment are shown in table given below: - The transfer deed itself shows that against a circle rate of Rs 159,000 per sqm, Axis transferred the land sub-lease deed at Rs 72,995 per sqm. This kind of transactions are prohibited under the IBC (see scan-A at pg 23). It may be pointed out that in 2015, when Gulshan Homes and Infrastructure Pvt Ltd sub-leased the adjacent plot (C3-E1 & C3-E2) in Sector 129, from Jaypee Infratech Ltd and Jaiprakash Associates Ltd, the circle rate was Rs 211,000 per sqm (see scan-B at pg 24). And in 2019/2020, the circle/market value ought to have been at a much higher level when the Max Square deal took place. NPSL struck a deal with New York Life Insurance (NYLI). On February 12, 2020, MEL and NYLI entered into Shareholders Agreement (SHA) under which MEL retained 51 per cent share in the company while 49 per cent shares were given to NYLI. On March 18, 2020, NYLI invested Rs 34.31 crore in equity and another Rs 34.31 crore in CCDs, in NPSL. On the same day i.e. on March 18, 2020, MEL invested Rs 35.71 Details of Rs 100 cr paid by Northern to Axis Bank (Rs cr) Date Amount Paid to Purpose of payment 26.11.2019 1,81,06,440 YEIDA Outstanding dues 26.11.2019 10,000 YEIDA Processing fee 26.11.2019 16,73,79,300 YEIDA Transfer Charges 26.11.2019 3,01,28,274 YEIDA GST on Transfer Charges 17.12.2019 26,74,179 JAL Transfer Charges Sub-Total 21,82,98,193 07.02.2020 77,17,01,807 Axis Bank For self @ Rs 72,995/sqm for 10,527 sqm 07.02.2020 1,00,00,000 Govt TDS Total 1,00,00,00,000 07.02.2020 8,36,90,000 Govt of UP Stamp Duty @5% of Circle Rate of Rs 1,673,793,000 @ Rs 159,000 per sqm Total 1,08,36,90,000