Punjab and Haryana HC Restrains Oberoi Realty From Further Allotments in Rs 8,000 Crore IREO Gurugram Project

Kaustav Chowdhury
Jul 12
4 min read

The Punjab and Haryana High Court has passed an interim order restraining Oberoi Realty from making further allotments in the Three Sixty North project located in Sector-58, Gurugram, valued at approximately Rs 8,000 crore. A Division Bench comprising Justices Jasgurpreet Singh Puri and Sanjiv Berry passed the order in a petition filed by Advance India Projects Limited (AIPL), which has raised serious allegations concerning violations of the Foreign Exchange Management Act (FEMA) and the Foreign Direct Investment (FDI) Policy.

The Project and the Ownership Dispute

Three Sixty North is a large-scale real estate development spread across 14.816 acres in Sector-58, Gurugram. The project was originally developed under three separate development licences obtained between 2009 and 2012, which were subsequently consolidated into a single migrated licence. The consolidation of these licences, and the circumstances under which Oberoi Realty came to be associated with the project, form the core of the legal dispute.

AIPL, the petitioner, contends that it holds legitimate rights over the project and that Oberoi Realty's involvement raises fundamental questions under both property law and foreign exchange regulations. The dispute touches upon some of the most contested areas in Indian real estate law, including the validity of licence transfers, compliance with ownership requirements, and adherence to foreign investment norms in the real estate sector.

The Statutory Framework: Haryana Development Act and Ownership Requirements

The petition invokes Section 8 of the Haryana Development and Regulation of Urban Areas Act, 1975, which governs the grant and conditions of development licences. Section 8 imposes specific requirements on licence holders, including conditions relating to the development timeline, quality of construction, and compliance with the approved layout plan. AIPL argues that the manner in which the project has been handled violates these statutory conditions.

Additionally, Section 3 of the Act, which deals with ownership requirements for obtaining a development licence, is central to the dispute. The petitioner's case is that the ownership structure underlying the consolidated licence does not comply with these requirements, and that the Director of Town and Country Planning (DTCP) must scrutinize the ownership chain before permitting further development or allotments.

FEMA and FDI Policy Violations: The Foreign Investment Angle

One of the most significant aspects of AIPL's challenge concerns alleged violations of FEMA and the FDI Policy in the real estate sector. India's FDI framework for real estate development is subject to specific conditions, including minimum capitalization requirements, lock-in periods, and restrictions on repatriation. The petitioner alleges that the transaction structure through which Oberoi Realty became involved in the Three Sixty North project does not comply with these norms.

If established, FEMA violations in real estate transactions carry severe consequences, including penalties, compounding proceedings, and in extreme cases, criminal prosecution. The RBI and the Enforcement Directorate are the primary agencies responsible for enforcement. The Punjab and Haryana High Court's willingness to restrain further allotments pending investigation of these allegations indicates that the Court has found a prima facie case warranting interim protection.

The Court's Interim Order

The Division Bench restrained Oberoi Realty from making any further allotments in the Three Sixty North project during the pendency of the proceedings. This interim order effectively freezes the commercial operations of the project to the extent of new sales, protecting the interests of existing allottees and preventing the creation of additional third-party rights that could complicate the resolution of the ownership dispute.

Significantly, the Court also directed the DTCP to decide the ownership dispute by July 20, 2026, or alternatively, to hear the matter on a day-to-day basis and decide within two weeks thereafter. This timeline reflects the Court's recognition that the uncertainty surrounding the project's ownership is causing ongoing harm and needs to be resolved expeditiously. The direction to the DTCP places the primary responsibility for factual determination on the regulatory authority that has the domain expertise and access to the relevant records.

Implications for Real Estate Development in Haryana

The case carries broader implications for the real estate sector in Haryana and for the IREO group of projects in particular. The IREO brand has been associated with several large-scale projects in the Gurugram region, and this dispute adds to the existing litigation around IREO properties. For homebuyers and investors in such projects, the case underscores the importance of conducting thorough due diligence on the ownership chain and regulatory compliance history of a project before committing funds.

The DTCP's decision, when it comes, will need to address several interrelated questions: the validity of the licence consolidation, the compliance of the current ownership structure with Section 3 of the Haryana Development Act, and the alleged FEMA violations. Each of these issues could independently affect the project's future, and their combined resolution will determine whether Oberoi Realty can continue its involvement in Three Sixty North.

Key Takeaways

1. The Punjab and Haryana High Court (Justices Jasgurpreet Singh Puri and Sanjiv Berry) has restrained Oberoi Realty from further allotments in the Three Sixty North project, Sector-58, Gurugram, in a petition by AIPL. 2. The project spans 14.816 acres under three licences (2009-2012) consolidated into a single migrated licence, and allegations include violations of FEMA and FDI Policy in the real estate sector. 3. AIPL invokes Sections 3 and 8 of the Haryana Development and Regulation of Urban Areas Act, 1975, challenging both the ownership structure and licence compliance. 4. The Court has directed DTCP to decide the ownership dispute by July 20, 2026, or on a day-to-day basis within two weeks thereafter. 5. The case underscores the critical importance of due diligence on ownership chains, licence validity, and foreign investment compliance before investing in large-scale real estate projects.