In a major relief to 48,000 buyers of the seven stalled realty projects of the Amrapali Group in Noida and Greater Noida, the Supreme Court has appointed the state-run realty firm NBCC to complete it. These flats have been under various stages of construction since 2008.
Holding development authorities and banks accountable for deliberately overlooking the violations committed by the builder, the SC said, “It is a shocking and surprising state of affairs that such a large scale cheating has taken place and middle and poor-class home buyers have been duped and deprived of their hard-earned money and lifetime savings and some of them had taken a loan from the bank and they are not getting houses.”
Appalled at the state of affairs in realty sector in Noida and Greater Noida, the SC referred to the affidavits filed by Noida and Greater Noida Authorities in which the two authorities said that more than 70% of the projects - which were initiated way back in the year 2008-09 and were supposed to be completed within 3 years – were incomplete.
It has also asked the two development authorities -- Noida and Greater Noida -- to give completion certificate and provide basic amenities to all those flats which are in a ready-to-move-in stage.
Of the 48,000 flats almost 10,000 are complete and buyers have been residing there. However, due to the lack of the completion certification, their registration has been in abeyance for several years. Water and electricity connections are also temporary.
With the cancellation of land-lease agreement of Amrapali Group, the SC has vested the land rights to the Court Receiver, senior advocate R Venkataramani. Venkataramani is authorised now to sell, lease out or take all decisions to raise fund to complete the projects.
So far as the completion deadline is concerned, there is no clarity on that. The Supreme Court has also cancelled the project’s RERA registration.
Realising financial bungling and siphoning of money, the court has ordered the Enforcement Directorate (ED) to register money laundering cases against Anil Sharma, managing director and chairman and Shiv Priya and Ajay Kumar, two directors of the company.
How will flats be constructed?
There are several ways to generate funds by the receiver appointed by the Supreme Court – (a) selling unused land of the Amrapali Group (b) taking over company’s cash deposits (c) collecting remaining due amount from the homebuyers. (e) selling many attached properties of other companies where money was siphoned off.
The judgement suggests the Court Receiver will pay money – raised through the aforementioned means - to NBCC which will then complete the project with 8% profit margin.
What is the deadline for NBCC to complete the project?
The Supreme Court hasn’t set any deadline for NBCC to finish the flats as the priority seems to be on raising the money first. The Court hasn’t disposed of the case and next hearing is on August 9, 2019.
What will happen to the banks’ 1000 cr loan to Amrapali and Noida’s and Greater Noida’s Rs 5000 cr land dues?
The Court Receiver has first priority to get the flats constructed and not to pay the dues of banks and authorities.
“However, since we have attached various other properties where homebuyers’ money has been invested, the rights of the Authorities as well as bankers to get the money recovered from the other properties of the builder Amrapali Group/Directors and where they have invested money and belonging to the guarantors in the various transactions,” the SC said.
Will there still be challenges in completing the projects?
Though the SC has provided complete ring-fencing for the buyers, the funds to start the project will be a big challenge.
Venket Rao, legal advisor, UP RERA, says, “Certainly, it’s a good beginning for buyers, but practical implementation will have challenges, especially considering the funds (immediate) will be a challenge. Though buyers have to chip in by paying their dues with three months and some diverted funds have to be bought by Promoters/individuals etc, question marks still subsist.”
Rao adds, “NBCC will have to comply and as the order reads, they shall be given money from the funds collected from the buyers as per the completed phase. It is also not clear if NBCC will chip in with initial amounts.
Here’s the background of the case -:
Real Estate Developer Amrapali Group launched seven projects between 2008 to 2015 in Noida and Greater Noida and sold to 48,000 homebuyers.
Out of 48,000 flats, about 10,000 flats are in ready-to-move-stage but common amenities such as clubs, convenient shopping area, parks etc are not ready.
In 2017, Bank of Baroda, one of the prime lenders to the company, filed an insolvency petition in the National Company Law Tribunal (NCLT) against Amrapali Infrastructure as the company defaulted bank’s loan. The Bank wanted to recover its loan and interest due to the company.
Under the Insolvency and Bankruptcy Code, 2016, in case the resolution proceedings fail, it gives right to banks to recover money by liquidating the assets of the company.
“If the assets, which mean flats, will be sold to recover banks’ loan, what will happen to us? We have paid money for those flats and we have our rights over them,” said Indrish Gupta, one of the 100 buyers who filed a petition in the Supreme Court and demanded that resolution proceedings should be halted.
The Amrapali Group had to pay Rs 3000 cr to development authorities as lease rent for land and Rs1000 cr to 10 banks.
Between September 2017 till July 2019, the SC heard the matter several times and passed some crucial orders. It directed a forensic audit of the company and sent its MD Anil Sharma and two directors to jail for not cooperating with the police.
In January 2009, the SC asked the state-run NBCC to complete two projects - Eden Park and Castle – and give a detailed plan to complete the rest of the projects.
The SC had asked Noida and Greater Noida authorities to finish the incomplete projects in May 2019 but expressed inability saying that they didn’t have resources and expertise to do so. The court had, then, reserved its judgement which it pronounced on July 22, 2019.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine