How Supreme Court Judgement On Amrapali Group Will Benefit Homebuyers
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 onwards.
The apex court 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.
About 10,000 of the 48,000 flats are complete and buyers have been residing in them. However, in the want of completion certification, their registration has been in abeyance for several years. Water and electricity connections are also temporary.
The Supreme Court has cancelled the lease agreement of Amrapali Group with both Noida and Greater Noida Authority, which means that the Group has no longer any right over the land.
The land ownership of the projects in question is now with Noida and Greater Noida Authority depending on their location.
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.
It has appointed senior advocate R Venkataramani as the court receiver who gets all the rights of the Amrapali Group. He is authorised now to sell, lease out or take all decisions to raise fund to complete the projects.
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.
The SC has pronounced some relevant part of the judgement which runs in 200 pages and is not in public domain yet. The pronouncements suggest the following relief to the homebuyers and the fate of the project.
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 the remaining due amount from the homebuyers
The oral pronouncement of the judgement suggests that the receiver will pay money – raised by the above suggested means – to NBCC who will complete the project with 8% profit margin.
What is the deadline for NBCC to complete the project?
“There is no deadline as far as the completion date is concerned. Further clarity will come only after the full judgement comes in public domain,” says ML Lahoty, who represents buyers in the SC.
What will happen to the banks’ Rs 1000 cr loan to Amrapali?
The court receiver has first priority to get the flats constructed. “So if after paying money to NBCC for finishing the flats, no money is left, bankers will not get anything,” says Venket Rao, legal advisor, UP RERA.
What will happen to land dues worth Rs 3000 cr to Noida and Greater Noida Authority?
Noida and Greater Noida Authority have got only 10% of the total lease rent from Amrapali and now when the court has cancelled the lease agreement, the authorities have got back their land. However, can they charge money as the land cost from NBCC?
Rao says, “The judgement suggests that first priority will be the completion of the flats and if there is left after all work, the development authorities’ share will be considered after that. There is a high probability that the authorities will lose their dues worth Rs 3000 cr.”
Real Estate Developer Amrapali Group launched seven projects between 2008 to 2015 in Noida and Greater Noida and sold to 45,000 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 to pay 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 Rs 1000 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 they 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.
Source : Outlook India