Wednesday, February 1, 2023
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SC Reserves Order On Stalled Projects In Amrapali Case

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The Supreme Court today while hearing several intervention applications in the Amrapali matter, the Bench has reserved on three specific issues including: 

  • The functioning of projects by State Banks
  • If surplus FARs be sold to raise funds or be returned to the Noida/Greater Noida Authorities 
  • If additional compensation be granted to the Greater Noida authorities. 

Senior Advocate Mukul Rohatgi, appeared  for JP Morgan and informed the Court that their properties have been attached  to recover money to the extent of 187 cr as per the Court’s directions and the attachment is blatantly illegal, as JP India does not have one Penny’s worth in Amrapali. They have had no dealing with Amrapali, as they are independent and have had no investment in Amrapali. Rohatgi asked for a day to file rejoinder since the forensic auditor has not even heard him.

Justice Mishra stated that they are are concerned with JP Morgan as it has branches all over the world, and that has to be taken into account.

Sr Adv Harish Salve appearing for SBI Cap, asked the Court to not pass any orders till he takes instructions from SBI, and urges them to release more funds. 

Justice Lalit asked Siddharth Dave, representing NBCC to submit a flow chart on their plans for the next 2-3 months and to inform the Court as to the funds that are still available with them, money required in next 3 months and if access to more funds is required, and they would be raised, their plan to finance the activities for the next few months, and how will the unsold units be sold. 

The Bench urged the Noida and Greater Noida authority to be more accommodating as far as the rate of interest is being levied concerned,

“The sector will die down if you continue to remain rigid. You have to give some relaxation. Not one project, all projects will fall through.”

Senior Advocate ML Lahoty on behalf of the homebuyers, submitted that homebuyers should not be made to pay anymore at this point towards the construction. According to previous directions, Court had asked construction to be completed in a time bound manner, making the homebuyers entitled to compensation.

Justice Mishra stated that Homebuyers should not be under the impression that without paying they will enjoy benefits of the property.

“Let us do something pragmatic in a step wise manner, for now. Do not invite our wrath, Mr Lahoty.” Said Justice Mishra.

ML Lahoty clarified that he did not suggest that homebuyers will enjoy without paying, but they’ve already been aggrieved a lot after paying huge amount of money.

Supreme Court will hear Rohatgi on the JP Morgan issue in its next hearing on Wednesday, along with Salve after he seeks instructions from SBI Cap

Supreme Court in is last hearing had allowed the enforcement directorate to attach properties of J P Morgan in Amrapali case after being informed that Rs 187 crore have been detected as proceeds of crime. The order was passed while taking hearing note of the receiver appointed for execution of the Amrapali group housing projects urging the Court to issue urgent orders to the Reserve Bank of India for an advisory asking all banks and financial institutions to disburse balance loan amounts to Amrapali homebuyers in order to ensure that funds are available to complete the stalled projects. 

The Supreme Court has been monitoring the execution and handover of the stalled Amrapali housing projects ever since an internal audit report, commissioned by the Court, found grave irregularities on part of Amrapali firms and its directors. The receiver was appointed to track the completion of the stalled projects and ensure that they are completely timely and handed over to the homebuyers.

The Supreme Court had passed its landmark judgement in the Amrapali case in 2019. The homebuyers of various projects who were aggrieved by the Corporate Insolvency Resolution Process that was being initiated by the National Company Law Tribunal against Amrapali Silicon City Private Limited had filed writ petitions before the Supreme Court.

According to these homebuyers, if such resolution is started against Amrapali, the interest of thousands of homebuyers of various projects being developed by the Amrapali group will be drastically effected. Other than this, there also were allegations of funds siphoning by Amrapali group, and therefore Supreme Court had taken cognizance of the matter and ordered a forensic audit to be conducted. The Amrapali group had challenged the pleas of the homebuyers. The petitions were also challenged by the and the Banks who had financed loan to the Amrapali Group under various mortgage deeds and the Noida and Greater Noida Authorities, with whom the Group had executed lease deed for lands on which the products had to be developed. According to them, their rights over the projects should be priorities over the homebuyers. 

The Supreme Court had ordered the cancellation of registration of Amrapali Group under RERA Act, and the projects were ordered to be completed by NBCC India Pvt Ltd. The Banks were given no right to sell the flats of home buyers or the land that was leased out, to get their own dues. The Banks were asked to realise their dues only from sale of the properties of Amrapali Group. All the lease deeds that were granted to Amrapali Group were cancelled and the Court receiver was given the rights of the lessee, who had to execute all the agreements and ensure that title is passed on to homebuyers and possession is handed over to them

In today’s hearing, Sr. Advocate Venkataramani informed the Court that UCO bank has in principal agreed to disburse any loan demand for any home buyers, will fund the NPA account holders also, and NBCC will try their best to fund the stalled projects. Directions have to be given to SBI to consider the proposal, as they need to relax some of their rules about due diligence too.

He has prayed for the following directions from the Court: 

  • UCO Bank be directed to either by itself, or through a consortium of banks, submit a final funding plan within four weeks.
  • Direct the Reserve Bank of India (RBI) to advise all banks and financial institutions (such as insurance companies), and employer establishments which have sanctioned home loans to Home-Buyers to disburse all balance loan amounts to the Home-Buyers whose accounts are regular.
  • All banks and financial institutions be directed to work out a long-term restructuring of all Home-Buyers’ loans pertaining to Amrapali Projects as well as any charges on Amrapali project held by banks and financial institutions.
  • Direct the RBI to keep its circulars and guidelines relating to NPA in abeyance and permit all banking and financial institutions etc. to disburse loans to NPA Home-Buyers as well, notwithstanding their NPA status.
  • Direct the Ministry of Finance, Government of India, to receive and process through SBI CAP the revised proposals prepared by the Receiver and the Committee for the release of reasonable Stress Funds as ‘additional reserve fund’.
  • Permit the Receiver and the Committee assisting him to proceed to sell or transfer the unused sanctioned FAR, permissible FAR, and purchasable FAR, as well as additional FAR due to existing or proposed Metro line
  • Issue directions to NOIDA , Greater NOIDA and other Public Authorities vis-a-vis proceeding with unused FARs etc. to sanction necessary plans and schemes and also to provide Power, Water, and Sewage connections to the Institution, builder and developer appointed by NBCC.

-India Legal Bureau

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