New Delhi: The Supreme Court on Tuesday came to the rescue of tens of thousands of homebuyers left stranded by the Amrapali Group, ordering state-run National Buildings Construction Corp. Ltd (NBCC) to take over and complete its stalled projects.
In a landmark judgement meant to serve as a warning to errant builders countrywide, an apex court division bench headed by Justice Arun Mishra and comprising Justice U.U. Lalit appointed a court receiver, who will have rights to Amrapali’s properties and recover its dues. The receiver, senior advocate R. Venkataramani, is empowered to enter into a tri-party agreement to recover dues and pass on possession to the homebuyers.
The court cancelled Amrapali’s registration under the Real Estate (Regulation and Development) Act, 2016 (Rera), and directed the Enforcement Directorate to investigate money laundering and diversion of funds. It also barred Amrapali from taking up any more real estate projects, for failing to deliver homes on time and diverting funds. The top court ordered attaching the personal properties of group chairman Anil Sharma and directors Shiv Priya and Ajay Kumar.
“This is indeed a remarkable judgement and will hopefully set a badly needed precedent for righting the wrongs imposed on helpless homebuyers held hostage by stuck projects. This remarkable move will have a far-reaching positive impact on the Indian housing market," said Anuj Puri, chairman of Anarock Property Consultants. “Eliminating weak links in the value chain ultimately paves the way for financially sound and ethical developers to flourish."
The court asked NBCC to complete pending projects of the Amrapali Group at an 8% commission. Homebuyers must deposit any outstanding amount, as per their contract, within three months at the UCO Bank branch of the Supreme Court.
In September, the Supreme Court had appointed forensic auditors Pawan Aggarwal and Ravinder Bhatia to probe into suspected irregularities at Amrapali Group and their initial report suggested that over ₹3,000 crore of homebuyers’ money had been siphoned off.
On 28 February, the apex court allowed Delhi Police to arrest Amrapali Group chairman and managing director Anil Sharma and two directors on a complaint that homebuyers of their various housing projects had been cheated.
On Tuesday, the Supreme Court said it was apparent from the reports of the forensic auditors that money had been diverted by directors of the real estate group by creating dummy companies, realizing professional fees, creating bogus bills, selling flats at undervalued prices and paying excessive brokerage.
In the 270-page judgement, the court also cancelled various deeds granted in favour of Amrapali group companies by Noida and Greater Noida authorities. It held that the authorities shall have no right to sell the flats of the homebuyers to recover the dues. The bench said the homebuyers’ money was diverted in violation of the Foreign Exchange Management Act and foreign direct investment norms. It directed the Institute of Chartered Accountants of India to initiate an inquiry and take appropriate action against Anil Mittal, the statutory auditor for Amrapali group companies.
The Noida and Greater Noida authorities have been directed to hand over the completion certificate and registered conveyance deed executed in favour of the homebuyers within one month of completion, even if dues to the authority are not cleared. The court has held that the money has been diverted due to the inaction of officials of Noida/Greater Noida authorities.
The bench directed the Union ministry concerned, as well as the state government and the secretary of housing and urban development “to ensure appropriate action is taken as against leaseholders concerning such similar projects at Noida and Greater Noida and other places in various states, where projects have not been completed. They are further directed to ensure that projects are completed in a time-bound manner as contemplated in Rera and homebuyers are not defrauded".
“This judgement is not limited to Amrapali but all the fraudulent builders, who are making money by similar tactics. We welcome this great action from the Supreme Court, which has directed the Centre and state government to take actions against similar fraudulent projects," said advocate M.L. Lahoti, who represented the homebuyers.