The Supreme Court directed state-run NBCC (India) Ltd. to complete the construction of apartment projects of Amrapali Group, providing relief to 42,000 homebuyers.
The court ordered the Noida and Greater Noida civic authorities to grant completion certificate to 9,000 homebuyers who have already moved in, allowing them to get water and electricity that was denied because the developer had not paid the dues. It also ordered a money-laundering probe against the management of Amrapali Group for siphoning funds and cancelled its registration under the Real Estate Regulation Act.
“It is a shocking and surprising state of affairs that such largescale cheating has taken place and middle and poor class homebuyers 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,” the apex court said in its order.
To help homebuyers get possession of their apartments, the Supreme Court ordered:
- NBCC is to complete the project at a commission of 8 percent. NBCC will have to ensure that a detailed project report is prepared and the work is completed as expeditiously as possible.
- Registration of Amrapali Group of Companies under RERA stands cancelled.
- Noida and Greater Noida Authority will have no right to sell flats of homebuyers or the land leased for the realisation of their dues. Their dues will have to be recovered from the attached assets and same direction is applicable for recovery of the dues by various banks too.
- Homebuyers have been directed to deposit outstanding amount under the agreement within three months from today in the bank account opened in UCO Bank branch in the court. The amount deposited by them will be kept in a fixed deposit which will be disbursed under the order of the court on the phase-wise completion of the projects/work by NBCC.
- Noida and Greater Noida Authorities have been directed to enter into a tripartite agreement within one month where homebuyers are already residing and issue completion certificate. It also directed the authorities to register conveyance deed in favour of such homebuyers.
- Supreme Court also directed the central government as well as state governments of various states to take appropriate action against builders where the projects have not been completed. The court further directed them to ensure that projects are completed in a time-bound manner as contemplated in RERA and homebuyers are not defrauded.
Amrapali Group has 16 projects in Noida and Greater Noida. The construction of these projects began way back in 2011 on the land that was leased by the authorities on concessional basis.
Homebuyers’ money which was obtained for construction purposes was diverted by the Amrapali Group, the court said in its order. “Money obtained from the banks has also not been invested in the projects and has been diverted elsewhere to acquire other assets,” it said. The forensic report submitted in the court revealed that no construction activity had taken place since 2015.
Amit Gupta, one of the petitioners, called the judgment a “victory” for homebuyers as the builder and authorities have been held accountable. Gupta, who booked a flat in 2011 and paid the entire amount, was supposed to get possession by 2015. He was the first homebuyer to challenge Amrapali Group in the Supreme Court.
BloombergQuint spoke with him to understand what the order means for homebuyers:
Do you think these project are financially viable?
The project is completely financially viable. All this while NBCC was shying away from taking the responsibility of taking over the 16 projects of Amrapali in Noida and Greater Noida.
How will NBCC get money to complete the project?
The court has directed NBCC to complete the pending projects. How do they do it is up to them. But, according to our research, the economics of financing could be following:
1. 10 percent amount given by the builder to the authorities has been ceased by the court and it can be used as seed capital in the construction which amounts to approximately Rs 512 crore.
2. Rs 3,500 crore will be collected from the sale of unsold inventory, homebuyers’ pending receivables, default payments of homebuyers and recovery from key management persons holding homebuyers’ money. This was also highlighted by the forensic auditors in their report submitted in the court.
3. Another chunk of Rs 3,000 crore may come up by sale of additional floor area ratio/floor space index and unused chunk of land in a development-based model.
4. Additionally, Amrapali Group’s properties worth Rs 700-800 crore are already under auction in Delhi and the personal properties of directors and promoters have been attached which may also go to sale sooner or later and may fetch around Rs 1,000- 1,200 crore in total.
What does revocation of RERA registration mean?
This means the projects’ RERA registration has been denotified and the project will now not come under RERA. After NBCC completes the project, a tripartite agreement will be signed between homebuyers, NBCC and Noida/Greater Noida Authority. Within 30 days of signing this agreement, homebuyers will get the registration of their homes and then they can pay the stamp duty.
What is the next course of action that you plan to take?
We will scrutinise and then focus on the execution of the order. Now these projects will be delivered between 1-3.5 years. We need to go through all the modalities of the order. We will check whether there will be a buyers’ committee to oversee the execution of project completion. Our next target is to see that the order gets executed properly.
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