Moneycontrol
| Source: Moneycontrol.com

Supreme Court restrains Amrapali Group directors from flying abroad

The bench, also appointed senior advocate Shekhar Naphade as amicus curiae (friend of court) to assist it and protect the cause of buyers

Providing relief to homebuyers, the Supreme Court today barred promoters of real estate company Amrapali Group from leaving the country without its permission and appointed an amicus curiae to oversee buyers’ interests.

The bench headed by chief justice Dipak Misra issued notices to the company and sought its response within a fortnight on a plea filed by Amrapali Silicon City Flat Owners Welfare Society. As many as 450 society members have filed a writ petition challenging the IBC Code’s Article 14 and 32. They were represented by lawyer Ajit Sinha.

The bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, appointed senior advocate Shekhar Naphade as amicus curiae (friend of the court) to assist it and protect the cause of buyers.

“We are happy and relieved that an amicus curia has been appointed to espouse our cause. At least now there will be somebody representing us at the committee of creditors’ meetings,” says Surendra Jain, vice president Amrapali Silicon City Flat Owners Welfare Society.

On October 6, the Supreme Court had sought the response of the government and two Amrapali Group firms on a plea by over 100 Amrapali home buyers seeking that their interests be safeguarded by treating them as secured creditors like banks and financial institutions. The plea, filed by Bikram Chatterjee and 106 others, had sought quashing of a National Company Law Tribunal (NCLT) order passed on the plea of Bank of Baroda seeking initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 against Amrapali Silicon City Pvt Ltd.

The plea has sought that either the home buyers are treated equally with banks and FIs, or the provisions of the bankruptcy code, which give priority to lending institutions, be held ultra vires to the Constitution as being violative of fundamental rights like rights to equality and life.The petition was filed through lawyer M L Lahoty. It had alleged that the 107 home buyers had neither got possession of the property, nor any compensation from the firm.

Silicon City is constructing its project in Noida Sector 74-75. The project is divided into three phases. Under the first phase, out of 2000 units, the company is yet to deliver 500 units. As part of the second phase, the company has not delivered 950 apartments and work is almost 60 percent complete. The third phase is barely 30 to 40 percent complete. Out of a total of 4,400 flat buyers, only about 1,500 flats have been delivered which means that around 3,000 homebuyers have so far been impacted by the order.

Under the insolvency law, the insolvency resolution professional (IRP) takes over the day-to-day management of the company and tries to arrive at a solution within six months. In this case, Deloitte’s Rajesh Samson has been appointed as the IRP. Bank of Baroda had initiated the insolvency process for an outstanding amount of Rs 56 crore. The company has delayed delivery of the Silicon City project located in Noida and has been unable to clear dues it owes Noida Authority (around Rs 550 crore). It is facing a default of Rs 155 crore against banks.

On October 6, Ultra Homes, an Amrapali Group company also went in for insolvency resolution. Bank of Baroda, one of the lenders to the commercial project in Greater Noida, had moved the National Company Law Tribunal to recover its dues. The principal bench of NCLT, Delhi, issued the order on the lender's plea. The tribunal appointed Sanjay Gupta as the insolvency resolution professional (IRP), to act on behalf of the lenders, and suggest possible way to recover the debt.
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