The receiver informs the apex court that the formalities for incorporation of a not-for-profit company under Section 8 of Companies Act, 2013 to receive funds from SWAMIH Fund has been finalised.
The Supreme Court on October 29 gave its nod to the government’s construction arm NBCC to go ahead with the sale of unsold inventory in Amrapali projects and not wait for completion.
NBCC has placed an action plan for sale of unsold inventories and floor area ratio (FAR) before the Supreme Court (SC), which has now been directed to be amended in consultation with the SC-appointed receiver and senior advocate R Venkataramani and his committee.
The receiver also informed the bench comprising Justices UU Lalit and Ashok Bhushan that if the current pace of construction continues, the entire unsold inventory can be sold in the next 12 months.
The order is expected.
NBCC, in a note submitted before the top court, has said that the total unsold residential units are 5,229 and are valued at Rs 2215.77 crore. The unsold commercial units are 560 along with a nursery school, nursing home and milk booths, and are valued at Rs 212.97 crore.
The likely amount of FAR of two projects at Noida is Rs 242.24 crore and five projects in Greater Noida is Rs 1,784.38 crore, which is calculated based on the approximate market value duly vetted by committee members.
It was proposed that the sale of the inventory would be undertaken in a phased manner after the completion of the project but the apex court was of the view that instead of waiting for completing the project, the sale process should be initiated immediately.
“At the time when the court is trying its best to arrange the funds for construction, expeditious sale of unsold inventory and FAR is a big concern and it is for this reason NBCC has been asked to go ahead and start the sale process. We hope that the sale by NBCC will generate some faith in prospective buyers. Further, the money generated by this sale will reduce the overwhelming dependence on the money being deposited by homebuyers and will ensure that the construction by NBCC continues in an unabated manner,” Kumar Mihir, advocate, told Moneycontrol.
The government’s construction arm on October 13 had proposed taking up sales and marketing mandate of unsold inventories and FAR for Amrapali projects. The bench had then directed the court receiver to submit the list of unsold inventories to ensure that there is transparency in the sales process.
Sources had earlier told Moneycontrol that MSTC is expected to raise around Rs 400 crore by auctioning six assets of the embattled firm and utilise the amount in completion of the stuck projects.
The six assets that will be auctioned include floor area ratio with a reserved price of Rs 55 crore with capacity to build three new towers in Princely Estate in Sector 76, 12.73 hectares of land worth Rs 44 crore in Udaipur, and Amrapali hospital worth Rs 21 crore in Greater Noida’s Sector Omega-I. Others include three pre-cast factories of the group in Greater Noida valued at Rs 179 crore, Rs 140-crore and Rs 39 crore respectively.
Sources had also told Moneycontrol that Rs 400 crore is expected by way of payments from homebuyers by the end of the October-December quarter.
The receiver also informed the court that Metal Scrap Trade Corporation (MSTC) has advertised four properties for auction scheduled for October 31. On completion of the auction, the outcome report will be submitted to the court.
He informed the apex court that the formalities for incorporation of a not-for-profit company under Section 8 of Companies Act, 2013 to receive funds from SBI Caps/SWAMIH Fund have been finalised and the receiver and the committee will soon be approaching the Registrar of Companies for its registration of the company.
The SC on October 13 had permitted the court receiver to incorporate a special purpose vehicle (SPV) to enable flow of funds from SBICap for completion of unfinished projects even as it directed the Reserve Bank of India (RBI) to step in and ensure that banks provide funding for the completion of stuck real estate projects of the embattled Amrapali Group even as it.
SBICap Ventures-managed stressed asset fund is an alternative investment fund (AIF) that was set up by the government in November last year to provide last-mile funding for stalled real estate projects.
The court receiver had on October 13 informed the apex court about ironing out of the legal structure with regard to SBICap funding. He had said that both parties have agreed to form a separate SPV under Section 8 of Companies Act under Social Welfare Project which will enable funding to start. The Supreme Court approved the formation of the company.
It should be noted that SBICap cannot release money directly to an individual such as the court receiver as per its charter but into a company account. Therefore, unless a company is constituted the money cannot be disbursed by the stressed asset fund.
The SWAMIH Investment Fund had agreed to fund six projects, namely Silicon City 1 and 2, Crystal Homes, Centurian Park Low Rise, O2 Valley and Tropical Garden. The amount of Rs 625 crore would cover a total of 6,973 units.
The court receiver informed the court that a meeting was organised by the RBI with member banks of the Indian Banks Association on October 28. The meeting concluded on the note that before the next date of hearing, through the members of IBA, a tentative set of proposals will be made available to the receiver which will then be placed before the court on the next date of hearing, which is on November 16.
On October 13, the SC had told the RBI to facilitate a smooth credit line to stuck Amrapali housing projects after being informed by the court receiver that nothing substantial on the front had been achieved.
“The RBI should be called upon to issue a clear directive to banks that they shall draw up a project funding proposal within such limit as they deem fit on the basis of information already shared with them, within a span of one month,” the bench had said.
More than 40,000 homebuyers, who had invested in various Amrapali projects more than eight years ago, are yet to receive possession of their homes.
The estimated cost of completion of all these pending projects of Amrapali is approximately Rs 8,500 crore, and NBCC, with the support of the apex court, has already completed and handed over two stalled projects, while implementation of some more projects is in progress at present with the funds made available by the apex court.On July 23, 2019, the top court had cracked the whip on errant builders for breaching the trust reposed by homebuyers and ordered cancellation of the registration of the Amrapali Group under the Real Estate (Regulation and Development) Act, 2016, and ousted it from its prime properties in the NCR by nixing the land leases.