The apex court holds banks, Noida and Greater Noida authorities responsible for the Amrapali mess.
Coming down heavily on banks, Noida and Greater Noida authorities for the Amrapali mess, the Supreme Court on July 23 ruled that they had violated the doctrine of public trust by permitting diversion of funds of homebuyers and issued as many as 11 directions that included cancellation of the RERA registration of all Amrapali Group projects.
It appointed the government's construction arm National Buildings Construction Corporation (NBCC) to complete all its pending projects, providing relief to over 40,000 homebuyers.
The bench also issued directions for all stressed housing projects, specifically those in Noida and Greater Noida.
It directed the concerned ministry of central government, the state government and the Secretary of Housing and Urban development to ‘ensure that 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 home buyers are not defrauded.’
The case has now been listed for further hearing on August 9.
"Law never permits unjust gain based upon fraud. The principle “fraud vitiates” is clearly attracted and such a transaction would become unenforceable and would be against the public trust doctrine. Real estate business can never prosper in case of breach of trust, bankers, Authorities in connivance and the builders are permitted to take away the innocent home-buyers' money without being accountable to their action/inaction.
"Authorities and Bankers have not acted in furtherance of public interest and failed to perform duties enjoined upon them. The kind of fraud that has taken place not only in Amrapali Group of Companies but at large as more than 70 percent of the various projects have not come up, is alarming to the Courts to take affirmative steps with the direction to prevent such frauds, restore the money of home-buyers and to punish incumbents responsible for such act. At the same time to ensure that buildings are completed. It cannot be denied that lifetime savings of homebuyers have been invested for purchase of a house with the faith and trust they have given the money. The scheme of the Government is to promote the real estate for which land had been acquired, even poor farmers have not been paid the compensation," the judgment said.
"We have appointed the NBCC to complete the various projects and hand over the possession to the buyers. The percentage of commission of NBCC is fixed at 8 percent," a bench of Justices Arun Mishra and UU Lalit said.
It also cancelled the leases of Amrapali's properties granted by the Noida and Greater Noida authorities and directed the Enforcement Directorate to investigate alleged money laundering by CMD Anil Sharma and other directors and senior officials of the group.
"The registration of Amrapali Group of Companies under RERA shall stand cancelled; The various lease deeds granted in favour of Amrapali Group of Companies by Noida and Greater Noida Authorities for projects in question stand cancelled and rights henceforth, to vest in Court Receiver," the judgment said.
"We hold that Noida and Greater Noida Authorities shall have no right to sell the flats of the home buyers or the land leased out for the realization of their dues. Their dues shall have to be recovered from the sale of other properties which have been attached. The direction holds good for the recovery of the dues of the various Banks also," the judgment said.
It appointed senior advocate R Venkataramani as the court receiver. All rights of Amrapali properties will now be vested with him after the cancellation of lease.
"The right of the lessee shall vest in the Court Receiver and he shall execute through authorized person on his behalf, the tripartite agreement and do all other acts as may be necessary and also to ensure that title is passed on to home buyers and possession is handed over to them," the judgment said.
It also directed Noida and Greater Noida to give completion certificates to flat buyers already residing in various projects of the group within a month and asked the Centre and the state governments to take appropriate action against the builders who have not delivered the group projects on time.
"We also direct Noida and Greater Noida Authorities to execute the tripartite agreement within one month concerning the projects where homebuyers are residing and issue completion certificate notwithstanding that the dues are to be recovered under this order by the sale of the other attached properties. Registered conveyance deed shall also be executed in favour of homebuyers, they are to be placed in the possession and they shall continue to do so in future on completion of projects or in part as the case may be. We direct the Noida and Greater Noida Authorities to take appropriate action to do the needful in the matter. The Water Works Department of the concerned area and the Electricity Supplier are directed to provide the connections for water and electricity to home buyers forthwith," the 270-page judgment said.
The homebuyers have been directed to deposit the outstanding amount under the agreement entered with the promoters within three months in the bank account opened in UCO Bank in the branch of the apex court. The amount deposited by them shall be invested in the fixed deposit to be disbursed under the order of the court on phase-wise completion of the projects by the NBCC, the judgment said.
The apex court also directed the Enforcement Directorate and concerned authorities to investigate and fix liability on persons responsible for 'such violation and submit the progress report in the Court and let the police also submit the report of the investigation made by them so far', it said.
The Institute of Chartered Accountants of India have been directed to initiate appropriate disciplinary action against Anil Mittal, CA for his conduct 'as reflected in various transactions and the findings recorded in the order and his overall conduct as found on Forensic Audit'.
"Let appropriate proceedings are initiated and concluded as early as possible within 6 months and a report of action taken to be submitted to this Court," the judgment said.
The apex court directed various companies/ directors and other incumbents in whose hands money of the homebuyers is available as per the report of Forensic Auditors, to deposit the same in the Court within one month, it said.
"The last opportunity of one month is granted to deposit the amount and to do the needful failing which appropriate action shall be taken against them," the judgment said.
NBCC refused to comment.
Homebuyers welcomed the judgment, saying that they were happy and relieved. "We are hopeful that this would resolve issues being faced homebuyers. We also hope that NBCC will be able to start work on the projects as soon as possible," they said through one of their lawyers Mihir Kumar, advocate.
Consultants said that this is a major landmark judgement favouring aggrieved homebuyers and would set a badly-required precedent.
"The Supreme Court's cancelling registration of all companies of Amrapali Group under state RERA is indeed a remarkable judgment and will hopefully set a badly-needed precedent for righting the wrongs imposed on helpless homebuyers held hostage by stuck projects. This ruling will have a far-reaching positive impact on the Indian housing market and, by eliminating weak links in the value chain, ultimately paves way for financially sound and ethical developers flourish. Several homebuyers will now get relief as they will also not have to bear the extra burden of the pending statutory dues. With NBCC given the charge to complete all these projects, buyers are being shown real light at the end of a long, dark tunnel. Such moves will have a long-lasting impact on the overall real estate sector and not just on some buyers,” said Anuj Puri, chairman - ANAROCK Property Consultants.
On February 28, the apex court had allowed the Delhi Police to arrest Amrapali Group chairman and managing director, Anil Sharma, and two directors on a complaint that buyers of their various housing projects were duped.
The top court, which was seized of several pleas of home buyers seeking possession of around 42,000 flats booked in Amrapali projects, had also ordered attachment of personal properties of Sharma as also its directors -- Shiv Priya and Ajay Kumar.
NBCC had earlier been directed by the apex court to construct two stalled projects of Amrapali Group - Castle and Eden Park projects in Noida.In January 2019, the forensic auditors had pointed out that there are some discrepancies in the investment made by JP Morgan in Amrapali Zodiac which they would like to further investigate. According to the auditors peons had bought share of companies worth crore and were probably involved in the transaction with JP Morgan.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.