The Supreme Court-appointed court receiver R Venkataramani, tasked with monitoring the completion of real estate company Amrapali’s stalled projects in Noida and Greater Noida, Uttar Pradesh, has issued notices to almost 3,000 prospective buyers who have neither registered their details on the receiver’s website nor paid their outstanding dues, informing them of their units being cancelled.
This was needed as without there being clarity over unclaimed inventory, the flats could not be sold to raise funds for completion of unfinished units. This will also help the court receiver in implementing swapping of units.
The Supreme Court in 2019 directed that the former directors of Amrapali Group, Anil Kumar Sharma, Shiv Priya and Ajay Kumar, be jailed, and multiple cases have been lodged against them for allegedly diverting homebuyers’ money.
The group’s projects were handed over to the government-owned NBCC (India) to complete, and the apex court in 2019 had set a deadline of 2023 for the handover of flats.
Amrapali Stalled Projects and Investment Reconstruction Establishment (ASPIRE) has signed an agreement with a consortium of seven public sector banks for the disbursal of a Rs 1,500 crore loan for the stranded projects. Banks have so far released around Rs 600 crore, sources said.
The Supreme Court on March 28 had directed the consortium to release Rs 1,500 crore by March 29 so that construction of stalled real estate projects of the embattled Amrapali Group could begin.
What has happened?
The allotment of homebuyers who have not registered on the portal nor paid any amount has been cancelled with immediate effect. Others who have registered have until the first week of July to pay. The court is expected to next hear the Amrapali case on July 11, 12 and 13.
The notice by ASPIRE executed through NBCC (India) said, “In continuation with the notices issued in leading newspapers on Sep 9, 2021 and October 27, 2021, some homebuyers have updated their details in the website of the court receiver. But at the same time the homebuyers mentioned in the list have failed to update their details in the website of the office of the court receiver nor shown any interest in their allotment by making any payment which is due. After giving so many opportunities and time to defaulted homebuyers, this is intimated that allotment of the units of such homebuyers stand cancelled with immediate effect.
“Homebuyers who have registered in the portal of the court receiver and not made any payments are hereby given one and final opportunity to make payments within a period of 15 days until July 4, 2022. On failure to do so their units will also be treated as cancelled.”
How will this help?
This allows the court receiver’s office to identify which units are unclaimed, and start the process of swapping wherein buyers can opt for a unit in a developer’s finished project in lieu of one in an incomplete one or where construction has not commenced and the sale of unsold inventory by Anarock Property Consultants. The cash this generates will part-fund the completion of the projects. Banks that have released funding too have been insisting on getting the unsold inventory as security.
In November 2021, NBCC had appointed Anarock as the channel partner to sell Amrapali’s 5,000 housing units in Noida and Greater Noida. In March this year, Anarock said as many as 150 housing units had been sold for Rs 70 crore.
Supreme Court advocate Kumar Mihir, who is representing homebuyers in the Amrapali matter, said that this notice is meant for homebuyers who have not come forward till date and whose ownership is yet to be ascertained.
“There are several buyers who have opted for swapping of units as their projects were launched without any approvals and have now been scrapped. Those people have to be given the option to shift. The court receiver has been trying to streamline this process for the last two years,” he explained.
The sale of these 3,000 or so units, if it goes through, can raise close to Rs 900 crore given that the average price per unit is around Rs 30 lakh, sources said, adding that this amount can help complete three to four projects.
The Supreme Court on August 13, 2021, had given 15 days’ notice to 9,538 Amrapali homebuyers to fill their details on the court receiver’s website and start making payments, failing which the court receiver would be at liberty to cancel their allotment and include their units as part of the unsold inventory.
The Supreme Court on October 13, 2020, had permitted the court receiver to incorporate a special purpose vehicle to enable flow of funds from the SWAMIH Fund managed by SBICap Ventures, which had promised Rs 650 crore.
In November 2019, the central government launched the Special Window for Affordable & Mid-Income Housing fund or the SWAMIH Investment Fund to help complete over 1,500 stalled housing projects, including those that have been declared non-performing assets (NPAs) or had been admitted for insolvency proceedings. The move was to help 4.58 lakh housing units across the country. Only RERA-registered projects with a positive net worth are to be provided funding. The fund is managed by SBICap Ventures.
ASPIRE was floated for this reason. It consists of a court receiver, a forensic auditor and a chartered accountant. It is a not-for-profit company under Section 8 of the Companies Act, 2013.
The total cost of completing all of Amrapali Group’s stuck projects is approximately Rs 8,500 crore.
On July 23, 2019, the top court cancelled the registration of the Amrapali Group under the Real Estate (Regulation and Development) Act, 2016, and ousted it from its prime properties in NCR by nixing land leases for breaching buyers’ trust.
How are unclaimed units treated under IBC?
There appears to be no statutory framework under Insolvency and Bankruptcy Code (IBC) in respect of unclaimed units in case of an insolvency process of a real estate company, say experts.“On June 14, 2022, the IBBI (Insolvency and Bankruptcy Board of India) has invited suggestions from the public for effective and expeditious resolution of real estate projects. The IBBI has sought public responses on various vexing issues such as addressing delayed claims by homebuyers, the ability of homebuyers to complete the project themselves, dealing with unsold inventory, etc. It is to be noted that this is only an indicative list and, therefore, open for further suggestions,” explained Dinesh Pednekar, partner, Economic Laws Practice.