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Tuesday, Sep 17, 2019

5200 flats in Amrapali projects either bogus or unsold: SC-appointed auditors

A bench led by justice Arun Misra was also displeased to know that Amrapali’s two properties could not be auctioned by the Debt Recovery Tribunal (DRT) because banks are not coming forward to finance buyers who have shown interest to purchase the said properties.

india Updated: Feb 12, 2019 10:07 IST
HT Correspondent
HT Correspondent
Hindustan Times, New Delhi
A view of Amrapali Sapphire, at sector 45, in Noida.  The SC is hearing a batch of petitions filed by homebuyers who are seeking possession of around 42,000 flats booked in various projects of Amrapali Group.
A view of Amrapali Sapphire, at sector 45, in Noida. The SC is hearing a batch of petitions filed by homebuyers who are seeking possession of around 42,000 flats booked in various projects of Amrapali Group.(Sunil Ghosh / HT Photo )
         

There are 5,200 flats in various Amrapali projects which are either bogus or unsold, court-appointed forensic auditors on Monday told the Supreme Court, which also grilled multinational firm, JP Morgan, for investing Rs 85 crore in the real-estate company in 2010.

A bench led by justice Arun Misra was also displeased to know that Amrapali’s two properties could not be auctioned by the Debt Recovery Tribunal (DRT) because banks are not coming forward to finance buyers who have shown interest to purchase the said properties. As per an earlier SC order, DRT had to auction the properties by January 31.

The top court is seized of a batch of petitions filed by homebuyers who are seeking possession of around 42,000 flats booked in projects of Amrapali Group.

Advocate Mihir, appearing for flat owners, told the bench that the DRT has reissued the same proclamation because it received no bid for the two properties. The lawyer told the bench that the banks were not ready to finance the buyers who want to purchase Amrapali properties. Also, DRT has asked for a clarification from SC whether banks can finance such properties.

As per DRT’s understanding the said properties are clean titles and, therefore, banks should be in a position to finance such a purchase. However, banks treat such properties as non-performing assets (NPA) and no loan can be advanced to make a bid for them.

The court was surprised to hear the submission. Justice Mishra referred to a recent news report on how banks were ready to fund NBCC for completing Amrapali’s unfinished projects. “Are banks making a cartel with vested interest to defeat our orders,” the judge wondered and said appropriate orders will be passed on the issue.

Advocate ML Lahoty, also appearing for flat owners, pointed out to the court that in 2017 the Noida authority was asked to issue occupation certificate subject to Amrapali paying 10% of the land value. As per forensic auditors Amrapali reportedly owes Rs 1,900 crore to Noida and Rs 3,200 crore to Greater Noida authorities. At this, the lawyer for Noida authority said the authority was ready to issue occupation certificate provided it was assured a payment security. This submission was countered by advocates for homebuyers who said under the present law prepayment of dues is not a condition for grant of occupation certificate.

The SC-appointed auditors also placed their report on JP Morgan’s transaction with Amrapali in 2010, and alleged that the company had violated Foreign Exchange Management Act (FEMA). They said the company had invested the money through external commercial borrowings whereas it was not allowed at that point of time unless the company had Foreign Investment Promotion Board (FIPB) approval.

Morgan’s counsel defended the transaction and tried to explain how the private equity was placed in Amrapali even as the court questioned him on the multinational company’s investment of Rs 85 crore. The court wanted to understand how did Morgan exit Amrapali at Rs 40 crore and that too by selling shares to Amrapali’s dummy companies.

Forensic auditors revealed that peons working in Amrapali group were directors in such companies. The judges sought to know details of investors who placed money through JP Morgan in Amrapali and also beneficiaries when it exited. “How is it possible that a peon earning Rs15,000 per month can afford to purchase shares worth Rs 140 crore,” the court said, fixing February 14 to hear the matter again.

First Published: Feb 12, 2019 10:07 IST