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Sunday, Nov 17, 2019

Supreme Court : Seize land assets of Amrapali, probe owners for money laundering

Effectively winding up the Amrapali Group’s rights to remain in the real estate business, the court cancelled its Real Estate Regulatory Authority (RERA) licence and the leases that it held to build projects across Noida and Greater Noida.

india Updated: Jul 24, 2019 05:26 IST
HT Correspondent
HT Correspondent
New Delhi
The court also expanded the scope of the ruling to the realty sector at large, ordering the central and state governments to take action against similar builders.
The court also expanded the scope of the ruling to the realty sector at large, ordering the central and state governments to take action against similar builders.(HT Photo)
         

The Supreme Court on Tuesday took away all land assets of Amrapali Group, ordered federal money laundering investigation against its bosses and senior executives, and asked a state-run developer to build nearly 46,000 unfinished flats – a ruling that marks the strongest crackdown yet in the country’s real estate sector and one that did not spare government officials and banks for conniving with developers.

Justices Arun Mishra and UU Lalit said the crisis in Amrapali — affecting tens of thousands of families — was “a serious kind of fraud was played upon the buyers in active connivance with the officials of the Noida and Greater Noida Authorities and that of the banks”.

Thus, the judges ruled, banks and administrations of the two cities will not have any claim on Amrapali’s unfinished projects, which will now be completed by NBCC India Ltd, though no deadline was set.

Effectively winding up the Amrapali Group’s rights to remain in the real estate business, the court cancelled its Real Estate Regulatory Authority (RERA) licence and the leases that it held to build projects across Noida and Greater Noida.

The court also expanded the scope of the ruling to the realty sector at large, ordering the central and state governments to take action against similar builders. “They are further directed to ensure that projects are completed in a timebound manner as contemplated in RERA and home buyers are not defrauded,” the order said.

In addition to the flats that Amrapali should have built, it owes ₹5,000 crore to civic authorities and ₹1,000 crore to 10 banks.

“Non-payment of dues of the Noida and Greater Noida Authorities and the banks [by Amrapali] cannot come in the way of occupation of flats by homebuyers as money of homebuyers has been diverted due to the inaction of officials of Noida/ Greater Noida Authorities,” the order said.

There are also cases where Amrapali homebuyers have begun residing in their flats but have been unable to get ownership deeds or essential services since the builder did not clear the requisite dues to complete the handover process. The court ordered relief for residents in such cases too, directing the authorities to execute the agreements within one month and issue “completion certificates” whether or not the dues are recovered.

“Water Works Department of the concerned area and the electricity supplier are directed to provide the connections for water and electricity to homebuyers forthwith in Amrapali projects,” the court order reads.

The ruling is a culmination of at least three years of campaigning by homebuyers, who protested in streets and outside government offices before taking their fight to the top court. Amrapali’s director and senior executives have been in custody since October 9, and some of their personal properties, which was determined to have been bought using laundered money, were attached.

Amrapali “diverted homebuyers’ money and siphoned it off to foreign countries… the directors diverted the money by the creation of dummy companies, realising professional fees, creating bogus bills, selling flats at undervalue price, payment of excessive brokerage, etc,”, the order observed, making the case for federal investigations.

“For violations of FEMA [foreign exchange rules] and FDI [foreign development investment] norms, we direct the Enforcement Directorate to make investigation in accordance with the law and submit reports quarterly to this court. Money laundering aspect is also to be looked into by concerned authorities,” the court added.

The judges were particularly critical of the banks that extended loans for Amrapali projects. “The money obtained from banks was diverted to unapproved uses such as for the creation of personal assets of Directors, creation of assets in closely held companies by the Directors along with their partners and relatives, for personal expenses of Directors, to give advances without carrying interest for several years. There was total non-monitoring by the bankers,” they wrote in the order.

Civic authorities, too, came in for criticism. “The Noida and Greater Noida Authorities were grossly negligent in reviewing and monitoring the progress of the projects and in collusion with leaseholders failed to take action concerning non-payment of dues and illegally permitted the group to sub-lease the land without payment of dues. Bogus allotments of flats were made. There were other irregularities galore,” the order said.

In May, the Supreme Court noted that Amrapali Group had committed a “first-degree crime” by cheating homebuyers and said that those responsible, “no matter how powerful they are, would be booked and prosecuted”.

Advocate for the homebuyers ML Lahoty welcomed the ruling. “By expanding the horizons of Amrapali order to the other similar projects, Supreme Court has done a great service not only to 49,000 homebuyers [of Amrapali] but to lakhs of similarly situated and frustrated homebuyers of many other projects,” he said.

Legal experts agreed the ruling will help homebuyers at large.

“The order will have impact on proceedings in other cases and it is a progressive judgment that brings to fore the rights of homebuyers,” said Supreme Court advocate Anil Mishra. “It would have been better had the court fixed liability of banks and authority officials too,” he added.