May hand over stuck projects to govt bodies for completion, top court warns Amrapali

The Supreme Court (SC) indicated on Wednesday it could take away the Amrapali Group’s ownership of unfinished projects and hand them to government agencies, reiterating that it will protect the interests of tens of thousands of homebuyers after the realty developer failed to deliver flats despite being paid.

Approximately 46,000 flats have not been delivered by Amrapali Group companies, which have the largest tract of land for a real estate developer across Noida and Greater Noida in the National Capital Region.

Having opened a case last year on a petition by homebuyers, the SC and forensic auditors unravelled an alleged fraud involving a web of companies that were used to funnel out investor money.

“If you are not able to discharge your obligations, Noida and Greater Noida Authority will take back your land. You are out. The construction cost is being paid by homebuyers. NBCC can complete the projects and by selling the unsold flats, the authorities and NBCC will recover their costs. We will take care of the home buyers,” said justice Arun Mishra, who is hearing the case with justice UU Lalit.

The fraud also involves unpaid loans from banks, which the judges said could invoke mortgages and guarantees to recover dues. “The loans which have been secured by Amrapali by mortgaging the lands to banks can be collected by the financial institutions from the directors of the company or the corporate guarantors,” the judges added.

The court also hinted that it could pass orders giving homebuyers the first claim on the money recovered by selling Amrapali assets instead of banks, as is currently the case in insolvency proceedings.

“If banks had taken timely action, this frustrating situation could have been avoided,” justice Mishra said.

The lawyer representing homebuyers welcomed the stance. “I am happy with the stand taken by the court because homebuyers have been suffering due to the conspiracy between the builder and the banks,” said advocate ML Lahoty.

According to him, banks gave big loans to the company but did not check if the money was being used for the purpose the real estate developer cited.

Amrapali’s directors are behind bars since October, 2018, when the court first found signs of widespread fraud. The company has defended its conduct, saying it was unable to fulfil its obligations due to market conditions.