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Supreme Court strips Amrapali Group of its projects

Lifting the veil off the activities of Amrapali, a bench of Justices Arun Mishra and UU Lalit also sent out a strong message to similar defaulting housing developers across the country.

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Making realty firm Amrapali pay for defrauding thousands of homebuyers for over a decade, the Supreme Court on Tuesday cancelled the registration of the realty group under the Real Estate (Regulation and Development) Act (RERA), transferred leases held by the company to court-appointed receiver R Venkataramani, and set the Enforcement Directorate against the company heads for laundering crores of rupees to foreign destinations.

Lifting the veil off the activities of Amrapali, a bench of Justices Arun Mishra and UU Lalit also sent out a strong message to similar defaulting housing developers across the country. The bench directed the Housing departments of Centre and state governments to ensure action under RERA is taken against persons or firms that default on delivering homes on time.

The bench said, "We are not a country in which courts will permit such action and permit a person to go scot-free. In view of their unholy conduct, defying description, their contumacious fraudulent conduct totally disentitles them and they are required to be dealt with as sternly as possible so as to make it exemplary one that such fraudulent actions do not recur in future, in real estate business in India."

As for Amrapali homebuyers, there was some good news. The court allowed them to take possession and directed the Noida/Greater Noida authorities to issue them completion certificates, notwithstanding huge dues of Rs 5,000 crore recoverable from Amrapali. The dues will now be recovered from sale of other assets of Amrapali. With regard to flats still under construction, the court directed the public body National Building Construction Corporation to complete the pending projects at a commission of 8%.

The SC Verdict

 Homebuyers had petitioned the SC to take the possession of nearly 42,000 flats of the Amrapali group
 SC struck down RERA registration of the group and lease of properties granted to it by Noida & Greater Noida authorities

The SC directed persons/firms who have to return money to Amrapali to do so within a month and asked the homebuyers to pay their dues as per project agreement within three months.

The web of deceit woven by Amrapali came to the court's notice following a forensic audit by two court-appointed auditors. They revealed how homebuyers were "duped" of their hard-earned money as 70% of the projects started in 2008 were not yet complete. Money received by Amrapali from banks was siphoned off to acquire other assets.

On learning that the total dues of Noida Authority and Greater Noida Authority as on April 30, 2019 was over Rs 5,426 crores, the court faulted the authorities of conniving with the Amrapali Group as, despite such a huge outstanding dues, the officials gave conditional no-objection certificates to the developer and allowed it to sub-let parcels of the allotted land for profit.

Even the money payable to the farmers as compensation for land acquisition was not paid by the realty firm. The bench noted, "The officials of the authorities have acted in clear breach of public trust... the officials of the authorities acted clearly in collusion with the builders." Their NOCs allowed them to obtain loans from banks. The court faulted the banks for acting as a "mute spectator" to large scale diversion of money.

The court even set the Enforcement Directorate on the trail of the Amrapali directors – Anil Kumar Sharma, Shiv Priya and Ajay Kumar – on how dummy companies were created, bogus bills raised, flats sold at undervalue price, payment of excessive brokerage, and investment obtained from JP Morgan in violation of Foreign Exchange Management Act and FDI norms. The Court noted this to be a "device" for siphoning off the money of the home buyers to foreign countries. Already the Directors are in custody of UP Police.

The matter will be heard next August 9 when the SC will monitor the progress of investigation.

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