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Supreme Court cancels Amrapali’s RERA licence, lease deeds

Hands over co’s unfinished projects to NBCC, asks Centre to act against errant builders

, ET Bureau|
Updated: Jul 24, 2019, 10.15 AM IST
The bench said the banks who had advanced huge loans to the realtor by passing the norms will recover the money.
NEW DELHI: The Supreme Court on Tuesday asked the government to act tough against errant builders, cancel their lease deeds in case of any illegalities and ensure projects were delivered on time, and made an example of ailing real estate major Amrapali for siphoning off thousands of crores of hard-earned funds of home buyers.

The court came down as a sledgehammer on the company for diverting home-buyers’ money to fund its promoters’ extravagant lifestyles such as buying fancy cars and villas — cancelling its RERA licence, lease deeds and handed over its unfinished projects to NBCC.

The court barred the Noida authorities and banks from recovering any dues owed to the company from home buyers, much to the dismay of the depressed real estate sector and stressed out banks.

Home buyers cannot be defrauded like this, the court said, further ordering an ED probe into the money-laundering which it said could not have taken place without the “collusion” of banks and the authorities.

The company will also face a FEMA probe. ED will submit quarterly reports on this to the court.

The court action came after a forensic audit of the company’s books showed large-scale diversion of money and other illegalities. This is breach of trust and defrauding of home buyers, it said.

All criminal cases filed against the company will be monitored by the court.


The authorities and banks, the court said, can realise their money from assets created by the promoters from diversion of funds and other guarantors but not the home buyers or the projects for which they had paid for.

Home buyers are not a direct party to the bank loan, it said. The court cannot perpetuate another fraud on the innocent home buyers by fastening liability of amounts payable to authorities and bankers.

The court asked the government and regulatory authorities to get their act together and take action against all builders who are lagging behind in finishing their projects.

Their lease deeds should be cancelled if they don’t pay their dues and projects not finished on time and RERA must ensure that the projects are completed on time, it said.

The ruling by Justice Arun Mishra and Justice Uday Lalit though came as music to the ears of the beleaguered flat buyers of Amrapali who fought a 10-year-old battle in court to get justice.

Senior advocate ML Lahoty who led the fight of the over 45,000 flat-owners in Amrapali projects in Noida and Greater Noida hailed the order. He said it would clean up the mess in the real estate sector and deter other builders from taking home buyers for a ride.

In coming to their rescue, the top court ignored the fact that the parent company, Amrapali Silicon City Private Limited, was facing resolution proceedings where the secured creditor would have to be paid first and also legal loopholes which leave the home buyer high and dry in case of fraud.

The court rapped the authorities and the Bank of Maharashtra and Andhra Bank for being negligent in monitoring and oversight and also actively conniving in the diversion of funds.

The court, which had earlier attached all immovable properties and accounts of the 40 Amrapali entities and their directors, appointed a receiver to sell these properties off to recover any dues.

Senior advocate R Venkataramani will be in charge of this process.

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