The Supreme Court on Tuesday directed the Union and State governments to move against builders defrauding homebuyers even as it cancelled the registration of Amrapali Group under the Real Estate Regulatory Authority (RERA) and directed the State-owned National Buildings and Construction Corporation (NBCC) to complete the unfinished housing projects of the company in a relief for over 40,000 homebuyers.
A Bench of Justices Arun Mishra and U.U. Lalit listed out how the company and its directors diverted the hard-earned money of homebuyers on luxury watches, cars, helicopter rides, villas in tourist destinations to have “fun”, etc. Over 70 percent of the housing projects initiated a decade ago remained incomplete. Families ended up paying both their rent and the loans due for their “dream home” in one of Amrapali projects.
The court directed the Enforcement Directorate and other law enforcement agencies to investigate and nail the people in the group responsible for fraud and money laundering. It sought a progress report. It fixed the next hearing for August 9.
The 270-page judgment made scathing remarks at the lender banks, Noida and Greater Noida authorities who remained mute spectators while the company and its directors conducted “sham transactions” under their very nose. These included sub-lease of public land got on huge concessions, grant of NOC for illegal mortgages, diversion of loans to “dummy companies” run by their office boys and peons. All this without bothering to pay compensation to the farmers whose lands were taken away for housing projects.
The court accused the banks of “negligence and non-monitoring”; of turning a blind eye to such an extent that even the basic checks were not done. On the other hand, the group owed over Rs.5426.09 crore to the Noida and Greater Noida authorities.
The judgment authored by Justice Mishra exposed the ways in which builders collude with banks and authorities to crush the hand which feeds them – the lower income and middle class homebuyers.
The Supreme Court ordered the Centre, States and Secretaries of Housing and Urban Development to take action against leaseholders/builders sitting on incomplete projects. The court put the liability on these authorities to “ensure that projects are completed in a time-bound manner as contemplated in RERA and home buyers are not defrauded”.
“In our opinion, if the real estate business has to survive in India, it has to be answerable to the public and has necessarily to uphold the trust reposed in builders/promoters… Real estate business can never prosper in case of breach of trust... Builders are permitted to take away the innocent homebuyers' money without being accountable for their action/inaction,” the judgment said.
Series of directions
In a series of directions, the court cancelled the lease deeds granted by Noida and Greater Noida authorities to the Amrapali Group. It said the two authorities and the lender banks have no right to sell any flat or land leased out for recovery of their dues.
The homebuyers have been directed to deposit the outstanding amount under the agreement entered with the promoters within three months in an account opened in the UCO Bank branch for this purpose in the Supreme Court complex. The amount deposited by them shall be invested in the fixed deposit to be disbursed under the order of this court in phase-wise completion of the projects/work by the NBCC.
The court further directed the companies/directors identified by the forensic auditors as having money got from the Amrapali homebuyers to deposit it in court within a month or face appropriate action.
