In what may be seen as a relief to Amrapali homebuyers, the Supreme Court on Thursday directed National Buildings Construction Corporation Ltd to undertake construction of unfinished housing projects of the embattled firm and file a comprehensive report on how it proposes to construct the housing units and the timeframe within which it plans to complete them.
NBCC told the apex court on Thursday that it was ready to undertake the projects of Amrapali group of companies. The bench of justices Arun Mishra and UU Lalit asked NBCC to place a concrete proposal before it within 30 days on how they could complete the projects of the Amrapali group.
“NBCC has been directed to construct the unfinished units and give a report within 30 days on how they propose to construct the units along with the timelines and the amount that will be required to complete them,” advocate Kumar Mihir, who represented 2,500 homebuyers under the umbrella of NEFOWA, told Moneycontrol.
The next date of hearing for considering NBCC’s proposal has been set for September 4.
At an earlier hearing on May 17, the apex court had given the go ahead to three co-developers to complete the stalled projects. It had also asked the embattled developer to deposit Rs 250 crore in four weeks in an escrow account that will be have to paid to co-developers on completion of the projects. These co-developers included Noida-based Galaxy Group, IIFL-Viridian consortium and Kanodia Cement.
The May 17 order now stands recalled, says Mihir who was present at the hearing on Thursday.
Coming down heavily on the Amrapali Group, the Supreme Court on Wednesday had ordered attachment of the properties and bank accounts of all the directors of its 40 firms and had questioned NBCC’s offer to complete Amrapali’s projects when the apex court was hearing the matter.
The court had on Wednesday also summoned Secretary of Ministry of Housing and Urban Affairs and Chairman and Managing Director of NBCC to personally appear before it at the hearing on Thursday for having violated its order in the Amrapali case. Both were present in court on Thursday.
The housing secretary Durga Shankar Mishra on Thursday apologised before the apex court.
The Supreme Court on Wednesday had come down heavily on the Amrapali group for playing “fraud” and “dirty games” with the court and ordered attachment of all the bank accounts and movable properties of 40 firms of the realty firm. It had also directed the company to place before it details of all bank accounts from 2008 till today and ordered freezing of bank accounts of all the directors of its 40 firms, besides attaching their personal properties.
Details of accounts of 38 companies were submitted before the court on Thursday and accounts of directors have been frozen. The embattled company has been directed to submit details of the remaining accounts by Monday. The court will review details of the statements of accounts submitted on August 9, says Mihir.
The bench on Thursday also took note of the alleged diversion of Rs 2,765 crore by the Amrapali group and asked the auditor to submit a report on this. The apex court directed the statutory auditors of Amrapali Group Anil, Ajay and Company, to examine accounts of all 40 companies of the group and file the report on whether the company had indeed diverted the amount collected from homebuyers.
“If you have diverted money, we will squeeze every asset and bring back every money you have diverted, including compensation that you may have to pay to the buyers for delay,” the bench comprising justices Arun Mishra and U U Lalit told the builder, says Mihir who was present at the hearing.
The Supreme Court on Wednesday had also noted that diversion of funds collected from investors by real estate developers was a “malady” and it wants to stop this “nonsense” once and for all. The apex court observed that if builders were diverting money invested by a person in a particular housing or commercial project to complete other projects, it, prima facie, amounted to misappropriation and criminal breach of trust.
The bench wondered as to how Rs 2,765 crore fund was allegedly diverted by the Amrapali Group for carrying out works in its other projects.
“How can they (chartered accountants) allow siphoning of money like this,” the bench said, adding “money given by the investor to complete a particular project can not be used for other projects as it amounts to criminal misappropriation.”
“This (diversion of funds) is the malady which is affecting all the builders. We want to stop this nonsense once and for all,” the bench said.
Referring to the issue of diversion of funds, the bench told the counsel appearing for the Amrapali Group, “Stand on your legs and not on the shoulder of investors.”
Last month, Amrapali group had informed the Supreme Court that it has submitted the proposal for construction of its unsold projects by the National Buildings Construction Corporation (NBCC) to the high-powered monitoring committee set up by the central government to look into delayed projects in Noida.
NBCC sources had told Moneycontrol that at the high-powered monitoring committee meeting held last month, the ministry had requested NBCC to look into the viability of the proposal. “The proposal needs to be vetted and due diligence of Amrapali’s properties also needs to be carried out. We may even decide to come up with a counter proposal,” sources had said.
NBCC if it decides to take over the projects, will manage it as a project management consultant (PMC) to ensure that completed houses are handed over to homebuyers and there is no diversion of money. For the purpose an agreement may have to be entered between NBCC, Noida Authority and the Amrapali group so as to manage the projects as a PMC, sources had said.
If an agreement is signed with Amrapali, it will continue to remain the promoter and will be responsible for any litigations concerning the projects. The embattled firm may even be asked to deposit its unsold inventory with NBCC which may be mortgaged to raise the PMC’s fees, sources had said.
“If NBCC decides to manage the project, initial funding may come in through a financial institution after mortgaging Amrapali’s unsold land. As PMC we will have to ensure quality of construction through the contractor and we will deposit the realization in an escrow account,” NBCC sources had said.