The government’s construction arm, National Building Construction Company (NBCC), will soon announce the dates for the sale of over 5,000 units at various Amrapali housing projects, spread across the Noida and Greater Noida markets. The NBCC’s move is aimed at garnering funds for completion of the pending projects of the now-defunct builder. In 2019, NBCC was tasked by the SC to take over the pending projects of Amrapali and deliver 38,159 units by 2023.
“The construction of all Amrapali projects is in progress and we are working simultaneously at many sites. At this stage, we are planning to sell the unsold flats to infuse funds,” an NBCC official said.
The sale may help NBCC generate funds to the tune of Rs 45 crore.
ED To Question Amrapali CFO Over Multi-Crore Scam
The Enforcement Directorate (ED), on December 19, 2020, stated questioning Amrapali Group’s chief finance officer (CFO) Chandra Wadhwa, to unearth the multi-crore scam, after a special court granted it the custody of Wadhwa.
The Lucknow branch of the ED, on December 18, 2020, had arrested Wadhwa from Delhi, in connection with his involvement in the fraud, where the company collected advances from over 42,000 homebuyers and diverted the funds to make personal gains.
The central agency will cross-question Wadhwa, to find out about the companies in which the builder diverted the funds collected from homebuyers, while also probing the involvement of government officials in the scam.
The ED had, earlier in 2020, arrested Amrapali’s directors Anil Sharma and Shiva Priya, to probe the Rs 6,000-crore scam.
NBCC Told To Sell Units At Amrapali’s Under-Construction Projects
November 2, 2020: The Supreme Court, on October 29, 2020, directed the NBCC to sell housing units in Amrapali projects, irrespective of the status of their completion status. The SC’s directive came, after the court-appointed receiver told it that work on the projects could be completed in one year, considering the current pace of construction work.
The top court has been devising various ways in which funds could be accumulated, to complete the stuck projects of the now-defunct Amrapali Group. While the proposed sale of the projects by government’s construction company NBCC is likely to fetch over Rs 2,000 crores, a process is also underway to get Rs 625 crores from the centre’s stress fund, the SWAMIH Fund.
RBI’s Participation Needed, To Get Funds For Stuck Amrapali Projects, Says SC
October 13, 2020: India’s top court, on October 13, 2020, said that the Reserve Bank of India (RBI) should urge financial institutions in the country to make available funds, for completing incomplete housing projects of the now-defunct Amrapali Group.
Even though the top court in India has ruled that state-run NBCC must complete the stuck housing projects of the embattled Amrapali Group as soon as possible, the agency is finding it hard to do so, in the absence of smooth funding. According to the SC-appointed receiver and senior advocate R Venkataramani, banks are not forthcoming in extending financial help, even though the top court has already asked the RBI to help with the process.
The SC-appointed receiver has so far signed MoUs with Union Bank and UCO Bank to facilitate approval of loans for over 3,000 buyers. He is also in touch with Housing and Urban Development Corporation (HUDCO) and private lender HDFC Bank to get financial assistance for pending Amrapali projects.
After being told by the counsel appearing on behalf of the central bank that it may not be fair on the part of the banking regulator to interfere in the commercial matters of lenders, the SC said an ‘active participation’ by the RBI would expedite the exercise, without leading to any meddling in the affairs of the banks. The SC asked the RBI to appoint an officer that should assist the SC receiver, to meet members of the Indian Banks Association and seek financial support for the stuck projects.
Will Deliver 19 Amrapali Projects In 36 Months: NBCC
October 5, 2020: With an aim to fast-track the construction work on stuck Amrapali Group projects, state-run constructor NBCC has doubled its workforce. In a statement issued on October 4, 2020, National Building Construction Company (NBCC) said it had now expanded its workforce from the prior 6,000 people to 12,000 now, in order to deliver over 43,500 housing units in 36 months. According to NBCC, it would start construction work on as many as 19 Amrapali projects before Diwali this year, to meet the estimated deadline.
While stating that the company has started offering possession of completed units since July 2020, NBCC said it would not wait for the entire project to be completed, to hand over individual units. Possession would be offered to buyers as soon as work on their homes was complete, irrespective of the work completion state at the project level, NBCC said.
With a cash crunch looming large over the fate of Amrapali projects, India’s top court, on September 21, 2020, asked the country’s banking regulator to clarify the legal framework over lending to the insolvent builder. The Supreme Court asked the RBI to submit an affidavit in this matter, after it was brought to the notice of the court that the banks, which had signed MoUs to lend to various stalled projects of the group, were shying away from releasing the credit, citing regulatory limitations.
The SC was also informed during the hearing that no funds had been released from the central government’s SWAMIH Investment Fund, which was expected to offer credit of Rs 625 crores.
Based on the assumption that cash flow will remain smooth, NBCC, the agency selected by the top court to complete a total of 26 housing projects of Amrapali, earlier in 2020, said that over 10,000 housing units could be delivered by June 2021.
SC Asks State-Run MSTC To Auction Amrapali Properties
To ensure speedy disposal of attached properties of now defunct Amrapali Group of Companies and its directors, the Supreme Court, on October 15, 2019, roped in state-run Metal Scrap Trade Corporation (MSTC). The top court said that the funds collected through the auction, would help in speedy completion of stalled projects.
Earlier, the SC on August 13, 2019, directed top officials in Noida and Greater Noida to comply with its earlier order and provide the completion certificate to those Amrapali projects, where residents have already moved in; or face jail. The top court had earlier reprimanded the two authorities for colluding with the embattled company to help it siphon off homebuyers’ hard-earned money.
About two years after the country’s top court took over the high-profile case pertaining to one of the biggest real estate developers in the Noida property market, the SC on July 23, 2019, had passed a decisive verdict in the Amrapali case. While cancelling the registration of all Amrapali group projects registered with the Uttar Pradesh Real Estate Regulatory Authority (UPRERA), the apex court directed public builder National Building Construction Company (NBCC) to take over all pending projects of the embattled builder. The crisis-hit real estate giant has as many as 43 real estate projects in various stages of construction.
It also directed the Enforcement Directorate (ED) to probe the money laundering carried out by senior company officials, including its owners. Incidentally, the ED had also filed a criminal case against the trouble-hit realtor earlier this month under the Prevention of Money Laundering Act (PMLA), after at least 16 FIRs were registered against the group by the Noida Police.
Over 42,000 homebuyers are waiting for delivery of their homes which they booked years ago. In some cases, bookings were done over a decade ago. While appointing senior advocate R Venkataramani as the court receiver, the SC vested rights of all the Amrapali properties with him. The court receiver will be responsible for auctioning these properties and channel the money towards completing projects. The court has also directed that completion certificates be granted in cases where homebuyers have taken possession of units without the builder completing this legal formality.
The Delhi Police arrested Amrapali bosses, CMD Anil Sharma, and directors, Shiv Priya and Ajay Kumar, in February this year. These three are still behind bars.
How did things come to such a pass?
When the National Company Law Tribunal (NCLT) in 2017 initiated insolvency proceedings and appointed an interim resolution professional to manage the affairs of embattled Amrapali Group, thousands of flat owners, primarily in Noida, found themselves extremely jittery. Their jitters are not unfounded. Under the earlier Insolvency and Bankruptcy Code (IBC), consumers were placed right at the end of the queue, when it came to distribution of assets, if a company were to be liquidated. (This has changed now.)
Also read: Buyers May Get A Say In Insolvency Proceedings Against Builders
Since insolvency proceedings would have impacted buyers’ interests, several pleas were filed in the SC, including one by the Amrapali Silicon City Flat Owners Welfare Society, against the NCLT order.