In a relief to thousands of home buyers of embattled Amrapali Group, the Supreme Court on Wednesday asked banks and financial institutions to restructure and release the sanctioned loans to the home buyers, so as to ensure availability of funds to the state-run National Buildings Construction Corp Ltd (NBCC) for construction of stalled housing projects. It also asked RBI to direct banks to release loans that have been declared as non-performing assets as per the banking regulator’s guidelines.
Keeping in view the interest of home buyers, a Bench led by Justice Arun Mishra asked the banks to release the sanctioned loans under “the current norms of the RBI for releasing loans and the rates fixed by the RBI therefore. The disbursement of further loans may be based on the present rate of interest fixed by the RBI”.
The disbursement of balance loans at the current lower rates has been ordered “in the peculiar facts of the (Amrapali) case. It may be released stage-wise and long-term restructuring of the loans may be done so that construction is completed and buyers are able to repay the loan”, it said.
“…as projects have been stalled for the last several years, the home buyers have obtained loans but cannot enjoy the fruits of their investment. At the same time, if projects are not completed and home buyers are not sure of handing over of flats, it would be difficult for them to pay bank dues till eternity and it is in the interest of home buyers as well as banks and FIs as they can recover money when projects are completed in an effective manner,” the SC said.
The SC also came down heavily on the Noida and Greater Noida authorities for charging high rate of interest up to 23% from builders for delay in making payments to it. It said that despite allotting encumbered and disputed land coupled with various other issues, the authorities failed to either reduce the exorbitant rate of interest or completely waive off the interest and other charges on account of delay and default in paying the land dues. “The concerned authorities did not take timely action, and the financial institutions resulted in projects being stalled, and now it has become tough to complete the projects,” the Bench added.
In order to give impetus to “standstill” housing projects Justice Mishra ordered that the Noida and Greater Noida authorities cannot charge high rate of interest from builders for any delay in making payments to it. Capping the interest rate at a maximum of 8%, Justice Mishra said that the issue of the interest affects “the public at large, particularly the home buyers and banks and FIs”.
The judges noted that while the banks in the last five years have reduced the interest paid on fixed deposits and it ranges between 6% to 7% only as of now, the interest rates on delayed payment charged by the authorities have remained exorbitant contrary to the prevailing economic situation of the country.
They said that there have been absolutely no business and commercial activities during the Covid lockdown in the real estate sector and the entire industry has come to a grinding halt causing further financial losses and damages to the real estate sector.
Rejecting the pleas of the Noida and Greater Noida Authorities to release the FAR (floor area ratio), which was available to the erstwhile Amrapali Group of Companies, the apex court allowed the sale of balance FAR through the court-appointed receiver to generate more funds that can be used to complete projects.
“The sale of unused FAR shall be up to permissible limit @ 2.75 or more as available; the sale of FAR beyond 2.75 up to 3.5 under the purchasable scheme or otherwise granted in Dream Valley Project… and other projects or any increase in FAR beyond permissible/purchasable due to whatever reasons such as the coming up of Metro project are to be sold & transferred under the authority of Receiver and Committee appointed by this Court,” the order stated, while posting the matter for further hearing on June 17.
The apex court had on June 3 asked NBCC, SBICap Ventures, which manages the government sponsored stress fund for the real estate sector, and senior advocate R. Venkatramani, who has been appointed as court receiver, and UCO Bank to conduct a joint meeting and submit a final plan for execution and handing over the stalled housing projects of Amrapali.
The receiver’s note submitted to the SC earlier pegged funds from sale of 5,228 unsold inventories at approximately Rs 2220.45 crore, funds from sale of other Amrapali properties, attached or otherwise, at Rs 500 crore, bank loans to homebuyers and balance accruing on sold units at approximately Rs 3,870.4 crore, and receivables from unsold units at Rs 213.46 crore.
On February 28, last year, the Bench had allowed Delhi Police to arrest Amrapali group CMD Anil Kumar Sharma and two directors – Shiv Priya and Ajay Kumar – for cheating. The SC has been monitoring the execution and handover of the stalled Amrapali housing projects ever since an internal audit report found grave irregularities on part of Amrapali firms and its directors.
