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Amrapali: SC Pulls Up Centre For Not Releasing Stress Funds

Nilashish Chaudhary
16 Aug 2020 2:15 PM GMT
Amrapali: SC Pulls Up Centre For Not Releasing Stress Funds
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The Supreme Court on Thursday pulled up the Central Government for not releasing money from the real estate stress funds created by them, towards completion of Amrapali projects, despite being asked to do so repeatedly over the last 3 months.

The Bench, comprising of Justices Arun Mishra and UU Lalit, asked Solicitor General Tushar Mehta why money from the Rs. 20,000 crore fund was not being moved by the Government.

This came after Senior advocate Harish Salve, representing SBI Capital, informed Court that there were certain issues that were creating an obstacle in finalizing SBI CAP's final proposal to finance the project. While seeking some more time to iron out the creases, Salve mentioned that one of the problems was a supervisory issue between SBI CAP and NBCC, and that the latter was reluctant to become a party to a fixed term contract.

Having learned this, Justice Mishra turned to the SG and expressed concern over the Government's seeming reluctance in releasing distress funds.

"Please remember that this is a Court-monitored project. SBI is also creating problems every now and then and even the Government seems reluctant (to release funds)…

We can pass an Order (directing release of funds), but we are going by the process…

…We're concerned about what is happening between SBI and NBCC…we will use our powers under Section 142 if needed, unless you (Government) work out a solution to this problem", orally remarked Justice Mishra.

Having noted Salve's submission, however, the Court granted SBI CAP time to sort out the issues. The Court also clarified that disbursal of payment by SBI should not be target oriented with respect to NBCC.

Notably, Supreme Court also asked SBI CAP to consider the rates of interest at MCLR rates, having opined that the current rate was not justified.

Thus, on the aspect of Bank financing, the Court Ordered as follows:-

"They have prayed for time as there are only certain aspects which remain to be creased out and they are likely to be sorted out including the issue of rate of interest, supervisory issue between NBCC and SBI CAP, and stage of funding whether it is to be target oriented, by the next date of hearing.

Disbursal to be made by the SBI CAP should not be target oriented. Let all these aspects be worked out by the next date of hearing."

Consortium of Banks

The Court Receiver, R Venkatramani, proceeded to suggest that he, along with a Committee appointed by the Court, be permitted to work out details regarding the formation of a Consortium of Banks to assist in financing incomplete Amrapali projects. Allowing the prayer to "find out the feasibility of formation of Consortium of Banks, which can extend finance to the various projects based on the unsold inventories and securities", the Court ordered that "the Committee as well as the Receiver are permitted to work out details and place the same before this Court."

Sale of FAR Projects

The Receiver informed Court that the value of FARs in Noida, Silicon City and Princely Estate, as set by MSTC (the Government Auctioneer) fell short of a good bench mark. Therefore, the sales of these projects were not completed. On Venkatramani's suggestion, Justice Mishra allowed the Committee to evaluate the projects correctly, and then auction the same through MSTC.

"…a payer has been made that Committee may be permitted to work out the bench mark and to suggest it to the MSTC and to proceed with the auction through MSTC. The prayer is allowed.

Let the bench mark be worked out over and above the figure fixed by the MSTC and auction may be made through MSTC, as prayed."

-ordered Supreme Court

With regard to the IMT Manesar property, the Court permitted the following three proposals made by the Receiver

  • to demand payment of dues, as ascertained by auditors, from allottees who are in possession of units
  • registration of allottees
  • sale of those units which are not occupied, through MSTC

Disbursal of Home Loans

The Court was informed by Corporation Bank and UCO Bank that a new MoU had been sent to the Court Receiver, while HDFC apprised the Bench that the proposal regarding restructuring of loan disbursal was being considered positively. HDFC told Court that it had submitted its objections to the Court Receiver and the proposal would be finalized by the next date of hearing.

Corporation Bank and UCO Bank further stated that their branches had been given directions to disburse home loans and by submitting the MoU, which is with the Receiver, home buyers could obtain loans from the concerned branches.

The Court directed the Receiver to consider the MoU and report back, while allowing home buyers to avail of loans as proposed by the Banks.

"Let the Receiver look into the MoU and report back to this Court on the next date of hearing. In the meantime, home buyers who want to avail the loan facility as proposed by the UCO Bank and Corporation Bank are free to do so. Let the concerned branches disburse the loan to them as per the MoU."

Auction by Orissa State Housing Board

The Orissa State Housing Board informed Court that auctions of property failed on three different occasions due to the proposed cost of land. Supreme Court took this into consideration and allowed extension of time for conducting an auction.

"Let fresh advertisements be issued and auction be finalized by 30.09.2020 positively", ordered Supreme Court.

Forensic Auditor's Report

The Court also allowed the Central Government's request to be given access to the Forensic Auditor's report in relation to all Amrapali companies, its subsidiaries and shell complanies in order to scrutinize and investigate the extent of tax evasion.

Senior advocate, ML Lahoty, was directed by Court to "furnish a copy of the Report of the Forensic Auditors to Mr. Vikramjit Banerjee, learned ASG, appearing on behalf of Directorate of CGST".

The matter will again be taken up for consideration on August 19, 2020.

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