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SC Accepts SBI CAP Funding for 6 Amrapali Projects [Read Order]

Nilashish Chaudhary
3 Sep 2020 2:31 PM GMT
SC Accepts SBI CAP Funding for 6 Amrapali Projects [Read Order]

The Supreme Court has accepted the funding arrangements proposed by SBI Capital with regard to 6 unfinished Amrapali projects.

SBI will release approximately Rs. 625 crore towards the completion of 6 shortlisted projects, namely Silicon City- 1, Silicon City- 2, Crystal Homes, Centurial Park- Lowrise, Centurial Park- O2 Valley and Centurial Park- Tropical Gardens.

The Supreme Court has clarified that the funding of these projects, which cover a total of 6973 units, will be provided according to the "Collection Milestones" model, as per the suggestion made by SBI CAP's counsel, senior advocate Harish Salve.

"Mr. Salve, learned Senior Advocate then suggested that instead of the fund flow being dependent on "project milestones" which are on the expenditure basis, the funds would be released by SBI CAPS on the basis of "collection milestones". The suggestion made by Mr. Salve is acceptable to the learned Receiver and to Mr. Pawan Aggrawal, the Forensic Auditor appointed by this Court. We, therefore, accept the suggestion made by Mr. Salve."

-records the Order

The contentious issue of the rate of interest of funding has also been finalized and this cost of funding to be charged by SBI will remain at 12% Internal Rate of Return.

Additionally, the Top Court rejected the suggestion to engage an outside agency for the administration and management work regarding the project. Clarifying that no payment needed to be made for professional expertise in this regard, the Court stated that such administration would fall within the exclusive domain of the NBCC and the court appointed Committee.

Mr. Harish Salve, learned Senior Advocate appearing for SBI CAPS suggested that considering the magnitude of the projects, some professional expertise would be required for administration and monitoring of the projects and that SBI CAPS had assumed the charges in that behalf to be Rs.80 crores. The learned Receiver as well as Mr. Siddhartha Dave, learned Senior Advocate appearing for NBCC however submitted that the arrangement with NBCC, a Public Sector Undertaking, contemplated various checks and balances at the end of NBCC and as such no separate entity for monitoring/administration of the projects would be required. At this stage, we accept the submissions made on behalf of NBCC and by the learned Receiver and do not deem it appropriate to engage the services of any outside agency to take care of administration/management of the projects.-states the Order

After extended deliberations, the Court appointed receiver had submitted a detailed note on August 24 along with charts projecting estimates regarding the funding of projects in question.

The Court has noted that estimates of including another project, Terrace Homes, in this funding arrangement would lead to the entire funding project resulting in deficit. Notably, however, despite the funding, the chart submitted by the Court Receiver shows a shortfall of approximately Rs. 98.07 crore with respect to the 6 approved projects till March 2021.

The Receiver's note proposed that the Court appointed Committee be granted liberty to sell off saleable FARs of the respective projects in order to generate additional resources which may be required to be pumped into Amrapali's projects.

Permitting the Receiver to do so, the Court has ruled that the FAR of Terrace Homes shall only be kept as security for SBI to kick start the funding. While the Committee is at liberty to monetize the same depending on deficit of funds for Terrace Homes, it appears that the sale of FARs will be prioritized to pool in funds towards the shortfall of Rs. 98.07 crores in the 6 projects at hand at the moment.

Further, the Supreme Court has directed that the legal framework of the funding be finalized and submitted before the Court in 4 weeks, after which SBI CAP could start with the funding.

"As the broad parameters, on the basis of which the funding arrangement could be arrived at, have now been accepted, the legal mechanics regarding the form and format for the funding and its management are now left to SBI CAPS and the learned Receiver assisted by the Committee to determine and crystalize.

We hope that the formulation and finalisation of the form and format will be arrived at as early as possible and preferably within four weeks, whereafter the funding can be started by SBI CAPS."

Furthermore, the Receiver has been granted liberty to approach RBI with his suggestion regarding formation of consortium of banks for project funding.

Having settled on the concern regarding funding, the matter will now be taken up again on September 7 2020, when all other issues would be considered.

On July 23 last year, the SC had ordered cancellation of Amrapali Group's registration under RERA and ordered a probe by the ED into allegations of money laundering, in pleas filed by several homebuyers seeking possession of around 42,000 flats booked in Amrapali Group projects.

The apex court had then directed the ED that the investigation should be carried out impartially, properly and expeditiously within a period of three months.

The Court also directed the NBCC to take over the stalled project.

On May 22, the bench had permitted ED to attach the properties of JP Morgan.

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