Amrapali's realty business like cobweb, housing projects seem illegal: SC

The Supreme Court asked the Amrapali Group to "come out with clean hands", observing that its residential projects in the National Capital Region seemed prima facie illegal and its real estate business was like "a well-operated cobweb".

Directing it to provide detailed data of its unecumbered properties, the apex court also said the group had such huge liabilities, that after paying the authorities, taxes and secured creditors from the sale of its properties, what would remain would be mere pittance.

The only way to secure over Rs 5,000 crore for construction of the pending projects by the National Buildings Construction Corporation India Ltd (NBCC), was to sell the individual properties of the directors of the Amrapali Group, a bench of Justices Arun Mishra and U U Lalit said. It sought detailed affidavit in seven days of all the directors who have even served for a few months in the Group and their individuals properties and bank accounts.

"It seems that it is a well-operated cobweb and once you get into it, you would not be able to come out of it. They have such huge liability to pay to NOIDA, Greater NOIDA, property taxes and secured creditors, that what will be left after selling its unencumbered properties is pittance," the bench observed.

The court said "prima facie it appears that all the residential properties of the Group in Noida and Greater Noida (areas of the NCR) where people have been given possession are illegal, as none of them had completion certificates".

Making it clear that it would not touch the bona fide directors, the bench said it was seeking the details as it had a hunch that "there were persons behind the persons". "Once we get the list of directors and their properties, we will pass appropriate orders. We must make it clear we are not against bona fide directors," it said.

The bench directed the group to submit details of eight companies which were not included in the list of companies it had submitted. While possession was given to the home buyers, it observed that legally speaking, the ownership rights were not transferred as there was no completion certificate. "Amrapali cannot wriggle out of its responsibilities of paying all pending dues."

The bench, after perusing the data of encumbered properties given by the group, said "You should come out with clean hands and not soiled hands. You have to give details of each and every liability, including that of buyers and secured creditors".

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Warning that there will be consequences for non-compliance of its order, the court said "it is your baby. You would have to discharge your duty by paying all the pending dues". It said there was no point in going back from its intent of handing the pending projects to the NBCC and the only way to recover Rs 5,000 crore for their construction was by "selling the individual properties of directors".

The bench asked the Amrapali Group to clear the pending dues of electricity in the project, saying it was the company's prime responsibility to clear all arrears.

"You have to clear all the dues, as this is you prime responsibility. Residents Welfare Associations cannot be in charge of all the maintenance and electricity works as there are no completion certificates for any of the projects," the bench said.

Advocate Gaurav Bhatia, appearing for the group, conceded that they have not got completion certificates but said that the residents should be directed to pay their electricity dues. The bench asked Amrapali to clear the electricity dues till this month and directed the power supply companies not to disconnect electricity on any of the projects.

"The problem is that you (Amrapali) gave possession of flats to the people even without obtaining completion certificates because you would have been liable to pay compensation to them for delayed possession. To shrug off your liability, you gave the possession even before the projects were completed," it said. At the outset, Amrapali Group submitted details of companies looking after the maintenance work of its different projects and break-up of outstanding amount for electricity for eight projects.

Advocate M L Lahoti, appearing for home buyers, said the residents in different projects were using pre-paid electricity meters and there was no question of any outstanding for power. "They (Amrapali) have utilised the electricity for their own use of completing the projects and other purposes and the dues are being attributed to the home buyers," he said.

On August 8, the top court had told Amrapali Group "Don't play smart or we will render you homeless" and said it would not allow the company to collect money from the hassled homebuyers. The top court had earlier cracked the whip on the 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 real estate major.