Courts Update SC allows Amrapali Group to sell 632 flats after...

SC allows Amrapali Group to sell 632 flats after completion of project

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New Delhi, Jun 29 (ILNS) The Supreme Court today told the Amrapali Group that it can sell 632 flats after completing the project, as per the direction given by the Court itself.

The apex court further rejected handing over the project at this stage to the NBCC, observing it would not be just and proper.

The Special Bench of Justice U U Lalit and Justice Ashok Bhushan refused to recall the 2019 orders or revisit the issue on whether the Company ‘La Residentia’ could be declared to be part of the Amrapali Group of Companies.

The Court was of the opinion that certain directions are to be needed in securing the amount receivable by the Amrapali Group of Companies through this instant project and passed certain directions as under:-

a) The Company shall be entitled to continue with the construction and development of the instant project;

b) The 632 flats, which were subject matter of orders dated July 23, 2019 and October 14, 2019 shall be allowed to be sold by the Company to interested persons or parties at a fair price or value, provided:-

i) all the concerned transactions, including the execution of appropriate documents or deeds, are counter-signed by the Court Receiver or his nominee;

ii) The price or value at which the said flats are to be sold, is certified by the Court Receiver to be fair and appropriate.

iii) all the amounts received by way of such transactions of sale are credited to a separate account completely under the control of the Receiver and/or his nominee;

iv) the cost of construction with respect to those 632 flats, upon due certification by the Chartered Accountants of the Company and to the satisfaction of the Receiver, shall be made over to the Company; and

v) it shall, however, be open to the Receiver to give such advances towards the construction of these 632 flats from and out of the amounts deposited in the account as specified hereinabove, depending upon the stage and progress of construction.

c) The injunction with respect said 632 flats, as directed in the orders dated July 23, 2019 and October 14, 2019, shall stand modified to the extent indicated hereinabove.

d) The difference between the amounts received from the concerned flat buyers for purchase of the said 632 flats and the expenditure incurred on cost of construction shall finally be credited to the general account maintained for the benefit of flat buyers of the Amrapali Group of Companies.

The apex court issued these directions after considering the matter under three sets of application. One is by the association and those supporting the association, second is by the company La Residentia and third is by the creditor of the company.

The first two sets of applications principally prayed that the orders dated July 23, 2019 and October 14, 2019 be recalled or revisited. The Association and the applicants supporting the Association submitted that the Company be declared part of the Amrapali Group of Companies and consequently, the entire project be developed by NBCC under the control and supervision of the Court Receiver. 

On the other hand, according to the Company, it was never part of the Amrapali Group of Companies and at best one of the companies of the Amrapali Group could be said to be a shareholder to the extent of 19.75 percent and that beyond such share capital no other amount was invested by the Amrapali Group of Companies.

Thus, according to the Company it could not be directed to surrender 19.75 percent of the project land or 632 flats as was directed in the order dated July 23, 2019. However, both the sets of applications desired that the same benefits as given to all the flat buyers from Amrapali Group of Companies be extended and the project be relieved of the requirement of paying the dues of GNIDA like other Amrapali projects.

Taking about the facts of the case it started with a lease signed by the Greater Noida Industrial Development Authority and the Company. Greater Noida was permitted to be developed by the Company on certain conditions.

The project to be developed by the Company was widely advertised through brochures and advertisements as ‘Amrapali La Residentia’ project, promising delivery of apartments within 36 months.

Relying on the promises made in the brochure and believing the representation that the project was of ‘Amrapali Group’, various interested parties booked apartments paying booking amount running into several crores. It appears that 3256 apartments were to be constructed and developed in three phases; 1408 apartments in the first phase, 996 apartments in the second phase and 852 apartments in the third phase.

The present petition and other connected matters filed before the Apex court on the ground that the Company is siphoning away the amount invested by the apartment holders. 

The Court, by the order dated September 6, 2018, directed that 46 companies, including the Company be audited by forensic auditors.

They submitted their reports in February and April 2019, which were quoted in the judgement passed by the Court on July 23, 2019, by which Court held, “We have also found that non-payment of dues of the Noida and Greater Noida Authorities and the banks cannot come in the way of occupation of flats by home buyers as money of home buyers has been diverted due to the inaction of Officials of Noida/ Greater Noida Authorities. They cannot sell the buildings or demolish them nor can enforce the charge against homebuyers/ leased land/ projects in the facts of the case.”

In the Subsequent order passed by the Court on October 14, 2019, the Court had directed La Residentia “to submit an affidavit on how much expenditure has been undertaken in the construction of each of the flat and total amount invested in the construction of 600 flats, which are available for sale at present. They are injuncted from selling flats, which are available. Let the affidavit be filed within 15 days.”

The present set of applications are required to be considered in the backdrop of the aforesaid orders passed by this Court on July 23, 2019 and October 14, 2019. ILNS/DS/RJ

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