Justice delayed, not denied

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Justice delayed, not denied

Tuesday, 06 August 2019 | VK Bahuguna

While the Supreme Court has cracked the whip on builders and officials who defrauded homebuyers, a few niggling issues remain. To ensure transparency in the real estate sector, strict compliance of the court order is the need of the hour

On July 23, a two-judge Bench of the Supreme Court of India, consisting of Justice Arun Mishra and Justice Uday Lalit, delivered a historic judgement in the case of writ petition (civil) No 940/2017, Bikram Chatterji and others vs Union of India and others, to bring governance back on the rails.  The move has, thus, ensured justice to more than 42,000 hassled home buyers of Noida and Greater Noida. The Executive miserably failed on this count.

The verdict will long be remembered as one of the finest judicial decision taken in recent times. The court’s decision came after a deep study of facts and chasing the wrongdoers to their graves. At the same time, the court also unearthed one of the biggest real estate scam conducted under the very nose and connivance of officials and political leaders. The court was ably assisted by senior lawyer ML Lahoty, the National Company Law Tribunal, forensic auditors and flat buyer crusader, Amit Gupta, who took a lot of personal risk in pursuing the case to its logical end.

While quoting the forensic auditors appointed by it, the apex court stated that a “serious fraud” has been played by the Amrapali group. It was done in connivance with authorities in Noida and Greater Noida. Money was diverted to personal accounts of the company’s directors and other dummy firms. Bogus bills in violation of the Foreign Exchange Management Act (FEMA) were created as they obtained investments and over valued them to siphon off the home buyers’ money. The court has ordered the Enforcement Directorate to nab the culprits. The criminals left no stone unturned to launder the money. They obtained loan from banks in the name of home buyers and swindled it. The bank officials worked in tandem with the Amrapali group, ignored regulations and turned a blind eye to the fraud committed by the directors of Amrapali. On top of all this, these thugs did not prepare accounts from 2015 to 2018, knowing it well that it was all going to be over.

To set things right, the court ordered the cancellation of the registration of the Amrapali group under the Real Estate (Regulation and Development) Act, 2016, cancelled the lease deeds signed between the builder and the authorities and vested the rights of these deeds to the receiver, senior advocate Venkat Ramani, appointed by the court. 

It is of equal importance that besides pulling up the Amrapali group, the court castigated the Noida and Greater Noida authorities as well as the banks for their connivance and palpable negligence. In order to ensure that the buyers get possession of their dream homes soon, the court appointed the National Building Construction Corporation (NBCC), which has been assisting it in assessing the cost and time, for the completion of the housing projects that have been lying in limbo. The NBCC has pegged its fee at eight per cent of the construction cost. The court also rightfully debarred the Noida and Greater Noida authorities from staking claim to the Rs 3,600 crore balance with the Amrapali group.

This writer had always been highlighting the fact that the authorities had no business to make money out of an acquired land from the farmers by invoking extraordinary clauses and then auction them for housing to mint money. In fact, this is a very lethal concept of befooling the political leadership to create these agencies to get away with Government rules and then do whatever they like to do. The Central and State Government must review this culture of constitution of such pompous bodies and put proper checks and balances.  

However, the best part of the Supreme Court’s judgement was that the buyers have been asked to deposit the balance money as per the builder-buyer agreement under the supervision of the court receiver. It further directed the authorities to smoothly register the properties and that the dues to the tune of Rs 3,600 crore should be recovered by selling off the attached properties of the Amrapali group.

However, a few niggling issues remain. First, once the buyers deposit 100 per cent of the due amount in the Supreme Court, a committee of buyers should be formed for each project so as to assist the court receiver. This committee should also help the receiver in auditing the work of the NBCC so that payments are linked to the progress of construction.

Second, the court invoked the violation of the Public Trust Doctrine by the Noida and Greater Noida authorities and held them equally accountable for the fraud. The home buyers’ funds were utilised by the Amrapali group’s directors/promoter vis-à-vis payments to the land authorities, which amount to more than Rs 500 crore as stated by both authorities. As per the court order, the lease has been terminated and RERA registrations of all projects have been cancelled. The authority had no claim on this as they failed to check the fraud. This amount should immediately be deposited with the NBCC so that it can start the work as per its project report submitted before the court. This fund can be used as “seed capital” to kick off construction, may be as an alternative to the demand of “stress funds” by Amrapali home buyers.

The Government of India needs to use this judgement to reform the real estate sector. At the same time, the Uttar Pradesh Government needs to take strict action against officials and authorities, who made a mockery of governance. This judgement may bring a new era in the real estate sector and prevent frauds. But the Centre as well as State Governments will have to follow the court orders in the true spirit to end it for all.

(The writer is a former civil servant)

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