Apex court asks Bank of Baroda to furnish a list of auditors to investigate where the homebuyers’ money has been diverted.
New Delhi: The Supreme Court Tuesday said it would order a forensic audit of all 40 firms of the Amrapali Group to investigate where the homebuyers’ money has been diverted.
“If you have diverted money, we will squeeze every asset and bring back every money you have diverted, including compensation that you may have to pay to the buyers for the delay,” the bench said as it asked Additional Solicitor General Maninder Singh — representing the Bank of Baroda — to furnish a list of auditors that could undertake this task.
The court is hearing a plea of over 100 homebuyers seeking a stay against the September 2017 National Company Law Tribunal (NCLT) Allahabad bench admission of a plea for Amrapali’s insolvency filed by Bank of Baroda.
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Diversion of funds
The court’s move Tuesday came after the top court last month came down heavily on the embattled real estate giant for alleged diversion of funds.
“Since we find that various documents have been placed on record indicating transfer/diversion of fund by the Amrapali Group itself, the Amrapali Group has admitted that out of the six projects, there was transfer/diversion of Rs.2765 crores. Though, it was submitted that the amount was transferred to other projects, but in our opinion, this was clearly diversion of funds,” the bench noted in a 2 August order.
During an earlier hearing, the bench comprising Justices Arun Mishra and U.U. Lalit said Amrapali was playing “dirty games” with the court.
In August, the bench also ordered the attachment of all the bank accounts and movable properties of all 40 firms of Amrapali. The bank accounts of the directors of the firm were also frozen and their personal properties attached.
Incomplete projects
In August, the court also recalled its May order allowing Amrapali to finish incomplete projects. The court then handed over the reins of the projects to Centre’s construction arm National Buildings Construction Corporation (NBCC).
The NBCC Tuesday submitted that it required at least Rs 8,500 crore — as opposed to Amrapali’s estimated Rs 5,220 crore — to complete the construction of 46,575 flats in 15 projects left incomplete by the real estate giant. Preliminary studies by NBCC indicate that this amount could go up by at least Rs 3,300 crore.
However, in an affidavit submitted with the Supreme Court, the NBCC said it was willing to take on this project only on a consultancy basis for which it would be paid a fee, adding that it won’t invest its own money.
The proposal
Once NBCC agreed to take on the mammoth task of completing the projects, the top court directed it in the August order to submit a proposal to chart the completion of Amrapali Group’s incomplete projects across Noida and Greater Noida.
According to NBCC’s assessment, the projects may be completed in phases in all respects “within a period of 36 months from the date on which the requisite amounts are made available to NBCC in terms of this proposal. The completed housing units shall be handed over to the homebuyers in phases.”
The affidavit further added that creditors, secured or otherwise, like banks, financial institutions and other lenders, would not seek payment of their outstanding dues till the completion of the project.
Required funds
Based on information provided by Amrapali to the court, NBCC said at least Rs 3,853 crore could be recovered from the 41,690 existing homebuyers who are required to pay as per their agreement, to arrange part of the required funds. The state construction firm further said Rs 2,609 crore could be generated from the 4,885 unsold inventory from the launched projects.
To commence the construction of the ongoing projects, the court could direct Amrapali to deposit Rs 250 crore into an escrow account a month from the approval of the proposal, said NBCC. In the event of a shortfall, existing lenders of the Amrapali Group and other financial institutions may be required to disburse the balance as may be identified in the DPR, as short term loan required for the completion of the projects.
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Unused FSI equivalent to 144 lakh sq. ft available with the beleaguered real estate giant could fetch another Rs 2,100 crore, added NBCC.
In its 34-page affidavit, NBCC proposed setting up of an SC-appointed committee comprising a member of the judiciary — a retired judge of the Allahabad High Court or Delhi High Court — a technocrat and a bureaucrat, who would monitor the progress of the projects.