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SC asks banks to release sanctioned loan amount to home buyers in Amrapali projects

Supreme Court bench says amounts will be released notwithstanding the fact that the home buyers’ loan accounts with banks have been declared NPAs.

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New Delhi: The Supreme Court Wednesday asked banks and financial institutions to release the sanctioned loan amounts in favour of home buyers who have purchased flats in Amrapali housing projects.

A two-judge bench led by Justice Arun Mishra said the loans will be released notwithstanding the fact that their accounts have been declared non-performing assets (NPAs). The order brings relief to thousands of home buyers who were unable to make payment to the National Buildings Construction Corporation (NBCC) for completion of their houses.

On an earlier occasion, the court had clarified that buyers would have to pay up in case they wanted possession of their flats.

The court said the loans will be released at the rates fixed by the Reserve Bank of India (RBI) and its disbursement “may be based on the present rate of interest” fixed by the central bank.

The bench also ordered the banks to do long-term restructuring of loans and release them stage-wise.

“Considering the facts and circumstances of the case, as projects have been stalled for the last several years, the home buyers have obtained loans but cannot enjoy the fruits of their investment,” the bench said.

Advocate M.L. Lahoty, who appeared for home buyers in the case, welcomed the court order. “This would help largely to arrange funds for construction as around Rs 3,000 crore is due towards home buyers due to their unpaid instalments. NBCC will be able to start the construction work when this money is with them,” Lahoty told ThePrint.

The SC has been hearing a batch of petitions filed in October 2017 by hundreds of home buyers, to whom Amrapali did not deliver flats at the promised time. After two years of hearings, the court last July cracked the whip on Amrapali for breaching the trust of home buyers.

Amrapali’s registration under real estate law RERA was cancelled, and it was also ousted from its prime properties, with the court nixing the land leases.

The court also ordered government-owned construction firm NBCC to take over the incomplete projects. It is now supervising completion of the unfinished flats.


Also read: How Amrapali cheated 49,000 homebuyers, according to Supreme Court


RBI instructions don’t come in way of banks releasing loan

Wednesday’s SC directions came on a plea made by home buyers through Lahoty. A request was made to direct the banks to release their loans.

According to Lahoty, the loans had been sanctioned under construction-linked plan. Till 2015, the buyers paid their monthly EMIs in time.

However, the banks stopped releasing money once the construction work stopped, forcing the home buyers not to deposit their EMIs. Eventually, several loan accounts became NPAs.

Both the RBI and the court receiver — appointed to work out the modalities of the construction of flats — were asked to give their opinion on the buyers’ request.

Senior advocate R. Venkataramani — the receiver — took a view that the RBI could be asked to direct banks and financial institutions such as insurance companies, and employers of the establishments to disburse all balance loan amounts to home buyers whose accounts are regular.

He was also of the opinion that the RBI should be asked to keep its circulars relating to NPA in abeyance. This was after banks said they had reservations regarding the funding of NPA accounts.

On its part, the RBI told the court its instructions do not come in the way of releasing loans of home buyers whose accounts are NPAs. It would be for the banks and other financial institutions to release the loan.

The court noted in its order that home buyers cannot pay bank dues till eternity and that it is in their interest as well as that of banks that the housing projects are complete.

NBCC not liable for any legal action

On the request of the NBCC, the court insulated the corporation from any legal action. It recalled the last year’s order that entrusted the NBCC with the task to finish the incomplete projects.

“…the NBCC is immune from any such actions, and we request the courts and consumer redressal commission and other authorities not to permit impleadment of NBCC as respondent and not to issue summons to NBCC as they are doing the work under the supervision of this Court and are not answerable to any other court, tribunal, authorities,” read the court’s Wednesday order.

The NBCC, the court made clear, is answerable only to the Supreme Court and cannot be dragged in the litigation filed by existing home buyers, previous contractors, co-developers, landowners, banks, financial institutions or creditors.

The NBCC will not be responsible for attending to queries made by home buyers. “They have to report the progress to the learned Receiver, and we request the learned Receiver to put progress reports of projects on the website,” said the order.


Also read:SC’s go-to real estate troubleshooter NBCC is struggling with stalled projects of its own


 

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