CMDs of Banks asked by SC to Issue Directions for Disbursal and Restructuring of Loans in Amrapali Case [READ ORDER]

On Friday 10 July 2020, the matter involving incomplete Amrapali Real Estate Project again came up for hearing before a Divison Bench of Justice Arun Mishra and Justice U U Lalit. Several aspects were discussed, and thereafter the following orders were passed by the bench: 

1. Funding of project by SBI Capital: Senior advocate Harish Salve appeared for SBI Cap and informed the Court that most issues had been ironed out in consultation with the Court Receiver, seeking a few more weeks to submit a final plan after assuring that progress was promising. It was also notified to the Court that 8 projects had been identified and selected by SBI Cap. Justice Mishra decided to give a time of 3 weeks and asked Mr. Salve to come up with a crystallized final proposal. Senior advocate ML Lahoty, defending homebuyers, observed, however, that the 12 percent interest rate quoted by SBI Cap will be too heavy a strain on homebuyers. Thus, he suggested that the interest rate should be considered to be in line with the rate of RBI. As the Receiver also endorsed this point, the issue remains open; while SBI Cap is due to submit its final proposal on 4 August 2020.
2. Payment of Dues to Noida/Greater Noida Authorities: The Court amended its previous decision concerning the interest rate which will relate to the leaseholders for the payment of the due amount. Senior advocate Mukul Rohatgi, appearing for the Greater Noida Authority, and Solicitor General Tushar Mehta, appearing for the Noida Authority, proposed that the 8 percent interest rate, as previously directed, would be made prospective. It was also pointed out that the Government had fixed the rate to be charged at the SBI Lending Rate, according to which the fees payable amounted to 8.5%. In the light of the submissions, the court instructed that the marginal cost of the Fund-based Lending Rate (MCLR) must extend fairly to all leaseholders. It has also been ordered that the Noida / Greater Noida authorities will pay the fees within a month, according to which 25% of the fees must be submitted within 3 months. The remaining sum must be paid one year from the date of the order, the court said. Any failure to do so would result in the withdrawal of the concessional interest rate.
3. Bank Financing: Justice Mishra stated that banks must take up issues related to disbursal of loans, restructuring of the loan, EMI liability, and subvention loan agreement without delay. The court ordered the receiver to direct the CMDs of all banks to comply with the orders of the court.
4. Payment of dues by homebuyers: The court also directed homebuyers to pay their due obligation in compliance with the conditions of the payment schedule provided by NBCC. The court receiver stated that NBCC has provided a project execution schedule and that tenders had to be issued. He also requested that homebuyers be directed to make payments based on the NBCC fund flow requirement.
5. Interference by Homebuyers: As the court receiver informed the bench of several communications from home buyers to him as well as to NBCC seeking priority for their towers to be completed first, Justice Mishra directed the buyers to show restraint and ordered that no home buyer should interfere with the work of NBCC.
6. Investigation of FIRs against Amrapali: Noting that several cases have been filed against Amrapali in different jurisdictional police stations, Economic Offenses Wing (EOQ) has been asked to investigate all cases. All police stations concerned must forward the FIRs to the EOW, as the court was of the opinion that only all investigations must be carried out by one agency.
7. Payment of Security Agency: Upon request from the receiver, the Supreme Court authorized him to make payments to the security agency appointed to manage assets in Greater Noida after due verification of the bills.
8. Reserve fund for NBCC: The court ordered the receiver to sit across the table with the finance secretary and the authorities concerned to work out the feasibility and modalities of the same and to record the developments. Besides, DHFL reported that it had disbursed home loans to 400 home buyers and that despite the insolvency proceedings, they were willing to disburse funds to 311 of the defaulting beneficiaries. Although it was claimed that the remaining 89 could be problematic due to their non-performing assets, DHFL informed the court that they would seek a solution and return in due course. Justice Mishra agreed that they may take till the first week of August to decide. The ED also informed the court that, according to the previous order, JP Morgan had transferred a total of Rs. 187 crores (Rs. 140 cr + Rs. 47 cr interest).

The matter will come up for the next hearing on 4 August 2020. 

[READ ORDER]