Amrapali Directors Shifted To Noida Hotel; To Be Kept Under Police Watch For 15 Days

Amrapali Directors Shifted To Noida Hotel; To Be Kept Under Police Watch For 15 Days

Amrapali Directors Shifted To Noida Hotel; To Be Kept Under Police Watch For 15 Days
Amrapali Grand in Greater Noida. (PropTiger)

In a new turn of events in the Amrapali saga, the country’s top court on October 9 sent three directors of the group to police custody, directing them to hand over all the documents of the 46 group companies to forensic auditors.
The Supreme Court, however, said the three directors be shifted to a hotel in Noida under the police watch for 15 days and their mobile phones be seized.   

In the meantime, nine properties of the company, some in national capital region’s in Noida and Greater Noida and others in Bihar’s Rajgir and Buxar, were sealed on October 10 to find the documents, which the directors said, were stored there. These documents are necessary to carry out the forensic audit of the company. 

Earlier on September 6, the SC had allowed Corporation Bank, which has lent the company Rs 270 crore, to move the National Company Law Tribunal (NCLT) against the builder. The court, however, directed the NCLT to stay put before it is told to do otherwise. That development came days after Bank of Baroda (BoB), which initiated insolvency proceedings against the builder earlier, submitted in the Supreme Court (SC) that distressed real estate giant Amrapali siphoned off funds to the tune of Rs 2,765 crore in shady transactions, and state-run National Building Construction Company (NBCC) informed the court it would require Rs 8,500 crore to complete 15 residential projects of the company.

The SC also identified 16 properties of the group for auctioning to provide NBCC with an initial corpus to start work. NBCC plans to mortgage vacant land parcels owned by the distressed realtor to raise Rs 2,000 crore of the total Rs 8,500 crore it needs to complete Amrapali’s 16 stuck projects. The remaining amount, Rs 6,500 crore, would be raised through selling of unsold flats and payments from existing homebuyers.  The SC on October 3 allowed NBCC to float tenders for selecting a builder to complete the stalled projects of Amrapali Group. The top court also asked the state-run builder to prepare a detailed project report for pending projects within 60 days. In the meantime, authorities in Noida and Greater Noida have seized Amrapali properties, including 5,000 flats and land parcels, which will be sold to provide funds to NBCC. 

Earlier, the top court slammed Amrapali Chairman and Managing Director Anil Sharma for misreporting his net-worth. In his election affidavit filed during the 2014 Lok Sabha polls, Sharma had declared he held assets worth Rs 847 crore ─ he now claims to have only Rs 67 crore.

Observing that a "big scandal is taking place in the name of real estate business", the top court had earlier ordered an independent audit of the company, and assured NBCC it would arrange the funds to complete the gargantuan task by tracking the siphoned-off money. The SC on September 12 appointed two auditors, Bhatia of Bhatia and Company and Pawan Kumar Aggarwal of Sharp and Company, to conduct the forensic audits of Amrapali group companies. It also directed the Delhi Debts Recovery Tribunal to sell the unencumbered commercial properties of the real estate company.

On August 21, the top court asked the company to give details of all company directors, who have served it since 2008 by September 4, and said their personal assets would be first auctioned to compensate buyers since assets owned by Amrapali may be encumbered.

"We want to know the outflow of funds from an umbrella company to even a single entity and its usage. We want to have the forensic audit of every single entity including the directors who have worked with the company since 2008 including the accounts of their wives, daughters and all related persons", the SC said.

Hear! Hear!

On August 2, the court had allowed the NBCC to take over company projects. However, this was done only a day after it took the state-run building company to task for contempt of court over extending help to Amrapali while the matter was sub judice.

While mincing no words as it came down heavily on insolvency-hit realtor Amrapali Group, the SC on August 1 had also sent out a strong message to the entire sector. Stating that Amrapali was playing "dirty games" with the court and misusing its “leniency” by “misdirecting” it, the SC ordered that all bank accounts and movable properties of 40 group firms be attached. On the other hand, the apex court observed that builders diverting funds collected from buyers was a "malady" and it wanted to stop that "nonsense" once and for all.

Directing the company in question to stand on its own and not on the “shoulders of investors”, the SC asked how chartered accounts of real estate companies could also siphoning of funds since "money given by the investor to complete a particular project cannot be used for other projects as it amounts to criminal misappropriation”.

“Depositors gave you the money in good faith. How can you divert the money for other purposes than construction of projects for which money was given? It amounts to criminal breach of trust,” the SC while sending a clear message to the entire developer community.

Tracking the money trail

In an earlier hearing on April 11, the company told the apex court that it would need Rs 2,000 crore to complete nine projects in Noida and Greater Noida – this is the area where the company was frantically launching new projects. These estimates were worked out after joint teams of homebuyers and company officials visited project sites on the direction of the apex court. Responding to that, the SC asked the company to give details of the money it collected from homebuyers while elaborating how much of this fund was used to complete housing projects.

While five of these projects are located in Noida (Sapphire, Eden Park, Zodiac, Silicon City-I, Silicon City-II), four are in Greater Noida (Centurian Park, Leisure Park, Gold Homes and Verona Heights).

When work on all five projects in Noida is complete, 6,917 units will be delivered. Similarly, when work on the four projects in Greater Noida is complete, the company will be able to deliver 2,753 apartments. In total, the trouble-hit company has 43 housing projects in various stages of construction.

It is worth mentioning here that in some of the Noida projects possession has already been handed over despite the fact that proper infrastructure is not in place as yet — the fire-fighting system, the lifts, the water supply, the sewage system, the power backup system, the parking lots, CCTVs, etc., are missing.

In fact, the Uttar Pradesh Power Corporation Ltd had in March stopped power supply to four of Amrapali's Noida projects over pending dues worth Rs 5 crore. The projects where power supply has been halted include Silicon City, Platinum, Zodiac and Princely Estate.

How the story unfolded

The SC, on October 27 last year, sought the response of Amrapali on a plea filed by around 700 homebuyers, who had booked their homes in its projects. A Bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud issued a notice to the real estate company and said it had already restrained the company promoters ─ Anil Kumar Sharma, Ajay Kumar and Shiv Priya ─ from leaving the country without its permission.

On October 13, the SC had issued a notice to the Amprapali Group, its promoters and the Ministry of Finance on another petition filed by homebuyers, and asked the promoters not to leave the country without its permission.

The lawyer representing the buyers told the court investors had neither received possession of their flats nor the refund.

The earlier plea, by the Amrapali Silicon City Flat Owners Welfare Society, was filed against an order of the National Company Law Tribunal (NCLT) that admitted Bank of Baroda's insolvency petition against Amrapali's Silicon City project in Noida in Uttar Pradesh.

Crisis scale

The group has a standing liability of Rs 1,000 crore to about 10 banks. Additionally, the group owes about Rs 3,000 crore to Noida and Greater Noida authorities, the two areas where the group has the highest number of residential projects. Also, it would require about Rs 3,000 crore to complete its various ongoing projects.

Also read: Your Developer Is Going Insolvent? You Can Claim Your Money Back

The grand spread

Here is a snapshot of the various projects of the group in the national capital region, as mentioned on its official website:

Completed projects

Among the completed projects of the group are:


Greater Noida


Also read: Your Developer Is Going Insolvent? You Can Claim Your Money Back


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