SC directs lenders to restructure home buyers’ loans


The Supreme Court on Wednesday directed banks and financial institutions involved in the Amprapali case to restructure the loans given to homebuyers. The amount is ordered to be released under the norms of the Reserve Bank of India and disbursement of further loans may be based on the present rate of interest fixed by the RBI, the court ordered.

The court also suggested that the release of amount could be done stage-wise and long-term restructuring of the loans may be done so that construction is completed and buyers are able to repay the loan.

The directions were issued by a bench headed by Justice ArunMishra while hearing the case of execution and handing over of the stalled Amrapali housing projects.

In the interest of both home buyers and the bank/ financial institutions, the court has directed the banks and financial institutions to release loans to home buyers whose loans had been sanctioned, even if their accounts have been declared as non-performing assets (NPA). Explaining the chronology, the bench held that the since the projects have been stalled for several years, “the home buyers who have obtained loans are unable to enjoy the fruits of their investment.” Additionally, due to incomplete projects, the flats have not been handed over resulting in difficulty for the home buyers to pay bank the dues. Once the projects are completed the banks can recover the money in an effective manner.

The court also passed orders on other related applications filed in the Amrapali case.

“The Court decided on applications of Noida & Greater Noida authorities claiming return of incremental FAR at Amrapali projects on account of being unused. The Court observed that to avail incremental FAR at Amrapali projects the home buyers had borne the cost / charges thereof. Therefore, the home buyers cannot be deprived of additional FAR even if some monies are owed to these authorities on account of availing the incremental FAR or otherwise. In case after completion of project, any surplus remains, then it can be released to Noida & Greater Noida authorities,” Vaibhav Suri, Partner, L&L Partners told Mint.

The bench also allowed the sale of balance FAR of Amrapali projects to be sold through the court appointed Reciever, Senior advocate R. Venkataramani, who is empowered to enter into a tri-party agreement to recover dues and pass on possession to homebuyers. The sale proceeds from FAR shall be used to generate funds to complete the pending projects.

In a big relief to the real estate sector, which have to pay huge amount for the public land given to them on lease by Noida and Greater Noida Authorities, the court directed that rate of interest on the outstanding premium and other dues to be realized in the all such cases at the rate of 8% per annum and let the Noida and Greater Noida Authorities do a restructuring of the repayment schedule so that amount s paid and Noida and Greater Noida Authorities are able to realize the same.

“With the earlier interest rate being around 14% to15%, the reduction to 8% is surely a boost for developers to get incremental funds to construct and complete their projects,” said Suri.

In a huge setback for Royalgolf Link City Projects Private Limited the court dismissed its plea to forego the sum of Rs.48.52 crores which it had to repay with 12 % interest by 10 Janaury. The amount was received as the principa amount by Royal golf from Amrapali group for the constructions 30 villas. Royalgolf has deposited the sum of Rs.48.52 crores but sought modifications of the order to forgo the 12% interest on the amount as it claims it is facing extreme hardship due to the varios litigations and slums in the real estate sector. The court has directed for the interest to be deposited within six weeks.

The court also clarified in its order that NBCC has been asked by the Top court to complete the incomplete projects. Hence, they are granted immunity and are not liable in any cases filed by any existing home buyers, previous contractors, co-developers, landowners, banks, financial institutions, other lenders and creditors, and any Government authorities before any other Court/ Commission or Authority.

The Supreme Court in July had directed the state-run NBCC to take over and complete its stalled projects of Amrapali Group. There are around 46,000 homebuyers who had invested in various Amrapali projects more than a decade ago, but many of them are yet to receive possession of their homes, as projects were stalled due to diversion of money by directors of the real estate company.

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