The Supreme Court on October 13 permitted the court receiver to incorporate a special purpose vehicle (SPV) to enable flow of funds from SBICap Ventures for completion of unfinished projects, even as it directed the Reserve Bank of India (RBI) to step in and ensure that banks provide funding for the completion of stuck real estate projects of the embattled Amrapali Group.
SBICap Ventures-managed stressed asset fund is an alternative investment fund (AIF) that was set up by the government in November last year to provide last-mile funding for stalled real estate projects.
The court order is awaited.
The court receiver on October 13 informed the apex court about ironing out of the legal structure with regard to funding by SBICap. He said that both parties have agreed to form a separate SPV under Section 8 of companies Act under Social Welfare Project, which will enable funding to start. The Supreme Court approved the formation of the company.Moneycontrol NewsMoneycontrol News|Moneycontrol News
The apex court had earlier directed the receiver and SBICap to finalise the legal framework for regulating the said funding and submit the same to the court.
It should be noted that SBICap cannot release money directly to an individual such as the court receiver as per its charter but into a company account. Therefore, unless a company is constituted the money cannot be disbursed by the stressed asset fund.
The SWAMIH Investment Fund had agreed to fund six projects, namely Silicon City 1 and 2, Crystal Homes, Centurian Park Low Rise, O2 Valley and Tropical Garden. The amount of Rs 625 crore would cover a total of 6,973 units.
The government’s construction arm NBCC on October 13 proposed taking up sales and marketing mandate of unsold inventories and Floor Area Ratio (FAR) for Amrapali Projects. The bench directed the court receiver to submit the list of unsold inventories before October 29, which is the next date of hearing to ensure that there is transparency in the sales process. The issue will be taken up then.
The Supreme Court-appointed court receiver and senior advocate, R Venkataramani, has been entrusted with the task of managing the affairs of the Amrapali Group. He had earlier written to the governor of the RBI and chiefs of other banks, inviting them to finance Amrapali projects.
RBI had submitted that credit related issues are de-regulated, that banks are independent to take their decisions based on their commercial viability and it has no role to play in the matter. The central bank has also asked the Indian Bankers Association (IBA) to expedite the decision making process.
The court receiver informed the bench that under Section 46D of RBI Act, Credit Loan Term Operation Fund falls under the direct supervision of RBI. In 2019, the government through an amendment had brought the National Housing Bank and the National Financial Institutions under the control of RBI.
“Once the action plan for sale of properties and unsold inventory is finalised and acted upon, the biggest hurdle in completion of construction and the prevalent apprehension in the minds of homebuyers will be removed. Further, with RBI playing an active role in arranging the finance for these projects, I am sure, there will not be any shortage of funds and NBCC will be able to complete these projects on time,” said Kumar Mihir, the Supreme Court advocate representing homebuyers in the matter.
The court also took up the issue of recovery of funds and said that they would want to go into these issues on the next date of hearing.
With regards to the Metal Scrap Trade Corporation issue, the court receiver informed the Supreme Court that MSTC has filed a detailed action plan for valuation and e-auction of properties and that the entire exercise shall be completed by February 2021.
The court gave its in-principle approval to MSTC to go ahead with the plan, but wanted them to expedite the entire process. Accordingly, MSTC has been directed to place a revised schedule on record.
The SC has approved the action plan and auction of four properties and directed the court receiver to file a report on the auction and valuation in a sealed envelope to maintain confidentiality in sales.
With regard to homebuyers’ loans, the Supreme Court had directed all banks and financial institutions to disburse and restructure the loans in June. The court receiver on October 13 informed the court that he had signed an memorandum of understanding (MoU) with UCO Bank and Union Bank of India (including Corporation Bank and Canara Bank which is now merged with Union Bank) and that most banks had not been cooperating with him.
He informed the court that it was due to this reason that homebuyers were unable to deposit the amount as per the payment charter. The court has directed banks to comply with the order and expedite homebuyers’ loan disbursements/deposits. The court directed all other banks to treat these agreements as standard and execute similar agreements with the receiver.
The court also directed the banks to consider the applications for fresh loans on their merit independently.
More than 40,000 homebuyers, who had invested in various Amrapali projects more than eight years ago, are yet to receive possession of their homes.
The estimated cost of completion of all these pending projects of Amrapali is approximately Rs 8,500 crore. NBCC, with the support of the apex court, has already completed and handed over two stalled projects, while implementation of some more projects are in progress at present.On July 23, 2019, the apex court had cracked its whip on errant builders for breaching the trust reposed by homebuyers and ordered cancellation of the registration of the Amrapali Group under the Real Estate (Regulation and Development) Act, 2016, and ousted it from its prime properties in the NCR by nixing the land leases.