BIKRAM CHATTERJI AND OTHERS Vs. UNION OF INDIA AND OTHERS, I.A. Nos. 49238 of 2020, Decided on : 10-06-2020

Issues Raised – the problems or questions brought before the court.

1. • NBCC’s Legal Protection: NBCC (the construction company appointed by the Court) sought confirmation that it is protected from being sued by homebuyers, vendors, and others in various courts nationwide, as dealing with these lawsuits was distracting them from their construction work.

1. • Repayment of Interest: Royalgolf Link City Projects Private Limited requested a modification of a previous order, arguing that it faced extreme financial hardship and should be excused from paying the mandated 12% interest on Rs. 48.52 crores it had received and repaid to the Amrapali Group.

1. • Use of Development Rights (FAR): The Noida and Greater Noida Authorities wanted unused land development rights (called FAR) to be returned to them so they could sell it to recover the huge outstanding financial dues owed by the Amrapali Group. Conversely, the Court Receiver wanted to sell the same FAR to raise funds urgently needed to complete the stalled housing projects.

1. • Forensic Report Challenge: Vansh Consultants Private Limited sought to have its name removed from the detailed financial investigation (Forensic Auditor’s) report, claiming it was wrongly listed as owing Rs. 9.75 crores to the Amrapali Group.

1. • Home Loan Disbursement: The Court Receiver requested directions for banks to release sanctioned home loans to buyers, even if their accounts were classified as financially troubled (Non-Performing Assets or NPAs), and to restructure these loans.

1. • Interest Rates on Land Dues: Developers requested a significant reduction in the extremely high interest and penalty rates (ranging up to 15% compounded semi-annually, plus penal interest) charged by the Noida and Greater Noida Authorities on outstanding land premiums, which was halting construction across the region.

Issues Framed – the main questions the court decided to examine.

1. • Is NBCC immune from legal action in other courts while working on the Amrapali projects under the Supreme Court’s supervision?

1. • Does Royalgolf Link City Projects Private Limited have grounds for waiving the interest payment on the money it held that belonged to the homebuyers?

1. • Should the unused land development rights (FAR) be given back to the Noida and Greater Noida Authorities to recover their dues, or should the Court Receiver sell them to fund project completion?

1. • Was the financial investigation (Forensic Auditor’s) report listing Vansh Consultants Private Limited as a debtor inaccurate, based on the documents provided?

1. • Can the Supreme Court direct banks to ignore standard rules (like NPA status) and release pending home loans to homebuyers to facilitate project completion?

1. • Should the court intervene to reduce the excessively high interest rates charged by the Authorities on outstanding land payments due to the poor condition of the real estate sector and the plight of homebuyers?

Observations on Issues Framed – what the court noticed or said on each issue.

• • NBCC Immunity: NBCC is operating strictly under the Supreme Court’s orders and supervision. It is only accountable to this Court in the pending case and is granted immunity from lawsuits filed by existing homebuyers, previous contractors, or government authorities in any other court or commission.

• • Royalgolf Interest: The money Royalgolf received was diverted money belonging to the homebuyers. The hardships cited by Royalgolf were commercial in nature. Allowing them to keep the benefit of that large amount without interest would amount to unfair enrichment. A 12% interest rate was deemed reasonable.

• • Sale of FAR: The availability of these development rights (FAR) is fundamentally due to the money invested by the homebuyers. Therefore, the homebuyers should have the first claim on any proceeds from the sale of FAR to ensure projects are completed. The Authorities’ dues must be recovered from the attached properties of the Amrapali Group, not from the sale of FAR needed for project completion.

• • Vansh Consultants: The detailed financial investigation report was found to be correct. The agreement Vansh Consultants presented was suspicious and appeared designed to hide the actual financial transactions, especially given the implied 100% interest rate and the non-existence of the tower/flats mentioned in the agreement. The money movement was seen as a conduit for money laundering.

• • Home Loan Disbursement: It is in the interest of both the homebuyers and the banks that the projects are completed so that banks can recover their money. Given the specific circumstances where projects have been stalled for years, the RBI’s guidelines concerning troubled accounts (NPAs) would not prevent the Supreme Court from issuing necessary directions for loan release and restructuring.

• • Interest Rates on Land Dues: The interest rates charged by the Authorities (such as 15% compounded semi-annually plus penal interest) are excessive when compared to prevailing bank lending rates (which have fallen significantly, e.g., SBI MCLR around 7-8%). These high rates are severely impacting the ability of developers to complete projects and are negatively affecting homebuyers. The Court concluded that a reasonable rate must be fixed.

Sections Interpreted – the sections of law and Act names discussed by the court.

• • Negotiable Instruments Act, Section 138 (Regarding proceedings filed for dishonored checks).

• • RERA (Real Estate (Regulation and Development) Act) (Mentioned regarding the cancellation of the Amrapali Group’s registration and the requirement for timely completion of projects).

• • FEMA (Foreign Exchange Management Act) (Mentioned regarding potential violations indicated in the financial investigation report).

Law Settled – the legal rule or principle made clear by the court.

• • Immunity for Court-Appointed Entities: Any entity appointed by the Supreme Court (like NBCC) to complete projects under judicial supervision is immune from being sued in any lower court or tribunal concerning the work performed.

• • Disgorging Unjust Enrichment: Parties who benefit from holding and using diverted funds belonging to homebuyers are required to return that money with reasonable interest to prevent unfair financial gain.

• • Priority of Homebuyer Assets: Resources essential for project completion (like the saleable development rights/FAR) that originated due to homebuyer investment must be controlled by the Court Receiver and prioritized for finishing the projects, superseding the dues recovery claims of the Authorities and banks.

• • Judicial Restructuring of Loans: In exceptional circumstances involving failed housing projects, the Supreme Court has the authority to direct banks and financial institutions to restructure existing home loans and release funds, even for accounts previously designated as financially troubled (NPAs), to ensure construction is completed.

• • Reasonable Interest Rates for Authorities: Given the severe financial distress in the real estate sector, the high interest and penalty rates charged by land development authorities (Noida/Greater Noida) on outstanding land premium are deemed unsustainable and must be reduced to a reasonable rate (fixed at 8% per annum) to allow projects to be completed.

Judgment / Directions (Conclusion) – the final order or directions of the court.

1. • Protection for NBCC: All courts, commissions, and authorities are ordered not to allow NBCC to be made a party in any legal dispute related to the Amrapali projects or issue summons to its officials. NBCC must submit monthly progress reports to the Court Receiver, who will post them on a website for the information of the homebuyers.

1. • Royalgolf Interest Payment: Royalgolf Link City Projects Private Limited’s request to waive the 12% interest payment was denied. They must deposit the total interest amount within six weeks.

1. • Sale of FAR: The request from Noida and Greater Noida Authorities to take back unused development rights (FAR) was rejected. The Court Receiver is authorized to sell all available FAR (including permissible, unused, and purchasable FAR) to raise money to complete the incomplete housing projects. The Authorities must approve necessary building plans for this sale within 30 days.

1. • Vansh Consultants: The request to remove Vansh Consultants Private Limited’s name from the list of entities owing money in the financial investigation report was dismissed.

1. • Home Loan Release: Banks and financial institutions are directed to release sanctioned loans to homebuyers, even if their accounts are declared as financially troubled (NPAs). These loans must be restructured for the long term and disbursed based on the current interest rates set by the RBI, according to the stages of construction.

Interest Rate Reduction: The interest rate charged by Noida and Greater Noida Authorities on outstanding land payments for all such projects is reduced to 8% per annum. The Authorities must restructure the repayment schedule accordingly.