BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS.

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A Bank of Maharashtra for repayment of their term loan instalment. This money was not meant for payment of term loan instalment as per FDI Rules. It was to be used in the construction.

91Copy pinpoint91. The ASCPL did not use the money for the project which was received from IPFII Singapore but transferred Rs.85 crores to ACPPL B and Rs.55 crores to repay bank loan instalments and repay the outstanding creditors provided for in the books and standing in the books. The said payments have rightly been held by Auditors to be in contravention of the FDI norms and rules and for which the money was brought in India.

92Copy pinpoint92. From 2013 to 2015, ASCPL has paid interest of Rs.58.81 C crores @ 17 percent, which is a highly abnormal rate. A sum of Rs.14.41 crores was paid on 31.3.2013. Likewise, on 31.3.2014, Rs.22.20 crores were paid and on 31.3.2015, another amount of Rs.22.20 crores was paid. The violations were made with the knowledge of the IPFII Singapore and they were in connivance with the ASCPL.

93Copy pinpoint93. The stand of the Bank of Baroda that they have independently appointed Lender’s Engineer is of no avail. There was negligence on the part of Bank of Baroda and merely proceeding before the Court in 2017 to recover the amount is not going to serve the purpose. More so, in view of the finding of the Forensic Audit that there was no necessity of obtaining the loan from the Bankers as Amrapali Group had sufficient E money from the home buyers, which has also been diverted and has not been utilised in the construction activities. Other assets have been created with the help of the same and the borrowings have been used in order to siphon off the money by making payment of some unusual amount not only to J.P. Morgan, but also to IPFII Singapore in violation of the FEMA F Rules and FDI Rules as found by the Auditors in the respective cases.

94Copy pinpoint94. It was submitted that the Bank of Baroda has obtained the deed of corporate guarantee inter alia from Ultra Homes Construction Ltd, Rinku Clothing Creations Pvt. Ltd., Jotindra Steels and Tube Limited and Vidyashree Buildcon Pvt. Ltd. RoC search report and CA certificate G had also been obtained. Lender’s Legal Counsel Report dated 2.3.2012 verifying the validity and enforceability of financing documents and creation of securing on assets of ASCPL is also on record. Jotindra Steels and Tubes Limited issued a corporate guarantee, it was absolutely improper for the Bank of Baroda to discharge the bank guarantee without payment of amount in view of the fact that Jotindra Steels and Tubes H

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Limited was not ready to subscribe to the capital was no ground for A Bank of Baroda to discharge Jotindra Steels and Tubes Limited. Once guarantee has been given and in view of the finding recorded by the Forensic Auditors as to the nature of bid by the Jotindra Steels and Tubes Limited and other persons, it is apparent that action was illegal.

95Copy pinpoint95. The leases had been granted by Noida and Greater Noida B Authorities subject to the provisions contained in U.P. Industrial Area Development Act, 1976. Section 13 of the U.P. Industrial Area Development Act, 1976 deals with imposition of penalty and mode of recovery of arrears, which states that where any transferee makes any default in the payment of any consideration money or instalment thereof or any other amount due on account of the transfer of any site or building C by the Authority or any rent due to the Authority in respect of any lease or where any transferee or occupier makes any default in payment of any amount of fee or tax levied under the Act, in addition to the amount of arrears, a further sum not exceeding that amount shall be recovered from the transferee or occupier by way of penalty. Under Section 13- D A, any amount payable to the Authority under Section 13 shall constitute a charge over the property and may be recovered as arrears of land revenue or by attachment and sale of property in the manner provided under the provisions of Uttar Pradesh Municipal Corporations Act, 1959 (Act no.2 of 1959). Section 14 provides for the resumption of any site or building and forfeiture of whole or any part of the money if any paid in respect thereof. “14. (1) In the case of non-payment of consideration money or any instalment thereof on account of the transfer by the Authority or any site or building or in case of any breach of any condition of such transfer or breach of any rules or regulations made under this Act, the Chief Executive Officer may resume the site or building so transferred and may further forfeit the whole or any part of the money if any paid in respect thereof. (2) Where the Chief Executive Officer order resumption of any site or building under sub-section (1) the Collector may, on his requisition, cause possession thereof to be delivered to him and may for that purpose use or cause to be used such force as may be necessary.”

96Copy pinpoint96. The Authorities have failed to take action under the aforesaid provisions. The Authorities have also failed to perform the statutory H

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A duty cast upon them to take prompt action. Merely filing of the case against Unitech Builders by way of petition in this Court did not furnish any grounds to the Authorities to remain silent spectator on the perpetration of fraud committed on the home buyers by Amrapali Group of Companies. Public trust doctrine requires an affirmative action, which was envisaged not only statutorily but under the Scheme also. They B were required to ensure that projects were completed within the stipulated period, otherwise, the very purpose of the grant would stand frustrated and colossal loss of public money. Amrapali Group did not pay even the amount due to be paid to the landowners on the part of land acquisition, it did not pay premium annual lease amount interest to Authorities. They C have violated every condition, but still, Authorities were bent upon to condone everything. This reflects absolute dereliction of duty cast upon the Authorities.

97Copy pinpoint97. The Noida and Greater Noida Authorities and the Bankers have permitted diversion of funds of home-buyers and the possession of other assets by Amrapali Group. The buyers’ money had been diverted, which was meant for construction on payment of dues of Authorities in case they were paid timely by the Amrapali Group to the Authorities and to the Banks substantively liability would have been cleared. But by their inaction and rather conniving, the buyers were cheated by the Amrapali Group. Authorities did not object when mortgages were effected in favour of Banks in violation of conditions. Bankers could not have violated conditions. Now, whatever complete/incomplete structures are there, the Authorities are claiming that buyers have no right and they have the first charge on the structure as they have to recover the amount, only thereafter if anything is left out, can be paid to the buyers. In case the submission is accepted, it would amount to playing further fraud upon the fraud. It was incumbent upon the Authorities as well as the Banks to prevent the fraud. Now, if Banks, as well as the Authorities, are permitted to recover the amount from the home-buyers’ investment, in that case, it would be equally unjust and would be against the conscience of the law and nothing would be left for buyers not even a brick and the structures have come up by investing their money. Law never permits unjust gain based upon fraud. The principle “fraud vitiates” is clearly attracted and such a transaction would become unenforceable and would be against the public trust doctrine. Real estate business can never prosper in case of breach of trust, bankers, Authorities in connivance and the builders are permitted to take away the innocent home-buyers’

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money without being accountable to their action/inaction. From tomorrow huge money will be collected from home buyers by the builder, banks would act in connivance and the Authorities sleep in slumber, permitting diversion of money of buyers/bankers, etc., and the home-buyers will be paying the dues of all concerned without investment of a penny by builder and rather they are diverting the money of the home-buyers in connivance with Authorities and Bankers and they are left without dream homes. If that is a factual scenario, no Court can permit such fraud to be perpetrated. Since “fraud vitiates”, the bounden duty of the Court is to act as parens patria not only to save the home-buyers but also to ensure that they are not cheated.

98Copy pinpoint98. Authorities and Bankers have not acted in furtherance of public interest and failed to perform duties enjoined upon them. The kind of fraud that has taken place not only in Amrapali Group of Companies but at large as more than 70 percent of the various projects have not come up, is alarming to the Courts to take affirmative steps with the direction to prevent such frauds, restore the money of home-buyers and to punish incumbents responsible for such act. At the same time to ensure that buildings are completed. It cannot be denied that lifetime savings of home-buyers have been invested for purchase of a house with the faith and trust they have given the money. The scheme of the Government is to promote the real estate for which land had been acquired, even poor farmers have not been paid the compensation. The land allotted at throw away prices of 10%, the allotment premium has not been paid and in an illegal manner plots have been allotted on huge amount by builders is another fraud in collusion with Authorities.

99Copy pinpoint99. How buyers get their houses and can be suitably compensated for the delay that has taken place in the matter and they are left at the juncture where the builder has diverted the funds for the last several years and no construction activities have taken place. For several years, no accounts were maintained from 2015 till date and a lot of money had been withdrawn from the Banks. The orders passed by this Court on 22.11.2017 to deposit 10 percent of the amount was not complied with by the Amrapali Group. Thereafter again on 17.5.2018, this Court permitted them to carry forward the project, but they did not do so and were not ready to deposit the amount of Rs.250 crores to show their bona fide to undertake construction activity and efforts had been made to wriggle out of assurances on which basis this Court had passed the orders. H

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100Copy pinpoint100. On behalf of Authorities provisions contained in Section 13 of the Uttar Pradesh Apartment (Promotion of Construction, Ownership, and Maintenance) Act, 2010 has been pressed into service. It is submitted that transfer cannot be made in favour of home-buyer without executing the Transfer Deed. As per Section 5 of Act of 2010, flat buyers become entitled to ownership and possession of the Apartment and undivided interest in the common areas as specified in the deed of the Apartment. It is further submitted that tripartite sub-lease deed has to be entered into in order to transfer ownership to the home-buyers, consisting of Authorities, builders and home-buyers and before that is done, it is necessary for builder to obtain the completion certificate on fulfilment of certain conditions. The main objection raised by the counsel is with respect to the issuance of completion certificate is default of the payment of amount with interest to be made under lease and relating to fire safety. It is also pointed out that completion certificate is necessary to be issued, the issuance of the same would depend upon payment of the dues and the Authorities, later on, will have no mechanism to recover the dues, once registered conveyance deed is executed in favour of home-buyers. According to Authorities, the buyers may contend that they have paid the entire consideration to the builder, who has defaulted in making the payment for the flat and the privity of making the payment is between the concerned Authorities and the builder. It is also submitted on behalf of Authorities that in part completion also, the certificate can be issued against the part payment received, however, the completion certificate would be issued in the same proportion minus 10 percent so that financial interest of the Authorities is protected. Sub-lease deed would be executed as per the present policy up to 90 percent of the proportion in which part payment has been received. F

101Copy pinpoint101. In our opinion, in the ordinary course, there cannot be any dispute with respect to the aforesaid propositions. However, in the instant case, the facts indicate that 9000 families are residing for the last several years out of the sheer necessity of shelter place and they have not been provided with electricity connections and other facilities due to non- G issuance of occupancy certificate by the concerned authorities. Most of them have paid the entire amount to the builders. The amount outstanding as against home buyers have to be used in completion of building. The payment to be made to concerned Authorities had also been collected by the builder from home buyers as component of price of flat, but has not been deposited with the concerned Authorities and

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the home buyers’ money had been diverted, which was more than the dues of the Authorities and the Banks taken together. Had timely action been taken by them no amount could have been diverted and the position would have been different as it stands today. However, since we have attached various other properties where home buyers’ money has been invested, the rights of the Authorities as well as bankers to get the money recovered from the other properties of the builder Amrapali Group/ Directors and where they have invested money and belonging to the guarantors in the various transactions. However, at the same time for want of payment to Authorities and Bankers by the builder under these facts and circumstances, it would be absolutely improper for the Authorities to deny issuance of occupancy or completion certificate, especially on the ground of non-payment of dues. As per the interim orders, we have ensured that fire safety devices are fitted in buildings at appropriate places wherever necessary and in case it is lacking at any place we have to ensure that they are fitted and there are no other violations pointed out in the construction so far made. Thus, the concerned Authorities have to issue occupancy certificate as well as completion certificate with respect to the projects in which home buyers residing without insisting for the payment of their dues. This Court has to monitor the payment of the dues to the Authorities as well as the Bankers, from guarantors and other proprietors. The innocent buyers cannot be made to suffer for no fault on their part. E

102Copy pinpoint102. Once Authorities have allowed 9000 home-buyers to occupy the premises without terminating the lease on the ground that occupation is illegal. Obviously, builders have put them in possession, they are not the encroachers and they have invested their valuable saving and have no other shelter place to live. They cannot be deprived of their houses and cannot be left without basic necessities of life like water, electricity, etc. The concerned Authorities are responsible to provide electricity, water, and all other basic amenities to buyers as they have the right to occupy the premises. In the peculiar facts of the case, we have directed the Authorities to provide basic necessities forthwith. We also direct the Central Government and Government of Uttar Pradesh to ensure that everything is done to protect the interest of the home-buyers obviously without obliging the builders. Wherever we seek any favour for home- buyers, we see that defrauding parties i.e., promoters/builders are further obliged by making certain concessions by the Government that would amount to perpetrating further fraud and unjust enrichment of builder. H

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A The case poses challenge to the law enforcement agencies to act in tandem to book such culprits.

103Copy pinpoint103. When there are defaults galore, creation of fake and dummy companies in an unbridled manner, it passes comprehension that how the Statutory Auditor has failed to discharge the duty cast upon him and the officials of the Amrapali Group also shared hard earned money of home-buyers in an illegal manner by siphoning it off. Directors had obtained salaries without doing anything. Money is diverted and siphoned off in other projects. Office junior employees, peons and relatives etc. were inducted as Directors just to defraud the home-buyers of their money and to siphon it out. Without material being supplied, a large amount of money had been paid by way of forge purchases as a method to divert money even through authorised signatories and the Companies of the relatives, family members and relations of the Directors and Guarantors also. In the case fraud is to such large extent, it is difficult to capsulise the facts in a narrow compass, for that when we see the report and good job done by the Forensic Auditors to unearthed the fraud. They have gone into minute details forensically and done their job extremely well, due to which serious kind of fraud has been unearthed with the involvement of so many persons as referred to by them. We direct the concerned Authorities to look into the violation of the FEMA and FDI norms as projected by the Forensic Auditors in their report and to submit progress report in this Court. IN RE: RERA

104Copy pinpoint104. The Bill was passed in the Rajya Sabha on 10.3.2016 and in the Lok Sabha on 15.3.2016. The Bill intended to standardise business practices and transactions in the real estate sector. It intends to ensure consumer protection. It intends to regulate transaction related to both residential and commercial projects. The Statement of Objects and Reasons are as under: “STATEMENT OF OBJECTS AND REASONS G The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector as grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardisation and lack of adequate consumer protection. Though the Consumer H

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Protection Act, 1986 is available as a forum to the buyers in the A real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasised in various forums. B

2. In view of the above, it becomes necessary to have a Central legislation, namely, the Real Estate (Regulation and Development) Bill, 2013 in the interests of effective consumer protection, uniformity, and standardisation of business practices and transactions in the real estate sector. The proposed Bill provides for the establishment of the Real Estate Regulatory Authority (the C Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority.

3. The proposed Bill will ensure greater accountability towards consumers, and significantly reduce frauds and delays as also the current high transaction costs. It attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism. The proposed Bill will induct professionalism and standardisation in the sector, thus paving the way for accelerated growth and investments in the long run. F

4. The Real Estate (Regulation and Development) Bill, 2013 inter alia provides for the following, namely:- (a) to impose an obligation upon the promoter not to book, sell or offer for sale, or invite persons to purchase any plot, G apartment or building, as the case may be, in any real estate project without registering the real estate project with the Authority; (b) to make the registration of real estate project compulsory in case where the area of land proposed to be developed H

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A exceed one thousand square meters or number of apartments proposed to be developed exceed twelve; (c) to impose an obligation upon the real estate agent not to facilitate sale or purchase of any plot, apartment or building, as the case may be, without registering himself with the B Authority; (d) to impose liability upon the promoter to pay such compensation to the allottees, in the manner as provided under the proposed legislation, in case if he fails to discharge any obligations imposed on him under the C proposed legislation; (e) to establish an Authority to be known as the Real Estate Regulatory Authority by the appropriate Government, to exercise the powers conferred on it and to perform the functions assigned to it under the proposed legislation; D (f) the functions of the Authority shall, inter alia, include – (i) to render advice to the appropriate Government in matters relating to the development of real estate sector; (ii) to publish and maintain a website of records of all real estate projects for which registration E has been given, with such details as may be prescribed; (iii) to ensure compliance of the obligation cast upon the promoters, the allottees and the real estate agents under the proposed legislation; (g) to establish an Advisory Council by the Central F Government to advice and recommend the Central Government on – (i) matters concerning the implementation of the proposed legislation; (ii) major questions of policy; (iii) protection of consumer interest; (iv) growth and development of the real estate sector; G (h) to establish the Real Estate Appellate Tribunal by the appropriate Government to hear appeals from the direction, decision or order of the Authority or the adjudicating officer;

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(i) to appoint an adjudicating officer by the Authority for A adjudging compensation under sections 12, 14 and 16 of the proposed legislation; (j) to make provision for punishment and penalties for contravention of the provisions of the proposed legislation and for non-compliance of orders of Authority or Appellate B Tribunal; (k) to empower the appropriate Government to supersede the Authority on certain circumstances specified in the proposed legislation; (l) to empower the appropriate Government to issue C directions to the Authority and obtain reports and returns from it. (5) The Notes on clauses explain in detail the various provisions contained in the Real Estate (Regulation and Development) Bill,

2013. D (6) The Bill seeks to achieve the above objectives.”

105Copy pinpoint105. It is apparent from the aims and objectives that Act ensures greater accountability towards consumers and significantly reduce fraud and delays. Accountability standards have been laid down where duties E cast upon promotors as well as the effort has been made to make consumer also responsible.

106Copy pinpoint106. Before coming to the rival submission with respect to RERA, we deem it appropriate to note certain provisions. Common areas have been defined under Section 2(n). The apartment has been defined under F Section 2(e). Section 2(k) defines carpet area, whereas Section 2(q) defines completion certificate. Completion certificate to mean that certificate issued by competent authority certifying that the project has been developed according to the sanctioned plan, layout plan and specifications as approved by the competent authority. Occupancy certificate has been defined in Section 2(zf) which states that certificate G issued by the competent authority permitting occupation of any building which has provision for civic infrastructures such as water, sanitation, and electricity. Section 2(zk) defines promoter as a person who constructs or causes to be constructed an independent building or a building H

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A consisting of apartments or converts an existing building for the purpose of selling to other persons; a person who develops land into a project; any development authority or any other public body; an apex State level co-operative housing society etc.; any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name; and such other person who constructed any building or B apartment for sale to general public.

107Copy pinpoint107. It is provided under Section 3 that no promoter shall advertise, market, book, sell or offer for sale any plot, apartment or building in any real estate project or part of it without registration with the Real Estate Regulatory Authority established under the Act. The provisions of the C Act have also been made applicable to the ongoing projects on the date of commencement of the Act and for which completion certificate has not been issued, the promoter shall make an application to the Authority for registration of said project within three months from the date of commencement of the Act. D The projects of Amrapali Group have registration under the RERA is an admitted fact. The provisions of the RERA are applicable is also not in dispute.

108Copy pinpoint108. Section 4 requires the application to be filed with specified documents for the purpose of registration. As per Section 4(2)(l)(D), 70 E percent of the amount realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose and the promotor shall withdraw only to the proportion of the percentage of completion of the F project. The accounts have to be audited in every six months and chartered accountant has to certify that amounts collected for a particular project have been utilised for that project and the withdrawal has been in compliance with the proportion of the percentage of the completion of the project. The provisions of Section 4(2)(l)(D) is extracted hereunder:

G “4. Application for registration of real estate projects.- (1)** (2) The promoter shall enclose the following documents along with the application referred to in sub-section (1), namely: — (l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating:- H

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(A)** A (B)** (C)** (D) that seventy per cent of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose: Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project: Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project: Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for that project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. Explanation.- For the purpose of this clause, the term “schedule bank” means a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);”

109Copy pinpoint109. When we consider the provisions in the instant case, it was necessary to deposit the amount in the account. In the year 2015, the RERA was in contemplation and certain provisions came into force on 1.5.2016 and some more Sections i.e., 3 to 19, 40, 59 to 70 and 79 and 80 G came into force with effect from 1.5.2017.

110Copy pinpoint110. A blatant violation of the provisions of RERA has been done by the Amrapali Group. Since RERA contemplates timely completion of projects once registration has been granted under Section 5 and H

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A extension of registration under Section 6, it is only in the event of force majeure in case there is no default on the part of the promoter, registration can be extended in aggregate for the period not exceeding one year. Force majeure shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature. The registration granted under Section 5 is valid for a period declared by the promoter. B Section 7 provides that the Authority may on receipt of a complaint or suo motu or on the recommendation of the competent authority revoke the registration granted under Section 5 in case promoter makes default in doing anything required by or under the Act or the rules or the regulation made thereunder; the promoter violates any of the terms of approval given by the competent authority; the promoter is involved in any kind of unfair practice or irregularities. It is also independently provided that in case the promoter indulges in any fraudulent practices, the registration can be revoked. Upon revocation of the registration, the promoter shall be debarred from accessing the website in relation to that project under Section 7(4)(a). Under Section 7(4)(b), the Authority shall facilitate the remaining development works to be carried out in accordance with provisions of Section 8. Provisions of Section 7 is extracted hereunder: “7. Revocation of registration. - (1) The Authority may, on receipt of a complaint or suo motu in this behalf or on the recommendation of the competent authority, revoke the registration granted under section 5, after being satisfied that— (a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made thereunder; (b) the promoter violates any of the terms or conditions of the approval given by the competent authority; (c) the promoter is involved in any kind of unfair practice or irregularities. Explanation.— For the purposes of this clause, the term “unfair practice means” a practice which, for the purpose of promoting the sale or development of any real estate project adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:— (A) the practice of making any statement, whether in writing or the visible representation which,— H

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(i) falsely represents that the services are of a particular A standard or grade; (ii) represents that the promoter has approval or affiliation which such promoter does not have; (iii) makes a false or misleading representation concerning the services; B

(B) the promoter permits the publication of any advertisement or prospectus whether in any newspaper or otherwise of services that are not intended to be offered; (d) the promoter indulges in any fraudulent practices. C (2) The registration granted to the promoter under section 5 shall not be revoked unless the Authority has given to the promoter not less than thirty days notice, in writing, stating the grounds on which it is proposed to revoke the registration, and has considered any cause shown by the promoter within the period of that notice against the proposed revocation. (3) The Authority may, instead of revoking the registration under sub-section (1), permit it to remain in force subject to such further terms and conditions as it thinks fit to impose in the interest of the allottees, and any such terms and conditions so imposed shall be binding upon the promoter. (4) The Authority, upon the revocation of the registration,— (a) shall debar the promoter from accessing its website in relation to that project and specify his name in the list of defaulters and display his photograph on its website and also inform the other F Real Estate Regulatory Authority in other States and Union territories about such revocation or registration; (b) shall facilitate the remaining development works to be carried out in accordance with the provisions of section 8; (c) shall direct the bank holding the project back account, G specified under subclause (D) of clause (I) of sub-section (2) of section 4, to freeze the account, and thereafter take such further necessary actions, including consequent de-freezing of the said account, towards facilitating the remaining development works in accordance with the provisions of section 8; H

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A (d) may, to protect the interest of allottees or in the public interest, issue such directions as it may deem necessary.”

111Copy pinpoint111. It is clear that RERA intends for completion of the project in case any fraud is committed by the promoter and the activity is not completed, the home-buyers cannot be left in lurch, allowing the prayer on behalf of Bankers as well as by the Authorities would amount to unfair treatment of home buyers in the facts of this case. It is too late for them to submit that home buyer has no rights in the teeth of the provisions contained in the RERA, which intends to prevent fraud.

112Copy pinpoint112. Once registration lapses on non-completion of project within the time stipulated or it is revoked the consequence ensue as enumerated in Section 8 of RERA, the Authority is enjoined upon the duty to consult with the appropriate Government to take such action as it may deem including the carrying out of the remaining development works by competent authority or by the association of allottees or any other manner as may be determined by the Authority. The development work has to be completed and cannot be left in between. Section 8 reads thus; “8. Obligation of Authority consequent upon lapse of or on revocation of registration.- Upon lapse of the registration or on revocation of the registration under this Act, the Authority, may consult the appropriate Government to take such action as it may deem fit including the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority: Provided that no direction, decision or order of the Authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of this Act: Provided further that in case of revocation of registration of a project under this Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works.”

113Copy pinpoint113. Functions and duties of the promoter are specified in Section

11. As per the provisions of this Section, the promoter shall be responsible to obtain the completion certificate or the occupancy certificate. He shall also be responsible for providing and maintaining the essential H

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services on reasonable charges, till taking over of the maintenance by A the association of the allottees. The promoter shall enable the formation of an association or society or co-operative society or federation of allottees. He shall pay all outgoings until he transfers the physical possession to the allottee. After he has executed an agreement for sale for any apartment, plot or building, he may not mortgage or create a B charge on such an apartment, plot or building and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee. It is clearly provided under Section 11(4)(h), which is extracted hereunder: “11. Functions and duties of promoter.- C

(4) The promoter shall— (h) after he executes an agreement for sale for any apartment, plot or building, as the case may be, not mortgage or create a charge on such apartment, plot or building, as the case may be, D and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building, as the case may be;” E

114Copy pinpoint114. It is clear that is the duty of the promoter to abide by the time schedule of the completion of the project of the allottee. The time of completion of the project is fixed from the date of the agreement. Though the RERA has come into force after the mortgage had been created, the intendment of RERA is that after the execution of the agreement no such mortgage or charge should be created. F

115Copy pinpoint115. Section 14 provides adherence to sanctioned plans and project specifications by the promoter. Section 15 deals with the obligations of the promoter in case of transfer of a real estate project to a third party. The promoter shall not transfer or assign his majority rights and liabilities to a third party without obtaining the prior written consent of two-thirds G allottees and without the prior written approval of the Authority. Section 16 deals with obligations of promoter regarding the insurance of real estate project. Section 17 provides for the transfer of title. It is incumbent upon the promoter to execute a registered conveyance deed in favour of H

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A the allottee along with undivided proportionate title in the common areas to the association of the allottees or the competent authority and the possession of the plot, apartment or building, as the case may be, shall be handed over to the allottees and the common areas to the association of the allottees or the competent authority, as the case may be. Section 17(1) is extracted hereunder: B “17. Transfer of title.- (1) The promoter shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority, as the case may be, and hand over the physical possession of the plot, C apartment of building, as the case may be, to the allottees and the common areas to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws: D Provided that, in the absence of any local law, conveyance deed in favour of the allottee or the association of the allottees or the competent authority, as the case may be, under this section shall be carried out by the promoter within three months from date of issue of occupancy certificate.”

116Copy pinpoint116. It is apparent that after the transfer of conveyance deed, the title vests in the allottee and of the common area in the association of the allottees or the competent authority as the case may be. No title remains with the promoter.

117Copy pinpoint117. Section 18 deals with the return of amount and compensation. F In case promoter fails to complete or is unable to give possession of an apartment, plot or building, he shall be liable on demand to the allottees. In case the allottee wants to withdraw from the project, without prejudice to any other remedy available, the promoter has to return the amount received in respect of that apartment, plot, building with interest in this behalf including compensation in the manner as provided under the Act.

118Copy pinpoint118. The rights and liabilities of allottees are provided in Section 19, which is reproduced hereunder: “19. Rights and duties of allottees.- (1) The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent

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authority and such other information as provided in this Act or the rules and regulations made thereunder or the agreement for sale signed with the promoter. (2) The allottee shall be entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale. (3) The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas, as per the declaration given by the promoter under sub- clause (C) of clause (I) of sub-section (2) of section 4. (4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder. E

(5) The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter. F (6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, under section 13, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity G charges, maintenance charges, ground rent, and other charges, if any. (7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under sub-section (6). H

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A (8) The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee. (9) Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same. (10) Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building, as the case may be. (11) Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be, as provided under sub-section (1) of section 17 of this Act.”

119Copy pinpoint119. Certain rights and duties as well as the liabilities to pay interest in case of default on the part of allottees are also provided in the provisions contained in Section 19. Chapter V provides for Real Estate Regulatory Authority, whereas Chapter VI deals with the Central Advisory Council. The provisions relating to Real Estate Appellate Tribunal are provided in E Chapter VII. Chapter VIII contains provisions relating to offences, penalties, and adjudication and Chapter IX deals with finance, accounts, audits, and reports.

120Copy pinpoint120. It is apparent that RERA intends protection of home-buyers and aims at completion of the buildings. The buildings have to be completed, for that, we are required to pass orders. We have already assigned the task to NBCC for completion of buildings as the promoters/ builders have failed to complete the building within the time fixed and the time which could have been extended. Now, more than 10 years have passed and buyers were given the assurances that they would get flats within three years period by the promoter/builder. The maximum time fixed in RERA has also expired and extension could not have been beyond 1 year.

121Copy pinpoint121. It is clear that common areas as provided under Section 17 have to be ultimately handed over to the Association of Allottees or the Competent Authority as the case may be. Thus, any sub-lease, alienation or transfer affected by the promoter of the common areas as defined in

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the RERA and otherwise reserved under the plan shall be void and inoperative.

122Copy pinpoint122. As the basic obligations have not been complied with by the promoters, they cannot also be entitled to FAR. It was pointed out on behalf of Authorities that permissible FAR is 2.75, whereas it has been wrongly mentioned and worked out at 3.50 by the Amrapali Group. In B the instant case, we find that there is serious kind of fraud by the promotors as such they cannot be said to be entitled to avail the FAR to utilise it or to alienate and more so when they have failed to complete the projects and pay the dues.

123Copy pinpoint123. It is also apparent from the provisions of the Act of 1976 as well as RERA and also the case set up by the Authorities that partial occupation certificate can also be issued. The completion certificate can be issued partially also as per the provisions of Uttar Pradesh Apartment (Promotion of Construction, Ownership, and Maintenance) Act, 2010. The main obstacle is said to be non-deposit of the amount which may be ordered to be paid, for that we may clarify in the peculiar facts and circumstances of the case, it has to be secured and recovered by way of selling other attached properties and the one, which have been created out of the diverted funds of the home-buyers and property of guarantors etc. The banks’ borrowings have to be taken care of in a similar manner. The money payable to the Authorities had been diverted and huge amount of buyers’ money had not been invested in the projects neither any part of the money of bank borrowings, in fact, were spent in the construction as found by the Forensic Auditors. The promoters are held accountable for the diversion of the money paid by the buyers as component of price of flats even on account of payment to Authorities. F

124Copy pinpoint124. There appears to be non-issuance of the completion certificate, whereas the buildings are being occupied, we direct issue of completion certificate. This Court has to monitor the payment of dues of the Authorities and Banks and that outstanding are not going to create hurdle in the execution of the registered document/conveyance deed in favour of home buyers. It has to be executed by the concerned Authorities G as well as by the Court Receiver and by the home buyers. The amount which is due on the part of home buyers has to be deposited in the account, which has been opened, in the UCO Bank by this Court. It has to be utilised firstly for the purpose of completion of the buildings and for providing other facilities and the home buyers of incomplete projects H

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A also have to deposit the outstanding amount on their part in the aforesaid account opened in the UCO Bank and out of that amount, it has to be disbursed as per the orders to be passed by this Court for the purpose of construction and outstanding if any, shall be used for the purpose of payment of compensation to home buyers for the period of delay as per the agreement or as may be determined ultimately and other dues. B

125Copy pinpoint125. With respect to percentage of profit of NBCC, we fix it at 8 percent. As it is a Government Undertaking, NBCC has to ensure that DPR is prepared reasonably and the work to be completed as expeditiously as possible.

126Copy pinpoint126. Learned senior counsel on behalf of Bank of Baroda submitted that Amrapali Group as per the conditions of the lease deed executed by the Noida Authority had the right to mortgage the land with the prior permission of the authority for raising loans for the purpose of financing investment in the project. No doubt the lease deed contained a stipulation as to mortgage with prior permission but no clear-cut permission had been obtained from Noida authority. Noida authority has clearly stated as rider that until and unless the entire due premium is paid along with lease money due, no mortgage can be effected. The stand of the authority is clear that without payment of land dues no mortgage could be effected. Thus, in fact in the eye of the law no mortgage could be created as there was no permission to mortgage unless the dues were paid and thus the bank could not have mortgaged the property before clearance of the dues of the Noida Authority, and secondly, the mortgage was permissible for the purpose of financing the investment in the project. As a matter of fact, when this was the stipulation, it was the banker’s duty to ensure that money made available was invested in the project.

127Copy pinpoint127. The Forensic Auditors’ report makes it apparent that Bankers have failed to ensure and oversee that the money was invested in the projects. It was diverted elsewhere as rightly found by the Forensic Auditors. Thus, no charge can be said to have been created by bank loans on the projects as the money, in fact, it has not been used in the projects as such home buyers cannot be saddled with liability and also the projects. Even what was paid by the home buyers, had not been used in the projects and stands diverted. There was, in fact, no necessity for raising the loans from the bank. The money borrowed from banks was used to create other assets worth thousands of crores. Thus, the

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banks can realise their money from those assets and from guarantors and not from the investment of home buyers, not from the buildings in which loans granted by banks have not been invested, which have been erected partially or some are at the nascent stage, for which hard-earned money has been paid by the home buyers. Home buyers are not direct party to the bank loan, thus it was the duty of the bankers and Noida B authorities, if they wanted to impose their charge, to ensure that no fraud takes place and money is invested in the projects for the purpose for which it has been taken not only the money paid by the home buyers but obtained from the banks and due to be paid to Noida authorities, is not usurped illegally by promoter/builder. Though it was realised as part of the component of the price of flat from the home buyers, by the C promoters/builders its illegal diversion was permitted by Amrapali Group in connivance with the officers of the authorities and the bank. Thus, the very condition of investment in the project by bankers, subject to which the mortgage was permissible, had been violated. Thus, it cannot be said that any charge of the banks has been created on the projects. The D charge would be on the property which has been purchased/created by dubious methods. It would be inequitable to fasten the charge against the investment made by the home buyers whereas they have not been benefited and rather have been cheated by the promoters for which bankers, as well as authorities, have to share the blame. We cannot perpetuate another fraud on the innocent home buyers in facts of the case of fastening liability of amounts payable to Authorities and Bankers.

128Copy pinpoint128. Learned senior counsel on behalf of the Bank of Baroda, also submitted that the home buyers are not secured creditors, as such they have no right over secured creditors. While making the aforesaid submissions the provisions of RERA have been ignored. Though they may not be a secured creditor, they have a right to be treated in accordance with the law, fairly and they cannot be subjected to a fraudulent action by the promoters, that too in connivance with the bankers and officials of the Noida and Greater Noida authorities. Even otherwise, in such a situation the court has to come to their rescue and protect their interests, and it is the duty of the court to ensure that buyers get flats and development work is completed as intended under the RERA and the flats are handed over to home buyers after completion. In case the fraud is permitted to be perpetrated on the home buyers, the very purpose of enactment of RERA would stand defeated. H

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129Copy pinpoint129. No doubt about it as submitted on behalf of Amrapali group of companies, that the provisions of RERA are for protecting the interests of promoters also. No doubt about it that the RERA intends to protect the interests of the promoters and home buyers both. However, in the instant case, we have given the opportunity to the promoters to deposit the 10% of the amount in December 2017 and January 2018 but orders have met with non-compliance with all impunity. Thereafter on the assurance of the Amrapali Group that it would undertake the construction work and a joint plan was submitted after great wastage of time and energy and then order dated 17.5.2018 was passed that was also not complied with. It was passed on a condition that a sum of Rs.250 crores to be deposited which was also not deposited by the Amrapali group to show its bona fide. The Group never intended right from the beginning to complete the construction work, has been rightly observed by Forensic Auditors. Thereafter, we have assigned the work to the NBCC. But at the same time, the effort has been made by Amrapali Group/ its Directors to sell the property which has been created by diversion of home buyers’ D funds. Incorrect facts have been stated and suppressions have been made in various affidavits filed in this Court that the certain properties are not encumbered. Various applications are being filed one after the other by the encumbered holders with respect to several properties that they have the charge over the said property.

130Copy pinpoint130. That apart, several attached properties have been put to sale by DRT under the orders of this Court. In most of the cases, no buyers have turned up and/or the price offered by forming a cartel are too low. The property cannot be sold at throw away price. For example, in the case of a hospital situated at Noida, the very group of doctors wanted to purchase, it who are running it, at a paltry sum by forming a cartel. Aforesaid is one of the examples of cartel formation that is how Amrapali group is instrumental in not allowing the properties to be sold. There appears to be some invisible hand holding buyers out and even the bankers are not coming up to finance the purchasers, is the genuine grievance pointed out at the Bar. Be that as it may. Entire gamut of facts indicates the contumacious conduct of Amrapali Group, proper and correct disclosures on oath have not been made, even encumbrances are not being specified clearly in spite of repeated orders passed by us. They have sold several valuable properties during pendency of petitions as pointed out by the Forensic Audit Report. In the aforesaid circumstances, H

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the submission raised on behalf of Amrapali group that under the provisions of the RERA their interest should be protected. In our opinion, considering the serious kind of fraud unearthed on the forensic audit, formation of dummy companies, violation of norms of foreign investment, violation of FEMA, siphoning off the money of home buyers, making payment of dividend without profits and a methodology had been devised of valuing the shares on an unreasonable higher basis so as to siphon out the money of the home buyers to J.P. Morgan etc. The creation of a large number of assets with the help of money of the home buyers. The Forensic Audit unfolds the true story of Amrapali Group. Right from 2015, no construction activity has taken place. Account books had not been maintained and money has been transferred continuously. No audit was made. Money was taken out from banks, and fake purchases have been made. Thus, they are not at all entitled for any indulgence under the provisions of the RERA. In view of their unholy conduct, defying description, their contumacious fraudulent conduct totally disentitles them and they are required to be dealt with as sternly as possible so as to make it exemplary one that such fraudulent actions do not recur in future, in real estate business in India. We are not a country in which Courts will permit such action and permit a person to go scot-free.

131Copy pinpoint131. The agreement initially executed in favour of home buyers to purchase flats may not create any right in the property in praesenti, it will be only on the execution of the registered document that title is going to be perfected, but investment in project is only of home buyers. In this case, as they have paid money invested in projects, it is for the courts to do complete justice between the parties and to protect the investment so made and interests of home buyers and to ensure that they get the perfect title and the fruits of their hard earned money and lifetime savings invested in the projects.

132Copy pinpoint132. On behalf of Bank of Baroda, learned senior counsel submitted that the agreement of promoter/builder with home buyers is unregistered as such, no right has been created in the immovable property in view of the provisions contained in section 49 of the Registration Act. G The submission ignores and overlooks the provisions of RERA which intends to prevent such frauds on home buyers and ensure completion of projects and that of the agreement between promoters and buyers. There are various rights under the agreement as well as under the RERA.

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A The agreement entered into at the time of allotment is the basis of the investment in the projects made by home buyers, it cannot be said to be a scrap of paper. It is their valuable investment which is required to be protected and cannot be permitted to be taken away by builder or secured creditors in an illegal manner. The provisions of section 17 of the Registration Act no doubt provide that a document of title requires B compulsory registration, no doubt registered document has to be executed that also has to be taken care of by the Court so as to protect the interest of home buyers.

133Copy pinpoint133. Learned senior counsel appearing on behalf of the Bank of Baroda urged that by virtue of the provisions contained in section 11(4)(g) C of the RERA Act, it is the duty of the promoter to pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the association of allottees, which he has collected from the allottees, for the payment of outgoings, including the land cost, ground rent, municipal or other legal taxes, charges for water or electricity, maintenance charges, including the mortgage loan and interest on mortgages or other encumbrances and such other liabilities payable to competent authorities, banks and financial institutions, which are related to the project. The two expressions of the provisions of Section 11(4)(g) are significant. Firstly, which the promoter has collected from the allottees. Secondly “which are related to the project”. In the instant case dues of the Noida/Greater Noida authorities have been collected from the allottees by the promoters but the authorities have permitted diversion of said amount by not taking any action in view of the chronic default right from the beginning. Though they knew that the promoter had booked the flats, even the permission to grant sub-lease of the plot had been granted in totally illegal manner without payment of dues of premium and lease rent etc. Conditional permission to the mortgage was issued without payment of the premium lease money etc. so as to perpetuate the fraud being done by the promoters. The mortgage created ought to have been objected in view of the conditions subject to which it could have been done. Obviously, it was done by Amrapali Group in connivance with officials of Authorities including the bankers. Thus when the authorities have themselves permitted fraudulent action money has been diverted, which has been paid by home buyers for payment to Authorities also, as premium was component of price and as bankers have also permitted diversion of loan amount, mostly on same day, it cannot be said in the H

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facts of the case, that any amount of the bankers or that of authorities remains invested in the project. The sine qua non is the expression “which are related to the project” would mean that that amount recoverable from the allottee is the one which has been invested in the project. A third person can be held liable for the money payable to secured creditors in case it has been invested in the project, in case it has not been spent in constructions, same cannot be permitted to be realised from the project/home buyers, the investment of home buyers cannot be frittered away and to fasten liability upon the innocent buyers/allottees in that event would tantamount to perpetrating yet another fraud on them. Accountability, as per law, has to be fastened on promoters/builders and all concerned. It would amount to total deprivation of money of home buyers without any fault on their part or legal liability. It would amount to fastening liability upon them once over again by misuse of the process of law. The factual matrix unfolded on forensic audit indicates serious kind of fraud that has taken place which would shut the enforcement of liability clause as against the home buyers. The provisions of the first and second charge cannot come to the rescue of Authorities/Bankers. Under Section 11(4)(g) the promoter has to pay all outgoings which he has collected from the allottees, the payment of outgoings includes land cost, ground rent, charges for water or electricity, maintenance charges etc. As per the proviso to Section 11(4)(g), the promoter shall continue to be liable, even after the transfer of the property, to pay such outgoings and penal charges, if any, to the authorities. Outgoings which have been collected by the promoter can be and have to be recovered in the facts and circumstance of the case from them as intended by section 11(4)(g) of RERA.

134Copy pinpoint134. Learned senior counsel on behalf of the Bank of Baroda F submitted that the provisions of section 11(4)(h) of RERA provides that the promoter, after he executes an agreement for sale for any apartment, plot or building, cannot mortgage or create a charge on such an apartment, plot or building, as the case may be, and if any such mortgage or charge is made or created then it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building, G as the case may be. The provision has a non-obstante clause. As the provision has given an overriding effect by non-obstante clause, the provision is no help to the banks as the agreement had been by promoters with home buyers entered into earlier in point of time to the creation of H

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A the mortgage. There could not have been any mortgage created subsequently and even if validly created, it would not affect the right and interest of the allottee as intended by RERA. Thus, the right and interest of the allottee are safeguarded by virtue of the provisions contained in section 11(4)(h). As the project was pending, the provision intends to confer a right on the allottee and save the allottees and also their interests from such liability. Even if the provision is held not applicable on the ground that RERA came into force later, since there was no valid mortgage as held by us, it was incapable of affecting the right or interest of the allottee. Had it been ensured that the money due to Noida and Greater Noida authorities was paid by the promoters to the authorities, the fraud of siphoning of money would not have taken place to the extent it has been done. Moreover, the money borrowed from banks has not been invested in the projects. In fact, projects required no funding. It would be iniquitous to charge the allottees with the bankers’ money. Thus, in the peculiar facts and circumstances of the case, we hold that rights or interests of the allottees are not at all affected by the mortgage created by the bankers or by the dues of the Noida or Greater Noida authorities.

135Copy pinpoint135. On behalf of the Bank of Baroda, Shri Maninder Singh learned senior counsel has submitted that section 4(2)(1) of the RERA requires the promoter to disclose the prior encumbrance. Therefore, the E RERA contemplates the creation of encumbrance even before the project is registered and such a plot can be offered to allottees. Basically, a declaration is required under section 4(2)(l)(A) that the land is free from all encumbrances or as the case may be, details of the encumbrances, if any, on such land, should be disclosed. The intention is that the allottee should know about the encumbrance if any. The provision does not espouse the cause of the bank in any manner whatsoever.

136Copy pinpoint136. On the strength of the provision of section 19(4) of RERA, learned senior counsel has submitted that the allottee should be entitled to claim the refund and compensation, if the promoter fails to comply or is unable to give possession of the apartment, plot or building in accordance with the terms of the agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provision of the RERA or the rules and regulations made thereunder. He submitted that the right of the allottees is restricted to only receiving the compensation from the promoters. We wholly disagree with the submission. It is made in oblivion

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of the provisions of Section 8 of the RERA which provides for completion of the development projects by the competent authority or by the association of allottees or in any other manner, as may be determined and the association of allottees shall have the first right of refusal for carrying out the remaining development work is the wholesome provision contained in the second proviso to section 8. To claim compensation is at the option of the allottee if the allottee wants to go out. That is an additional right, not the only right conferred under the RERA. He cannot be left in lurch but is entitled to claim the refund if he so desires. It is his option to claim the refund along with interest and compensation which is to be determined under the RERA. The rights of the allottees are not restricted to only receiving the compensation as submitted. The submission is too tenuous to be accepted.

137Copy pinpoint137. A submission has also been raised that the RERA recognises and protects interests of the lenders and does not in any manner take away rights under any of the existing statutes such as T.P. Act, Debt Recovery Tribunal Act, SARFAESI Act. It is apparent from a perusal of RERA, which is a special Act, that certain rights have been created in favour of the buyers. The provisions of RERA have to prevail. When we come to the question of protection of rights of buyers even if RERA had not been enacted, under aforesaid laws in the facts of the case, a different view could not have been taken. However, there is no dispute that the bankers would have the right to recover their dues from whom and in what manner is the question which we have already answered. The provisions of RERA are beneficial to the home buyers and are intended to insulate them from fraudulent action, ensures completion of the building and it is the duty of the court to protect and ensure the home buyers’ interest and at the same time to hold them responsible for the duties enjoined upon them under the said statute. We are not absolving the home buyers from the discharge of their liability if any. At the same time, they have the right of enforcement of their right for compensation due to undue delay in completion of the project.

138Copy pinpoint138. It was submitted by learned senior counsel on behalf of the G Greater Noida authority that title has to pass in home buyers by way of registered document as provided in section 17(1)(b) of the Registration Act and section 13 of the U.P. Apartments Act, 2010 and also the provisions of the lease deed. The deed of transfer will be a tripartite sub-lease deed. Completion certificate has to be obtained, for that it has to be applied for. Dues of the authorities have to be paid before a H

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A completion certificate is issued. The charge of Noida and Greater Noida authority has priority over other charges. None of the aforesaid submissions impress us so as to defeat the rights of home buyers. We have already dealt with that the dues have to be recovered in accordance with law from the properties which have been created by the funds which have been diverted and the property of the directors etc. In order B to do complete justice between the parties so that the faith of public is not shaken in the real estate sector and such frauds are prevented in the future. We cannot permit the authorities in the facts and circumstances of the case to deal with the rights of the home buyers in arbitrary and in an unjust manner.

139Copy pinpoint139. In case the authorities are making allotment of plots at a paltry sum of 10% and giving the builders 8 years period to make payment of premium with a moratorium of 2 years then the period runs to 10 years and the project is to be completed within 3 years. It is clear that the authorities have to be very vigilant for securing their interests otherwise in every case even if the promoter has completed the project and realised the charges from the home buyers and has not deposited the amount due to the authorities, in case no action is taken by the Authorities, can it be taken after 10 years against home buyers. The question arises whether innocent home buyers would have to pay the amount to authorities which they have already paid to promoters as part of the component of cost of flats or plots as the case may be, whether they are to be saddled once over again with the liability to pay, though the amount paid by them has been illegally usurped and diverted elsewhere and not paid to the authorities and they have acted in connivance of officials. The authorities have to be vigilant in such cases and not to tolerate the default. They F have to blame themselves for their inaction and have to wait for the realisation of dues by sale of other properties and as against guarantors etc. The projects have to be completed as mandated by Section 8 of RERA

140Copy pinpoint140. It was submitted that the authorities on cancellation of the G lease have to forfeit 25% of the amount and have to resume the lands along with the structure. It cannot be done in view of the provisions of RERA, particularly in view of the provisions of section 8 and other beneficial provisions contained in the said Act. Under section 14 of the Act of 1976, there can be forfeiture of the entire amount also, in case of

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breach of condition or breach of rules, etc. by the promoters/ builders. A Be that as it may. We hold and direct no action under any provisions derogatory to the interest of home buyers can be taken either by the authorities or the bankers in the peculiar facts and circumstances of the case, that is to say, that no part of the building can be demolished. Buildings have to come up and completed even the ones which are at the nascent stage as mandated by RERA. No doubt about it that in case of failure to pay the dues the onus of payment of land dues has to be passed on to the buyers on pro-rata basis but in the instant case they have already paid the substantial amounts, huge amount has been permitted to be diverted by the authorities and bankers as such they have to wait for recovery and cannot act in a manner further detrimental to the interests of the home buyers.

141Copy pinpoint141. On behalf of Amrapali group, learned senior counsel submitted that there were force majeure conditions in completing the projects. There were legal impediments in the completion of projects within the period given in the flat-buyers agreement during the period from 2011- D

15. The submission is baseless. It is apparent that the Full Bench of the High Court though held that the land acquisition was vitiated but still it was upheld. The High Court did not quash it for the reason that development has taken place. Higher compensation was ordered to be paid. That order was affirmed by this Court in 2015 in Savitri Devi v. State of U.P. (2015) 7 SCC 21. There was no interim stay granted by E the High Court on construction work, is made clear by the Noida and Greater Noida authorities. There was no room to entertain any doubt as to the fact whether for a particular village the acquisition had been quashed. There was no quashing of land acquisition and moreover, there was no stay. Only higher compensation was ordered to be paid. There F was no force majeure condition or any legal impediment as such the period from 2011 to 2015 cannot be treated as a moratorium period vis- à-vis the dues of Noida and Greater Noida authorities. The submission made as to the farmers’ agitation etc. is too vague and 30% of the projects have come up; whereas 70% have not yet come up, out of the projects in Noida and Greater Noida alone. It goes to indicate how at G large-scale middle-class home buyers have been defrauded of their hard- earned money, taken away by the affluents and the officials in connivance with each other. Law has to book all of them. We are hopeful that law will spread its tentacular octave to catch all culprits responsible for such H

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A kind of fraud causing deprivation to home buyers. It is shocking and surprising that so many projects have remained incomplete. Several lakhs of home buyers have been cheated. As if there is no machinery of law left to take care of such situation and no fear left with the promoters/ builders that such acts are not perceivable in a civilised society. Accountability is must on the part of everybody, every institution and in B every activity. We fail to understand the standard of observance of the duties by public authorities has gone so down that such frauds take place openly, blatantly, and whatever legal rights exist only on papers and people can be cheated on such wide scale openly, brazenly and with the knowledge of all concerned. There is duty enjoined under the RERA, C there has to be a Central Advisory Council as well as the role of the State Government is not ousted in order to protect against such frauds. We direct the Central Government and the State Government to take appropriate steps on the time-bound basis to do the needful, all other such cases where the projects have remained incomplete and home buyers have been cheated in an aforesaid manner, it should be ensured D that they are provided houses. The home buyers cannot be made to suffer when we are governed by law and have protective machinery. Question is of will power to extend the clutches of law to do the needful. We hope and trust that hope and expectation of home buyers are not going to be belied.

142Copy pinpoint142. We are not impressed by the submission that Amrapali Group had taken the lands and had paid a part of dues and has invested a certain amount. The statement of the expenditure of the money of the home buyers, in the construction activity that has been filed in the Court, is not supported by documents and is prima facie a scrap of paper. We F have called the concerned incumbents who have prepared it and cross- checked from them and we are satisfied that the statement filed on the expenditure of Rs.10,000 crores is nothing but a scrap of paper not supported by the books of account, supporting documents. It has to be outrightly rejected as there is an attempt made on siphoning off, apparent from the report of the Forensic Auditors also. G

143Copy pinpoint143. In his affidavit, Anil Kumar Sharma has given details of companies from which funds were transferred to the extent of Rs.2,996.20 crores to different group companies, mainly from following nine companies:

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 579 [ARUN MISHRA, J.]

CHART “E” DETAILS OF MAJOR COMPANIES FROM A WHERE FUNDS WERE TRANSFERRED IN THE FORM OF ICD AND SHARE CAPITAL AS PER BALANCE SHEET TILL 2015 Consolidated Amount Transferred from Amrapali Group till 31 st March 2015 S. No . Nam e of Companies Net amoun t Transm itted/ B Transferred from these companies of Am ra pali Group of Compa nies (A) Amount in Cr,

1 Amrapali Sma rt City Dev. Pvt. Ltd. 538.59

4 Amrapali Leisure Valley Pvt. Ltd. 431.11

5 Amrapali Silico n C ity Pvt. Ltd. 391.57

8 Amra pali Princely Estate Pvt. Ltd. 186.99

9 Amrapali Sapphire Dev. Pvt. Ltd. 21.84 E Grand To tal 2,996.20

The diversion of huge amount has been rightly detected on Forensic Audit.

144Copy pinpoint144. Learned senior counsel appearing on behalf of Amrapali Group also submitted that the under-valued transactions have been found F of INR 321.31 crores which is incorrect. The Forensic Auditors have given the details in their report along with reasons, we agree with them and have no hesitation to reject the submission.

145Copy pinpoint145. As to other amounts with respect to advances which are recoverable, the explanation that there is a surrender of shares by Mr. G Shiv Priya, etc. is not supported by books of accounts. There is no basis to contend so. No proper explanation has been given on behalf of Amrapali Group. Shares were purchased by Mr. Anil Kumar Sharma in his own name. It was clearly an advance. It was not purchased in the name of the company but in the individual’s name. There was cash in hand and other recoverable also, no proper explanation has been offered. H

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A Cash in hand has to be deposited back as it belongs to home buyers. The finding as to the diversion of home buyers’ funds is based on the figures worked on the basis of minute accounting as reflected in the auditors’ report. There is no proper answer to each and every entry which have been gone into by the Auditors. General and broad submissions have been made which are flimsy and have no legs to stand. Thus, the objections are rejected. The professional fee could not have been realised by the Directors. They were not the employees. They have not rendered any professional services. They along with other employees, statutory auditors, CFO, etc. have formed a cartel to defraud the home buyers for siphoning off their money. Dummy companies were created in the names of peons, boys of office, the relation of statutory auditor, CFO, etc. and several companies were created only for the purpose of few transactions. The fact discloses how the fraud has been perpetrated upon the home buyers which defies description which could not have been unearthed except by skilful exercise done by the Forensic Auditors. Thus, we have no word to specify the extent of fraud played. Least said is better as to the entire gamut of the facts and entire scenario of the case.

146Copy pinpoint146. It is apparent from the report of the forensic audit submitted by Forensic Auditors that there is a serious kind of fraud played upon the buyers in active connivance with the officials of the Noida and Greater Noida Authorities and that of the banks. The money of the home buyers has been diverted. The Directors diverted the money by the creation of dummy companies, realizing professional fees, creating bogus bills, selling flats at undervalue price, payment of excessive brokerage, etc. They have obtained investment from J.P. Morgan in violation of FEMA and FDI norms. The shares were overvalued for making payment to J.P. F Morgan. It was adopted as a device for siphoning off the money of the home buyers to foreign countries. In view of the huge money collected from the buyers and comparable investments made in the projects, there was no necessity to obtain a loan from banks. The amount so obtained was not used in the projects. The mortgage deeds in favour of the banks were not permissible due to non-payment of dues of the Noida and G Greater Noida Authorities. The Noida and Greater Noida Authorities issued conditional NOCs. to create mortgages subject to payment of dues which were not paid. They issued such NOCs in collusion with builders. It was incumbent upon the bankers also to obtain clear unconditional NOCs. which were not obtained and to ensure that the dues were paid to Noida and Greater Noida authorities. They permitted H

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diversion of money immediately after sanctioning of the loan and also in day to day transactions of Amrapali group of companies.

147Copy pinpoint147. No accounts were prepared w.e.f. the years 2015-2018 and money withdrawn was diverted during the said period. The Statutory Auditor, Mr.Mittal failed in duty and was part of fraudulent activities as found in the Forensic Report. The money obtained from banks was diverted to unapproved uses such as for the creation of personal assets of Directors, creation of assets in closely held companies by the Directors along with their partners and relatives, for personal expenses of Directors, to give advances without carrying interest for several years. There was total non-monitoring by the bankers. The money laundering was resorted to by Amrapali Group/ Directors. The Noida and Greater Noida C Authorities were grossly negligent in reviewing and monitoring the progress of the projects and in collusion with leaseholders failed to take action concerning non-payment of dues and illegally permitted the group to sub-lease the land without payment of dues. Bogus allotments of flats were made. There were other irregularities galore. D

148Copy pinpoint148. Because of their failure to fulfil the obligations towards the buyers and the serious kind of fraud which has been played by them upon the home buyers, the registration of Amrapali group of companies under the Real Estate Regulation and Development Act, 2016 deserves to be cancelled. E

149Copy pinpoint149. Because of the gross violations of the conditions of lease deeds executed by the Noida and Greater Noida Authorities in favour of Amrapali group of companies with respect to various projects, are liable to be cancelled and the rights thereupon shall vest in the Court Receiver.

150Copy pinpoint150. There was no valid mortgage created in favour of Banks and there was a huge diversion of money paid by homebuyers which were more than required for payment of dues of the Noida/ Greater Noida Authorities and banks. The buyers have paid the dues of Noida and Greater Noida authorities as a component of the price for flats. Thus, the premium and other dues payable under the lease deeds to the Noida and Greater Noida Authorities, cannot be recovered from the home buyers or the projects in question. The dues as may be ordered shall be recovered by sale of other properties which have been created by the diversion of funds and have been attached by this Court. The banks have also failed to ensure that the money was used in the projects. As found in the forensic audit, there was no necessity of obtaining loans from the banks and it has not been used for the purpose it was obtained. H

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A The Authorities and Bankers have violated the doctrine of public trust and their officials, unfortunately, acted in collusion with builders. The dues of the banks are also to be recovered from the other attached properties as observed by us.

151Copy pinpoint151. The criminal cases have also been registered by the police, we propose to monitor the progress of the investigation. For violations of FEMA and FDI norms, we direct the Enforcement Directorate to make investigation in accordance with the law and submit reports quarterly to this Court. Money laundering aspect is also to be looked into by concerned authorities.

152Copy pinpoint152. It has been found in the Forensic Audit Report that there are several recoverable from various companies as well as from individuals, Directors and other incumbents. We direct that as per the findings recorded by the Forensic Auditors, the money be deposited in this Court on a time-bound basis and other needful be done as observed by the Auditors. As we have approved the report, let the concerned companies/ D Directors/ individuals take steps in compliance with the observations and findings made by Auditors to refund the amount and or to do needful as suggested within one month.

153Copy pinpoint153. We have also found that non-payment of dues of the Noida and Greater Noida Authorities and the banks cannot come in the way of occupation of flats by home buyers as money of home buyers has been diverted due to the inaction of Officials of Noida/ Greater Noida Authorities. They cannot sell the buildings or demolish them nor can enforce the charge against homebuyers/ leased land/ projects in the facts of the case. Similarly, the banks cannot recover money from projects as it has not been invested in projects. Homebuyers money has been diverted fraudulently, thus, fraud cannot be perpetuated against them by selling the flats and depriving them of hard-earned money and savings of entire life. They cannot be cheated once over again by sale of the projects raised by their funds. The Noida and Greater Noida Authorities have to issue the Completion/ Part Completion Certificate, as the case may be, to execute tripartite agreement and registered deeds in favour of the buyers on part-completion or completion of the buildings, as the case may be or where the inhabitants are residing, within a period of one month.

154Copy pinpoint154. Resultantly, we order as follows: (i) The registration of Amrapali Group of Companies under H RERA shall stand cancelled;

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 583 [ARUN MISHRA, J.]

(ii) The various lease deeds granted in favour of Amrapali Group A of Companies by Noida and Greater Noida Authorities for projects in question stand cancelled and rights henceforth, to vest in Court Receiver; (iii) We hold that Noida and Greater Noida Authorities shall have no right to sell the flats of the home buyers or the land leased B out for the realization of their dues. Their dues shall have to be recovered from the sale of other properties which have been attached. The direction holds good for the recovery of the dues of the various Banks also. (iv) We have appointed the NBCC to complete the various projects and hand over the possession to the buyers. The C percentage of commission of NBCC is fixed at 8 percent. (v) The home buyers are directed to deposit the outstanding amount under the Agreement entered with the promoters within 3 months from today in the Bank account opened in UCO Bank in the Branch of this Court. The amount deposited D by them shall be invested in the fixed deposit to be disbursed under the order of this Court on phase-wise completion of the projects/work by the NBCC. (vi) In view of the finding recorded by the Forensic Auditors and fraud unearthed, indicating prima facie violation of the E FEMA and other fraudulent activities, money laundering, we direct Enforcement Directorate and concerned authorities to investigate and fix liability on persons responsible for such violation and submit the progress report in the Court and let the police also submit the report of the investigation made by them so far. F (vii) We direct the Institute of Chartered Accountants of India to initiate the appropriate disciplinary action against Mr. Anil Mittal, CA for his conduct as reflected in various transactions and the findings recorded in the order and his overall conduct as found on Forensic Audit. Let appropriate proceedings G are initiated and concluded as early as possible within 6 months and a report of action taken to be submitted to this Court. (viii) We direct various Companies/ Directors and other incumbents in whose hands money of the home buyers is available as per the report of Forensic Auditors, to deposit the same in H

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A the Court within one month from today and to do the needful in the manner as observed. The last opportunity of one month is granted to deposit the amount and to do the needful failing which appropriate action shall be taken against them. (ix) Concerned Ministry of Central Government, as well as the B State Government and the Secretary of Housing and Urban Development, are directed to ensure that appropriate action is taken as against leaseholders concerning such similar projects at Noida and Greater Noida and other places in various States, where projects have not been completed. They are further directed to ensure that projects are completed in C a time-bound manner as contemplated in RERA and home buyers are not defrauded. (x) We appoint Shri R. Venkataramani, learned Senior Advocate, as the Court Receiver. The right of the lessee shall vest in the Court Receiver and he shall execute through authorized person on his behalf, the tripartite agreement and do all other acts as may be necessary and also to ensure that title is passed on to home buyers and possession is handed over to them. (xi) We also direct Noida and Greater Noida Authorities to execute the tripartite agreement within one month concerning the projects where homebuyers are residing and issue completion certificate notwithstanding that the dues are to be recovered under this order by the sale of the other attached properties. Registered conveyance deed shall also be executed in favour of homebuyers, they are to be placed in the possession and they shall continue to do so in future on completion of projects or in part as the case may be. We direct the Noida and Greater Noida Authorities to take appropriate action to do the needful in the matter. The Water Works Department of the concerned area and the Electricity Supplier are directed to provide the connections for water and electricity to home buyers forthwith.

155Copy pinpoint155. Let the cases be listed for further hearing before us on 9.8.2019.

H Kalpana K. Tripathy Directions issued.