Allow banks to disburse loans to Amrapali home buyers, SC to RBI (Lead)

In a relief for embattled home buyers, who are yet to claim possession of their houses in the stalled Amrapali Group projects, the Supreme Court on Wednesday directed the banks to release loans given to the home buyers, which were declared as non-performing assets (NPAs).

A bench, headed by Justice Arun Mishra and comprising Justice U.U. Lalit, pointed out that banks have certain reservations regarding the funding of NPA accounts. “In view of current social and economic conditions, the court may direct the RBI to keep its circulars/guidelines relating to NPA in abeyance and permit all banking and financial institutions, etc. to disburse loans to home buyers notwithstanding the status of accounts as NPA,” said the top court in its 36-page judgement.

The bench noted the restructuring of the loans should be done as per the RBI’s present norms. It directed the banks and financial institutions to release loans to home buyers, whose loans have been sanctioned, notwithstanding the fact that their accounts are declared as NPAs.

“Let there be restructuring of the loan amount. It may be released under the current norms of the RBI for releasing loans and the rates fixed by the RBI,” added the bench.

The top court observed that banks and financial institutions be directed to work out a long-term restructuring of all home buyers’ loans in Amrapali projects as well as any charges on the Amrapali projects held by banks and financial institutions.

Counsel appearing for the banks pointed out that they are ready to release the loan to the home buyers. However, they would release the loan to a particular home buyer in a phased manner and as per the stage of construction.

Homebuyers’ counsel Kumar Mihir said: “The judgement clarifies a lot of issues regarding funding and once banks implement this order, the work can start on all the projects.”

The top court-appointed receiver submitted that the RBI may be directed to advise all banks and financial institutions such as insurance companies, and employers of the establishments which have sanctioned home loans to home buyers to disburse all balance loan amounts to the home buyers whose accounts are regular, and that they will abide by instructions issued by the receiver in this regard.

The court said: “The disbursement of further loans may be based on the present rate of interest fixed by the RBI; this we order in the peculiar facts of the case. It may be released stage-wise and long-term restructuring of the loans may be done so that construction is completed and buyers are able to repay the loan.”

The top court also provided relief to the real estate companies which have not completed many housing projects in Noida and Greater Noida. The court said that Noida Authority should not charge heavy rate of interest from the real estate companies for the delay in the payment, and the rate should be kept at 8 per cent.

“We direct that rate of interest on the outstanding premium and other dues to be realised in all such cases at the rate of 8 per cent per annum and let the Noida and Greater Noida Authorities do a restructuring of the repayment schedule so that amount is paid and Noida and Greater Noida Authorities are able to realise the same,” said the top court.

Last week, the apex court had reserved orders on the aspect of generating funds to complete the unfinished Amrapali housing projects. The court-appointed receiver managing the progress of completion of these housing projects had informed the court that due to shortage of funds, the construction work has been held up.