Blaming the officials of Noida and Greater Noida authorities for failing in their duties, the Supreme Court Tuesday said they acted "clearly in collusion" with builders and overlooked the interest of home buyers of the Amrapali group.
The top court also took critical view of huge loans extended by various banks to the defaulting builders.
The top court said that officials of Noida and Greater Noida were well aware of what was happening on the spot but their inaction, enabled cheating of the home buyers at a large scale.
A bench of Justices Arun Mishra and U U Lalit said, "Thus, it is apparent that the officials of the concerned authorities have not discharged their duty in accordance with the trust enjoined upon them under aforesaid terms and conditions of lease deed, thus, by their inaction, enabled cheating of the home buyers at a large scale. They were well aware of what was happening on the spot".
The top court said that once the Noida and Greater Noida authorities knew very well that Amrapali Group was at default, they could not have allotted further land to the group without insisting for payment of its dues to of over Rs 5,500 crore.
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"Thus, apparently, the officials of the authorities acted clearly in collusion with the builders and overlooked the interest of the Authorities and home buyers while permitting the sub-leases of plot of land to be granted," it said.
The bench said that it was not open to the authorities to permit the sub-leases of plot of land executed by Amrapali Group, thereby allowing the leaseholder to earn a huge amount without making payment of the amount due to them.
"The officials of the authorities have acted in clear breach of public trust. They have permitted the defaulting leaseholders to earn the amount by sub-leasing its land of which dues had not been cleared," it said.
It was beyond comprehension as to how the officials permitted such sub-leases when even the basic obligation to raise the construction was not being fulfilled by the builders, it added.
"The action of the officials of the authorities has the effect of causing unjust enrichment of builder from the land held by the concerned authorities. It was wholly an illegal exercise permitted," the top court said.
It said that a large number of projects which have come up not only in Noida and Greater Noida, but most of them have not been completed by the builders/promoters and they have siphoned buyers' money in large scale.
"No action has been taken by the Noida and Greater Noida Authorities against builders for cancellation of leases due to violation to fulfil their obligation," the top court said.
The top court invoked the public trust doctrine, which mandates the State and its functionaries to take affirmative action for effective management, and the citizens are empowered to question its ineffectiveness.
"The land of the farmers had been acquired for the purpose of housing and infrastructure needs by the State Government and handed over to the concerned authorities for construction. They are bound to ensure that builders act in accordance with the objective behind the acquisition of land and the conditions on which allotment had been made," the bench said.
The bench added that it was a duty of concerned officials that they are not only enjoined to ensure that the rights of the home buyers are protected but also the interests of the authorities and bankers.
"As no effective action had been taken and officials have permitted wilfully contumacious violations of conditions of the lease. Right under their nose and to their knowledge serious kind of fraud had been taking place and officials have clearly connived with builders," the bench said.
The court also took critical view of huge loan extended by various banks to the defaulting builders on mortgage of prime properties with Noida and Greater Noida issuing giving conditional no-objection certificates to them.
"The amount of loan advanced by banks was not used for the purpose it had been obtained for a particular project and it was diverted to other companies. It was happening not only under the nose of Noida and Greater Noida authorities, but was directly in the knowledge and connivance of the bankers as day-to-day transactions in the bank accounts were pointing out that the money was being siphoned and diverted for other purposes routinely, not being utilised for the purpose it was given," the bench said.
It said that all concerned authorities have helped in perpetuating the fraud on the home buyers by Amrapali group of companies, its various Directors, officials and others.
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