Indian banks pulled up by top court for 'collusion' with real estate firm
23/07/2019 17:35
By Suchitra Mohanty and Nupur Anand
NEW DELHI/MUMBAI, July 23 (Reuters) - India's top court on
Tuesday said several banks had colluded with Amrapali Developers
AMRA.BO , one of India's largest real estate firms, in the
misappropriation of loans meant for housing projects.
The Supreme Court criticised the lenders for failing to
monitor the end use of loans to the company, one of several
developers in India to hit financial trouble in recent years
after a decade-long building boom.
More than 40,000 homebuyers are suing Amrapali in a long
running legal battle over delays to projects, many of which have
not yet been started even though customers have made payments.
"The authorities and bankers have violated the doctrine of
public trust and their officials, unfortunately, acted in
collusion with builders," a two-judge bench of India's Supreme
Court said on Tuesday, referring to state development
authorities.
The Bank of Baroda and Corporation Bank -- Amrapali lenders
criticised by the court -- did not respond to requests for
comment.
Amrapali declined to comment.
A court-ordered forensic audit of Amrapali released in May
said the firm defrauded its customers out of around 35 billion
rupees ($507.88 million) by diverting home buyers' funds. It
also said that loans taken by banks had also been diverted by
the promoters to increase their own personal wealth. Amrapali
has not commented on the audit.
A government-run construction company has been delegated
with completing the unfinished projects of the group.
(Reporting by Suchitra Mohanty in NEW DELHI and Nupur Anand in
MUMBAI, Editing by William Maclean)
((mailto:Nupur.Anand@thomsonreuters.com;))