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Amrapali Diverts Cash Reserved For Development Purposes To Pay Endorsement Fee To Ms Dhoni

Courtesy/By: Gopalakrishnan.R.R | 27 Jul 2019

‘Amrapali builders’ diverted cash which was reserved for construction purposes to pay endorsement fee for cricketer and former India cricket team captain Mahendra Singh Dhoni. Additional Solicitor General Madhavi Divan informed a bench of Justice RF Nariman,Justice Sanjiv Khanna and Surya Kant that it was compulsory to deposit 70 per cent of money raised from customers in a separate bank account as per Real Estate (Regulation and Development) Act. This money was to be used only for construction purposes like acquiring materials, purchasing land and so on. For the money to be withdrawn from the separate account, prior approval of the chief engineer, the charted accountant and an architect was mandatory.

Also, Additional Solicitor General Madhavi Divan pointed that it was easy to initiate insolvency proceedings against any real estate company, as the Insolvency and Bankruptcy code was amended.

According to the amendment in the Insolvency and Bankruptcy Code, homebuyers were granted the status of financial creditors of the company in case of insolvency proceedings. Over 150 petitions were filed by realty sector players challenging the constitutional validity of section 5(8)(f) of Insolvency and Bankruptcy Act which guarantees the homebuyers, the position of a financial creditor in insolvency proceedings.

Courtesy/By: Gopalakrishnan.R.R | 27 Jul 2019