Amrapali case: Supreme Court dismisses real estate developers' plea to cap interest rate at 8%

In a setback to real estate developers in Noida and Greater Noida, the Supreme Court on February 28 dismissed the intervention applications (IAs) filed by realtors against its November 7 order that had recalled the 2020 order which had directed the authorities to cap the rate of interest at 8 percent for the delay in payment of land dues by real estate firms to authorities.

This means that the builders would have to pay dues at an increased rate set by the authorities.

The earlier SC orders had capped the interest rate at 8 percent.

A Bench of Justices Ajay Rastogi and Bela M Trivedi rejected several applications filed by builders from Noida and Greater Noida that sought to seek parity with the Amrapali projects in terms of interest rates.

In the Amrapali case, considering the peculiar circumstances and plight of over 42,000 home buyers and siphoning off funds worth more than  Rs. 11,000 crore, the Supreme Court had directed the two authorities to charge MCLR rate and not the usual 18 percent charged by them. Following that, several builders approached the Supreme Court requesting that their interest rate of past dues should also be reduced to MCLR rate.

"The IAs were filed by various group of companies, including Ace Group of Companies, but they are not in any manner concerned with the plight of home buyers of Amrapali Group of Companies, of which judicial cognizance was taken by this court and merely filing of IAs by other group of companies who are stranger to the cognizance taken by this court in reference to Amrapali Group of Companies, do not deserve any indulgence at least in the instant proceedings…Consequently, the IAs are dismissed," the February 28 order said.

It observed that the Ace Group of Companies had approached it by filing an IA on its own behalf and not being authorised by the builders who have entered into their respective lease deeds with the Noida/Greater Noida authorities, neither the applicant (Ace Group of Companies) was holding power of attorney on behalf of others nor authorised by other developers/project proponents working with Noida/Greater Noida authorities, or that it was in a representative capacity, it said.

The order noted that in the Amrapali matter, the Court in the interest of justice, stepped in and took cognizance to secure  the interests of homebuyers, obviously within the four corners of law and proceeded to consider as to what relief could be extended to the homebuyers, who booked their flats in various projects of Amrapali Group of Companies.

With regard to the application filed by Prateek Group of Companies is concerned, the order noted that the company’s statement that came on record is dated November 7 and is “indeed alarming that all its projects were completed much before the cognizance was taken by this Court and it was unable to pay the demand as raised by the Noida/Greater Noida authorities in terms of the conditions of the lease deed executed with open eyes between the parties.”

The order noted that the developer had moved an IA before the court “which was not even remotely concerned with the cause of which judicial notice was taken by this Court with an object to secure interests of the homebuyers of Amrapali Group of Companies".

It noted that CREDAI and NAREDCO and other developers had not filed any IA up to the passing of the order dated November 7, 2022 and so far as the other IAs are concerned, all came into the pool after the order of August 25, 2020, came to be passed by the Court at a later stage and admittedly either of the promoters/builders was not even remotely concerned, directly or indirectly, in reference to the projects of Amrapali Group of Companies of which judicial cognizance was taken by the court.

Homebuyers said that they want registration of their homes to begin.

“We hope that the uncertainty over the land dues will end now and the Authorities will find a way to ensure that the process of Registry starts at the earliest without any further delay and no undue burden is passed on to the homebuyers,” Kumar Mihir, the advocate representing homebuyers, told Moneycontrol.

The top court order came following a batch of IAs filed by several promoters/ developers/builders active in Noida and Greater Noida for recalling the order dated November 7, 2022, pursuant to which the interim orders passed by the apex court dated June 10, 2020, August 19, 2020, and August 25, 2020, stood recalled by the court.