Days after the Noida Authority sent notices to around 60 builders following a Supreme Court order asking them to pay their outstanding dues or face action, the real estate developer community has said that the move can delay the registry of 1.5 lakh homes in the two satellite cities of Delhi, Noida and Greater Noida.
The Confederation of Real Estate Developers' Associations of India (CREDAI) has urged the Noida and Greater Noida authorities to take homebuyers’ interests into account in the wake of the Supreme Court ruling earlier this month to recover dues from builders at interest rates fixed at the time of executing the lease deed.
Developers have demanded a one-time settlement (OTS) scheme as in Haryana.
The Uttar Pradesh unit of the National Real Estate Development Council (NAREDCO) had last week also requested the Noida Authority to withdraw its November 17 order regarding the method of calculation of interest on developers’ land dues.
The apex court had on November 7 quashed its 2020 order and directed builders to pay land dues as per the terms and conditions agreed upon between them and the authorities.
The court in its previous order of June 2020 had directed the authorities to cap the rate of interest at 8 percent for the delay in payment of land dues.
According to the terms of the agreements between builders and the authorities, the rate of interest for delayed payment was pegged at 15-23 percent.
In the last one week, the Noida Authority issued notices to over 60 developers over non-payment of dues. The total amount to be recovered by the authority is Rs 9,000 crore.
Similarly, on November 24, the Greater Noida Authority cancelled the allotment of two plots to Parsvanath Developers for not completing the project and for non-payment of dues of Rs 281 crore.
In a meeting of over 100 real estate developers on Tuesday, the builders voiced concerns over the Noida and Greater Noida authorities’ action.
Manoj Gaur, president, CREDAI NCR and CMD, Gaur Group, said, “After studying the SC order, and the authorities’ response, the developers felt that the 15-23 percent compound interest would raise the final amount substantially. We are of the view that it would take the final figure much higher than the current market rate. In that case we might have to take recourse to NCLT (National Company Law Tribunal). Moreover, since occupancy and completion certificates are linked to the clearance of the dues, buyers would not be able to register their homes.”
CREDAI in a statement said that the developers also demanded that the present situation requires an OTS scheme as introduced in Haryana, where the issue was settled amicably, enriching the state exchequer and leaving developers and homebuyers happy.
“Since Uttar Pradesh is also a BJP-ruled state like Haryana, a sympathetic view is the need of the hour. The developers also decided that if the issue is not settled, they will represent the Noida and Greater Noida authorities, the UP finance minister, and the state chief secretary,” CREDAI said in a statement.
Developers felt the order could delay the registry of 1.5 lakh homes given the higher outgo on interest, which imposes a heavy financial burden on them and which may delay the completion and registry of homes.
They alleged that notices served by Noida Authority did not take into account their perspective.
Also Read: Noida Authority starts issuing notices to developers to clear their dues
Developers also drew the attention of authorities that the delays in payment were also on account of events outside their control, including a National Green Tribunal order regarding the Okhla Bird Sanctuary that banned all construction activity, the plots allotted to them not having clear titles, and the settlement of the farmers’ compensation taking an “inordinately” long time.
“Access to plots and development of basic infrastructure such as electricity, as promised by the authorities, did not materialise within the stipulated time. As a result, developers had to defer taking possession of the land. The NCR Planning Board’s revision of its plans also hampered the construction,” the CREDAI statement said.
Rajiva Singh, president of the Noida Federation of Apartment Owners Associations, said that a middle path should be taken to solve the matter in a way that homebuyers are not at the receiving end.
“It is the homebuyer who gets affected in the end because of the tussle between the builder and the authority. Thousands of homebuyers are still waiting to get their flat or homes registered. Now the authority has started sending notices to developers but if they go to NCLT, then again the registry of flats would be stalled. So we have to adopt such a solution that the registry of homes is not stopped,” Singh said.
He added that the interests of homebuyers should be paramount for both the authority and the builder while taking whatever measures needed to end the stalemate.
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