Vikram Tuli, Meenakshi Gupta and hundreds of other homebuyers had invested in the Today Homes Ridge Residency project in Noida’s Sector 135 during 2010-2012. It was meant to be the address of their homes, but instead turned out to be a long legal battle. At the end of this, they hope to get a home into which they poured their life’s savings and are now bearing the cost of a legal wrangle.
Almost three years after the National Company Law Tribunal (NCLT) ordered insolvency proceedings against Today Homes Noida Pvt Ltd, homebuyers have pinned their hopes on the Supreme Court now, though their case is before the tribunal. The Noida authority had challenged the National Company Law Appellate Tribunal (NCLAT) order declaring it an operational creditor in the Supreme Court. While the apex court had upheld the NCLT order, the authority now has filed a review petition. A final decision of the top court will pave the way for a faster resolution of the case by setting aside Noida Authority's claim related to land dues.
“We have been invested in the project since 2011 and even after 11 years, the towers are standing but we are unable to get possession. While nine towers were delivered, the remaining eight towers are incomplete as tile work and electrical as well as plumbing works are yet to be done. Even the structure may be deteriorating. First, we suffered at the hands of the builders for eight years and now we are suffering due to the Noida Authority and the NCLT for the last three years,” said Tuli, one of the petitioners and homebuyers, now a financial creditor in the case.
Status of the project and problems plaguing it
Today Homes Ridge Residency was conceptualised around 2010. The builder, Today Homes, had taken the land on lease from the Noida Authority. The project had 18 towers, some with around 60 flats and some with around 100 flats, taking the total number to 1,750 units. Each unit was priced between Rs 50 lakh and Rs 75 lakh. The builder carried on construction of some towers till early 2019 for unknown reasons and delivered 646 units spread across nine towers in 2015. However, the structure lacks the minimum facilities as it has no sewage treatment plant, park, gym, and dedicated parking space. Open pits lead to waterlogging during rains leading to mosquito breeding. Around 850 more flat buyers are still awaiting delivery while the builder was declared insolvent in 2019.
The roughly 13-acre project was to be completed by 2013-14 but almost a decade later, investors are stranded. While some had approached different forums including the National Consumer Disputes Redressal Commission, a group of buyers approached the NCLT in 2018. The homebuyers also tried to hold talks with the developer for getting the project completed but got no response, they said.
Then the buyers moved Uttar Pradesh Real Estate Regulatory Authority (RERA) in 2017 and got orders in their favour but it could not be executed as the builder did not comply with the order.
Later, some homebuyers filed a case against the developer in 2018 under the insolvency and bankruptcy code. The NCLT initiated insolvency proceedings against Today Homes Noida in 2019. The company had opposed the decision citing that it had got a four-year extension from UP Real Estate Regulation Authority (RERA) to complete the project by June 2021. However, the NCLT rejected the argument saying that the Insolvency and Bankruptcy Code (IBC) overrides provisions under the realty law.
"The NCLT had accepted failure on the part of the developer and ordered insolvency. The company was declared insolvent in 2019 and the CIRP (corporate insolvency resolution process) commenced. Two builders submitted their resolution plan before the RP (resolution professional). A builder named One Group got over 51 percent of the CoC (committee of creditors/homebuyers) votes in March 2020. The CoC sent the company’s proposal to the NCLT for approval," said Abhay Pratap, an advocate representing four homebuyers who objected to the resolution plan.
However, some homebuyers have challenged the decision alleging that the RP neither followed rules nor discussed the resolution plan, and also reduced the voting timelines.
Responding to this, RP Rabindra Kumar Mintri said, “The corporate insolvency resolution process (CIRP) of the Corporate Debtor was conducted in a manner adhering to all rules and regulations and due timelines have been followed. The CoC-approved resolution plan has been filed to the Hon’ble NCLT for their approval. Further, some of the objections have been filed against the CoC-approved resolution plan. The Hon’ble NCLT will take up those applications for hearing along with resolution plan approval application.”
“They registered their objections before the NCLT. Another builder also challenged the selection of successful resolution applicants (One Group). These all applications are pending before the NCLT,” said Pratap.
The next hearing is on August 31 to discuss the resolution plan, shared Mintri.
Gupta, one of the investors, rued that while the resolution plan was sent for approval in 2020, a hearing on the plan is yet to take place, further delaying the resolution. Gupta had purchased a unit in resale in 2014.
The foremost challenge before the petitioners is from the Noida Authority. While the NCLT had termed the Noida Authority as an operational creditor, the authority wants to be included as a financial creditor.According to court documents, Rachit Mittal, counsel for Noida Authority, stated that the Noida Authority’s plea to be declared a financial creditor is before the Supreme Court. Mittal had then urged the bench not to take up the case until a final decision is delivered by the apex court.
However, the Supreme Court on May 17, 2022 ruled that the Noida Authority continues to be the operational creditor and not the financial creditor, bringing relief to thousands of homebuyers.
“We would think that having regard to the fact that both the NCLT and NCLAT have proceeded on the basis that the appellant (NOIDA) is an operational creditor, we need not stretch the exploration further and pronounce on the questions, which may otherwise arise,” a bench of justices KM Joseph and Hrishikesh Roy said in its 186-page verdict on May 17.
However, the authority has filed a review petition against the order.
Another issue is the demand for pending dues by the authority amounting to around Rs 125 crore including penalty and interest.
“The Noida Authority is not letting the hearing take place as its case is pending before the Supreme Court. The builder had paid Noida Authority nine installments out of 10 and an installment of around Rs 9 crore was pending. The authority filed a claim of around Rs 125 crore in lieu of that after levying interest and penalty. If the successful resolution applicant will pay Noida Authority’s claim, it will become unviable for them and they won’t be able to deliver flats to the homebuyers,” alleged Tuli.
A mail sent to Noida Authority and counsel of Today Homes remained unanswered at the time of publishing of this copy. According to Zauba, a site that tracks different firm’s ownership details, Today Homes was being run by Ajay Sood, Govind Pathak, GK Gambhir, Vikas Tulsiani and Dinesh Kumar. This reporter could not reach out to any of them.
The project was advertised in 2010 and by 2011, almost all the units were sold. The builder stopped construction in 2019 for unknown reasons while the scheduled delivery was by 2016. However, it handed over possession of 646 units in nine towers by 2015, and not a single flat was delivered after that. However, Tuli claimed that barring around 80 flats, the registry of the remaining delivered flats could not be done as the builder had not paid the lease amount to Noida Authority. The builder took around 85-100 percent payment from buyers but neither delivered the flat nor the compensation amount as per the buyer-builder agreement.
As per the agreement, the builder was supposed to deliver possession within 30 months with a grace period of 120 days or compensation of Rs 5 per square foot per month in case of delay. However, the developer also did not pay anything to the homebuyers, they claimed.
What remains to be done?
The case is pending before the NCLT. Until the NCLT approves a resolution applicant, construction cannot begin. The second thing is clearance from the Noida Authority. Either the court or the successful resolution applicant will have to settle the matter with the authority as it is the owner of the land. Then the builder will have to take all other clearances including those regarding pollution and safety.
Alternatives available to homebuyers
Insolvency Professional Anurag Nirbhaya said that it's better for the buyers to wait for a resolution from the NCLT because the case has already been going on in this legal forum. If they are unhappy with the NCLT order, they can go to National Company Law Appellate Tribunal (NCLAT) or go to the Supreme Court as well.Project timeline