Real estate developers operating in Noida and Greater Noida have approached the Uttar Pradesh government seeking relief on the issue of payment of pending land dues. They have requested the government to adopt a one-time settlement scheme (OTS) on the lines of the one in Haryana or the ‘Vivad Se Viswas’ scheme announced by the Union finance minister in Budget 2023, to help builders clear their liabilities and keep projects viable.
The Uttar Pradesh chapter of the National Real Estate Development Council (NAREDCO) has written to UP’s Infrastructure and Industrial Development Commissioner Manoj Kumar Singh requesting him to direct the department to adopt a developer-friendly policy of settlement of land dues of developers.
The three development authorities of Gautam Budh Nagar – Noida, Greater Noida and Yamuna Expressway Industrial Development Authority (YEIDA) – are governed by the Infrastructure and Industrial Development Department of the UP government.
It is estimated that builders owe a total of Rs 40,000 crore to Noida, Greater Noida and YEIDA, including premium, interest and penal interest against allotted plots on which real estate projects are in different stages of execution.
Also Read: UP developers seek lenient terms their counterparts in Haryana enjoy
The developers’ body also noted that due to various reasons like land acquisition disputes between farmers and authorities and the consequent litigation, stay orders from High Court and Supreme Court, execution of projects got delayed, resulting in huge accumulation of land dues (principal, interest and penal interest) payable to the Noida, Greater Noida and Yamuna Expressway Authorities.
Following a recent Supreme Court order, Noida, Greater Noida and YEIDA are resorting to “aggressive and coercive” recovery of land dues, including cancellation of allotted land.
The Supreme Court had, on February 28, dismissed the intervention applications (IAs) filed by realtors against its November 7 order, which had recalled the 2020 order that capped the rate of interest at 8 percent for the delay in payment of land dues by real estate firms to authorities. This meant that the builders would have to pay dues at an increased rate set by the authorities.
“In the interest of completion of projects, giving delivery of approximately 2.50 lakh flats to homebuyers, and discharging the liability of land dues payable to the Authorities, it is humbly requested that a policy may be adopted on the lines of ‘Vivad Se Viswas’ scheme of the Central government or ‘Samadhan Se Vikas’ scheme of the Haryana Government,” the UP NAREDCO said in the letter on April 3.
Haryana’s OTS policy ‘Samadhan Se Vikas’ requires the developers to pay 100 percent of the principal amount and 25 percent of the interest portion, following which 75 percent of the payment would be waived off.
Finance Minister Nirmala Sitharaman announced a voluntary settlement scheme called ‘Vivad Se Vishwas-2’ in her Budget speech to settle contractual disputes between the government and private parties.
UP NAREDCO noted that homebuyers are not able to get possession of their flats due to delay in construction and the Authorities are also not facilitating issuance of Completion Certificates (CCs) and sub-lease permission of the completed portion of these projects as they are demanding no dues certificates (NDCs) as a pre-condition for processing the plan approval, plan revision, part completion and sub-lease permission, which the developers are unable to obtain due to the accumulated land dues.
Besides, the project loans taken by developers from banks and financial institutions have also become overdue and non-performing assets (NPA). The lenders are approaching the National Company Law Tribunal (NCLT) under the Insolvency & Bankruptcy Code (Amendment) Act, 2021 as some of the developers have already been admitted under the CIRP process and many others are likely to follow suit.
“In view of the above, unless some positive measures are taken by the government to prevent these under-construction real estate projects turning insolvent, homebuyers will not get their flats, Authorities will not get their dues, and lenders will not get their investments in these projects. Under the circumstances, we are left with no other alternative but to seek your intervention in the matter and request you to direct the concerned department to adopt a developer-friendly policy of settlement of land dues,” the UP NAREDCO said in the letter.
The developers’ body also said that the farmer compensation, which is not a part of the lease deed is also recovered at exorbitant rates.
Since the land was allotted to the developers based on the highest tendered price, it is the duty of the Authorities to meet all the expenses related to the acquisition of the allotted land, the developers body said.
As per an analysis by real estate consultancy Anarock, as many as 500,000 flats worth Rs 4.48 lakh crore are stuck across seven micro markets in the country. The report says that the National Capital Region (NCR), which comprises Noida and Greater Noida, has approximately 240,610 stuck or delayed units, worth over Rs 1.81 lakh crore.
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