SC reverses 8% interest cap for land cost dues in Noida, Greater Noida - Hindustan Times
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Flat registrations in Noida, Greater Noida: Supreme Court reverses 8% interest cap for land cost dues

ByAbraham Thomas
Nov 08, 2022 07:41 AM IST

The direction by the court came on an application moved by the Noida and Greater Noida authorities, claiming that builders were misusing a June 10, 2020, order passed by the Supreme Court which fixed interest on outstanding premiums at 8%.

The Supreme Court on Monday recalled its June 2020 order capping interest payable by builders to Noida and Greater Noida authority at 8% and clarified that this benefit would apply only to Amrapali projects, being constructed by state-owned NBCC since July 2019.

The Supreme Court further asked the Noida and Greater Noida authority to calculate the rates payable by builders other than Amrapali.
The Supreme Court further asked the Noida and Greater Noida authority to calculate the rates payable by builders other than Amrapali.

The direction by the court came on an application moved by the Noida and Greater Noida authorities, claiming that builders were misusing a June 10, 2020 order passed by the Supreme Court which fixed interest on outstanding premiums at 8%.

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The June 10, 2020, order said, “We direct that rate of interest on the outstanding premium and other dues to be realized in all such cases at the rate of 8% per annum and let the Noida and Greater Noida Authorities do a restructuring of the repayment schedule so that amount is paid and Noida and Greater Noida Authorities are able to realize the same.”

The authorities claimed this order was passed in the context of the Amrapali housing projects and will not apply to other builders. An element of confusion prevailed as the order was passed on an application moved by Ace group of builders in the Amrapali housing case, which is being monitored by the top court since it cancelled the license of the Amrapali group in July 2019.

The difference was huge as instead of 15% interest payable to Noida and Greater Noida, the builders sought repayment based on 8% interest rate fixed by the court.

Clearing the air, a bench of Chief Justice of India (CJI) Uday Umesh Lalit and justice Bela M Trivedi said, “The appeals filed by Noida and Greater Noida are allowed and the order passed by us on June 10, 2020, August 19 and August 25 are recalled.”

The Court further asked the Noida and Greater Noida authority to calculate the rates payable by builders other than Amrapali.

The full text of the judgment was not available till late on Monday and it is yet to be seen how the order will impact the registration of flats which has been held up in the past due to non-payment of land lease dues by private builders.

The decision will bring a windfall to the Noida and Greater Noida authorities, which had informed the apex court that due to confusion created by the June 2020 order, more than 9,000 crore was locked as dues payable by builders. Senior advocate Ravindra Kumar, who appeared for Noida, said that the dues had increased as even institutional land owners began to claim benefit of the Supreme Court order.

According to Kumar, the order of the court will speed up registration of flats as once the builders pay up the outstanding premiums on land cost, which they defaulted over past two years, the registration of flats could take place.

The Ace Group of Companies, on whose plea the June 2020 order was passed, claimed that it faced precarious conditions in the entire Noida and Greater Noida region following economic recession in the last decade, as a result of which the entire real estate sector faced acute financial crunch. The projects were reported to be incomplete with various litigations creating a huge financial impact on builders leading to non-delivery of projects.

The group obtained the plots between the period 2010 and 2015 from the authorities in Noida and Greater Noida. It claimed that the Noida Authority is raising additional demand at the rate of 600 per square metre, whereas Greater Noida Authority is raising demand at the rate of 1,700 per square metre.

The top court in its Monday order also refused to pass any order on the sale of unused floor-area ratio (FAR) in Amrapali housing projects as proposed by Court-appointed receiver R Venkatramani, who is the present attorney general. In view of the opposition to this plan by Noida and Greater Noida authority, the Court left the matter for consideration for the next bench. The sale of FAR was proposed to fetch nearly 1,500 crore for the cash-starved Amrapali projects being constructed by state-owned NBCC.

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