SC sets aside Noida authority’s delay penalty on Lotus Boulevard, Grande homebuyers

The Supreme Court on Thursday set aside the penalty for delayed construction levied by the Noida authority on homebuyers of the Lotus Boulevard and Lotus Grande projects, which are currently under insolvency proceedings, observing that homebuyers cannot be penalised for the “sins” of the past developer

The Supreme Court on Thursday set aside the penalty for delayed construction levied by the Noida authority on homebuyers of the Lotus Boulevard and Lotus Grande projects, which are currently under insolvency proceedings, observing that homebuyers cannot be penalised for the “sins” of the past developer.

The court was hearing a petition filed by homebuyers of the two projects in Noida’s Sectors 100 and 110. They had challenged a July 2025 order of the National Company Law Appellate Tribunal (NCLAT) directing them to pay “time extension” charges to the Noida authority. (HT Archive)

The court was hearing a petition filed by homebuyers of the two projects in Noida’s Sectors 100 and 110. They had challenged a July 2025 order of the National Company Law Appellate Tribunal (NCLAT) directing them to pay “time extension” charges to the Noida authority.

A bench of justices JB Pardiwala and K Vinod Chandran said, “The project was to be completed in the year 2016, and despite another decade having passed, the homebuyers are still left in the lurch. The essential purpose of development would fail if Noida brings in a stipulation of payment of default charges.”

Directing the authority to waive the penalty, the bench noted the peculiar facts of the case, in which the homebuyers came together to pool their resources and complete the project after the developer, Granite Gate Properties Private Limited, was declared a corporate debtor and faced insolvency proceedings.

Later, a successful resolution applicant (SRA), SMV Agencies, entered the picture, and its resolution plan was approved by the NCLAT.

The homebuyers, represented by senior advocate Dhruv Mehta, argued that they were being “penalised for past sins of the corporate debtor”, with the authority imposing a penalty on them for failing to complete the project within a year, by 2017, the date assigned for completion.

With the resolution plan of the SRA having been accepted by the homebuyers, Mehta argued that imposing the penalty would only further delay completion of the project.

The bench held, “In the present case, the defaulting developer is out of the picture and the half baked project can be completed only if the Resolution Plan is put into operation and completed. In the peculiar circumstances of this case, we are of the opinion that it is only proper that Noida waives the penalty charges since it is neither the default of the homebuyers nor the default of the SRA, which led to the delay.”

The court set aside the penalty imposed by the Noida authority for the delay, holding that it was not “valid” to have the amount payable by the developer now “mulcted” on the SRA and the homebuyers.

The Noida authority was represented by advocate Rachit Mittal, who argued that the time extension penalty ought to be considered part of the corporate insolvency resolution process (CIRP) charges.

He submitted that under the original lease deed, the time extension charges were stipulated at 4%, 5% and 6% for the first, second and third years of delay, respectively, with cancellation of the lease being the only consequence stipulated after the three-year period.

After considering the submissions, the court rejected Noida’s appeal seeking time extension charges beyond the three-year period, up to the 10th year.

Earlier, amid reluctance among homebuyers to pay the penalty, the Noida Authority had sealed three towers of the Lotus Panache project in October 2024, pending the final decision of the top court.

Supreme Court on Thursday set aside the penalty for delayed construction levied by Noida authority on homebuyers of Lotus Boulevard and Lotus Grande projects, currently under insolvency, observing that the homebuyers cannot be penalised for the “sins” of the past developer.

The court was considering a petition filed by homebuyers of the two projects in Noida’s Sector 100 and 110. They had challenged an order of the National Company Law Appellate Tribunal (NCLAT) in July 2025, directing them to pay “time extension” charges to Noida authority.

The bench of justices JB Pardiwala and K Vinod Chandran said, “The project was to be completed in the year 2016, and despite another decade having passed, the homebuyers are still left in the lurch. The essential purpose of development would fail if Noida brings in a stipulation of payment of default charges.”

Directing the authority to waive the penalty, the bench noted the peculiar facts of the case where the homebuyers came together to pool their resources and complete the project after the developer, Granite Gate Properties Private Limited, was declared a corporate debtor and faced insolvency proceedings. Later, a successful resolution applicant (SRA) in the form of SMV Agencies entered the picture whose resolution plan was allowed by the NCLAT.

The homebuyers led by senior advocate Dhruv Mehta argued that they are sought to be “penalised for past sins of the Corporate Debtor” with the authority imposing penalty upon them for failing to construct the project within a year, by 2017, the date assigned for completion. Now, with the resolution plan of the SRA having been accepted by the homebuyers, he argued that imposing the penalty will only delay the completion of the project.

The bench held, “In the present case, the defaulting developer is out of the picture and the half baked project can be completed only if the Resolution Plan is put into operation and completed. In the peculiar circumstances of this case, we are of the opinion that it is only proper that Noida waives the penalty charges since it is neither the default of the homebuyers nor the default of the SRA, which led to the delay.”

The court set aside the penalty imposed by the Noida on delay, holding that it is not “valid” that the amount payable by the developer is now “mulcted” on the SRA and the homebuyers.

The Noida authority was represented by advocate Rachit Mittal, who said the time extension penalty ought to be considered as part of the corporate insolvency resolution process (CIRP) charges. He stated that as per the original lease deed that existed, the stipulation for time extension charges were at 4%, 5% and 6% in the first, second and the third years of delay, respectively, with only a stipulation for cancellation of the lease itself after the three year period got over.

After considering the submissions, the court turned down Noida’s appeal praying for time extension charges beyond the three years, up to the 10th year.

Earlier, due to the reluctance of homebuyers to pay the penalty amount, Noida authority had sealed three towers of the Lotus Panache project in October 2024 awaiting the final decision by the top court.