Noida Extn: exit may be a good idea
If you have invested in one of the projects in Noida Extension area and were waiting with bated breath for Tuesday’s Allahabad high court judgement on the land acquisition row in the area, your wait just got longer. The matter came up for hearing in the high court on Tuesday but was adjourned till August 17 with the court giving time to the farmers and the Greater Noida Industrial Development Authority (GNIDA) to reach a compromise.india Updated: Jul 29, 2011 22:08 IST
If you have invested in one of the projects in Noida Extension area and were waiting with bated breath for Tuesday’s Allahabad high court judgement on the land acquisition row in the area, your wait just got longer. The matter came up for hearing in the high court on Tuesday but was adjourned till August 17 with the court giving time to the farmers and the Greater Noida Industrial Development Authority (GNIDA) to reach a compromise.
At least 30,000 buyers may have to pay a price for the Uttar Pradesh government’s “malafide use of powers”, as the Supreme Court put it in one of its judgements, in acquiring land from farmers at unbelievably low prices and selling the same to developers at a much higher price. Farmers allege that the land was acquired from them at Rs 400 per square metre and sold to builders at R10,000-11,000 per square metre.
While the farmers of certain villages are celebrating their victory over the state government and some others are queued up in the court with similar demands, homebuyers who had invested their hard-earned money in projects of this area are left in a quandary.
The story so far
It all started with the farmers of Shahberi village moving the high court earlier this year against the GNIDA, alleging illegal land acquisition and low compensation.
In May, the high court ruled in the favour of farmers, quashing the land acquisition by the GNIDA. On July 6, the apex court upheld the high court’s judgement, cancelling the allotment of five builders. Around 6,500 homebuyers were left in a quandary. Within a few days, SC asked developers to either give a refund to buyers or shift them to other projects.
Inspired by the victory of Shahberi village, farmers of Patwari village in the Noida Extension region went to the high court with similar demands and got a ruling in their favour on July 19. This ruling affected at least 20 projects and at least 25,000 buyers. This was followed by a spate of similar demands by emboldened farmers from at least 9-10 other villages of the region. The High court then decided to club all such petitions in a single hearing on Tuesday.
Exit is tough...
Though SC has asked developers to give an exit option to buyers and refund their money, the process is likely to get delayed. In fact, the process hasn’t even started yet. A Noida-based buyer, who spoke on the condition of anonymity, wants to exit Supertech Ltd’s Ecovillage 2 coming up in Noida Extension. But in the absence of a formal letter in this regard, he doesn’t know how to start the process. On July 19, the firm’s managing director, RK Arora, had announced that the company will contact its buyers soon. Many other buyers are finding themselves in a similar situation.
Most developers we spoke to said they would inform buyers about the two options as soon as possible, but admitted that the process may take time.
“We are in talks with GNIDA officials,” said Manoj Gaur, chairman, Gaursons India Ltd. “Buyers should not panic. Exit will not be an easy one. This is because we have already invested significantly on construction till date. And if any buyer comes to us seeking refund, giving away the money is not just a ‘sign on a cheque’ and ‘subsequent encashment’ of the cheque.”
But how long will they have to wait?
“The wait can be of six-nine months or even more, depending on the changing scenario,” said Smarjit Singh, managing director, Agni Property, a brokerage firm with a pan-India network.
...and so is shifting
The other option that developers have been asked to give is shifting homebuyers to other projects. However, this would work only if the shifts are happening outside Noida Extension. The reason: with more villages in the region moving court over the issue of land acquisition, other projects may also get affected.
For instance, for its Ecovillage 2, Supertech had given shifting options to Ecovillage 1 and 3. But on July 19, when the high court ruled in favour of the farmers of Patwari village, the land on which Ecovillage 3 was supposed to come up went back to the farmers.
Financing may pose a hurdle too
With uncertainty looming over the region, banks may exercise caution in financing projects there. HDFC Ltd refused to answer queries sent via email. Even ICICI Bank Ltd, which has a small exposure in this region, also refused to answer queries. When contacted on telephone, Punjab National Bank’s (PNB) termed the developments of Noida Extension as a Pandora’s box, “We adopt certain basic measures and precautions while disbursing loans,” said SK Singh, general manager, PNB. “Anything like developments in Noida Extension is completely not anticipated. There are more cases pending before the court.”
Moreover, even projects that are not affected in the region may face funding problems. Recently a reader from Ghaziabad, Ashish Dasgupta, wrote to us about such a problem. His lender, HDFC, refused to disburse the pending amount of loan for his project in Noida Extension even though the project is not affected by any judgement. Dasgupta has booked a flat in Mahagun Mywoods, Ebony Tower and his loan was approved by HDFC, Lohia Nagar, Ghaziabad. When he enquired with the branch about the status, the lender said that HDFC has stopped funding projects in Noida Extension.
Mint sent queries regarding the case to HDFC via email, to which the bank replied that it didn’t want to comment.
Opt for the refund if the builder is offering it; shift to another project only if it is in an area outside Noida Extension.