Corporation Bank cannot auction Amrapali Group’s building, says Noida authority
The Noida authority allots property on leasehold basis for a period of 99 years, unlike the freehold method of selling a property.Updated: Aug 07, 2017 22:48 IST
The Noida authority will not let the Corporation Bank auction Amrapali Group’s building in Sector 62 to recover its Rs9.10 crore loan. Since the property was given on leasehold basis, the Noida authority has the first right to auction the building.
“We will seek opinion on this issue from our legal department. As per norms, the authority has the first right to the property. Had it been a freehold property, the bank could have auctioned it without any legal issue,” said Manmohan Mishra, financial controller of the Noida authority.
The Noida authority allots property on leasehold basis for a period of 99 years, unlike the freehold method of selling a property. In a freehold transaction, the buyer gets unconditional right over the property.
“The Amrapali Group had mortgaged this property for a loan. Therefore, we are auctioning it to recover our dues,” said Ashok Chandra, zonal manager of the Corporation Bank.
After obtaining a legal opinion, the Noida authority will issue notices to the Amrapali Group and the Corporation Bank.
In a similar case, the Life Insurance Corporation (LIC) on April 5, 2016, had announced an e-auction of the Unitech Group’s land in Noida to recover its Rs198 crore loan. However, the Noida authority intervened and prohibited the auction.
The LIC had wanted to auction Unitech’s group-housing land measuring 14 lakh square metres in sectors 96, 97 and 98, which was allotted by the Noida authority on December 28, 2006, for Express City Group Housing project.
“Similarly, we will stop the Corporation Bank’s auction,” an authority official said.
The Noida authority is yet to recover around Rs20,000 crore from around 80 builders.
As per the 2006 policy, a builder was supposed to pay 10% of the total land cost at the time of allotment and the rest in allotments over eight years. After the authority failed to collect dues, the policy has been changed and builders have to make a down payment of 40% of the cost.
“This 10% -90% policy has led to a financial crisis due to which we are failing to recover our dues,” an authority official said.
First Published: Aug 07, 2017 22:48 IST