In a move that enables land-owning authorities in Noida and Greater Noida regions, the Supreme Court (SC) on November 7, 2022, recalled its 2020 order, capping the rate of interest at 8% on land dues. The top court, however, clarified that this benefit would apply only to Amrapali projects, being constructed by state-owned NBCC, even though the order was passed on an application moved by Ace Group.
“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,” a Bench of Chief Justice of India UU Lalit and justice Bela M Trivedi said.
In his application to the court, advocate Ravindra Kumar, who represented Noida and Greater Noida authorities, told the SC that the two land-owning authorities in the NCR would suffer losses to the tune of Rs 75,000 crore if the rate of interest of land dues is capped at 8% as provided under the 2020 order.
“The Supreme Court was pleased enough to recall the June 10, 2020, order and allow our application,” Kumar told PTI.
In its order, the apex court has specified the interest rate charges by the twin authorities for issuing large tracts of land in the cities for the development of residential projects 2010 onwards. In their review application, the authorities underlined the fact that developers were misusing the June 10 order.
While they are paying a significantly lower interest rate even though they continue to charge over 18% penalty on buyer defaults, Kumar said in his petition.
“We direct that rate of interest on the outstanding premium and other dues to be realised 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 realise the same,” the SC had said in its June 10, 2020, order.
Order will drive builders into insolvency, says industry body
The SC order will drive many developers into insolvency aside from delaying delivery of 1.5 lakh homes in Noida and Greater Noida, industry body CREDAI-NCR has said.
“After studying the SC order, and the authorities’ response, the developers felt that the 15-23 per cent compound interest would raise the final amount substantially. We are of the view that it would take the final figure much higher than the current market rate. In that case, we will have to take recourse to the National Company Law Tribunal,” said Manoj Gaur, president, CREDAI-NCR.
The industry body demanded a one-time settlement scheme as a solution to this issue.
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