Setback for real estate firms of Noida, Gr Noida, SC recalls order capping 8 per cent interest on land dues

Senior advocate Ravindra Kumar, who represented Noida and Greater Noida in the matter, told PTI, "The Supreme Court was pleased enough to recall the June 10, 2020 order and allow our application". The order passed on the application is yet to be uploaded by the top court.

New Delhi:In a setback to real estate companies in Noida and Greater Noida areas, the Supreme Court on Monday recalled its order of June 10, 2020 which had capped the rate of interest at eight per cent on the dues for land given on lease to different builders, according to a lawyer. A bench of Chief Justice UU Lalit and Ajay Rastogi allowed the application of Noida and Greater Noida seeking recall of the 2020 order on the ground that both the authorities have been suffering huge losses and their functioning have virtually come to a standstill.

Senior advocate Ravindra Kumar, who represented Noida and Greater Noida in the matter, told PTI, "The Supreme Court was pleased enough to recall the June 10, 2020 order and allow our application". The order passed on the application is yet to be uploaded by the top court.

The application which was heard last year by the top court, Kumar has argued that both the authorities were to incur loss of more than Rs 7500 crore, if the June, 2020, order is not recalled. Both Noida and Greater Noida had alleged that different builders have suppressed the facts from the court leading to the passing of June 10, 2020 order favouring the real estate companies in Noida and Greater Noida areas.

Kumar had told the court that the court by its order dated June 10, 2020 has curtailed the interest charged by the authority from the year 2010 onwards, under contracts entered into by it with builders and under which large tracts of lands belonging to the state have been made available for private exploitation by builders.

He had submitted that though Noida authority had argued the matter before passing of the 2020 order but the fact of the matter is that a builder (Ace Group) on whose plea the order was passed had colluded with lower rank officials and no notice was served upon the authority as a result no proper response was filed to the petition.

"The applicant respectfully submits that the orders of this court were made in circumstances where the applicant was unable to place its defence in the court to the far-reaching financial impact that would result from the orders passed by this court. The applicant very respectfully submits that it is in the interest of justice that the orders be recalled and the matter heard fresh", Kumar had said.

He had also pointed out that it was not a case that many builders were involved in the matter as at the time of order only Ace Group was before the court and Panchsheel builders and Supertech Group came before the court at a later stage.

The Noida authority had further submitted that the Ace Group suppressed the facts on land interest rates, default in paying lease premiums while the company itself charged 18 per cent compound interest from buyers and the fact that they had already delivered a couple of projects even before the Amrapali case was filed in 2017.

Kumar had said that the builders charge 18 percent interest while authority used to charge 11 percent compounded annually payable in easy instalments but they were penalised because of the order. He had said that the authority's working is at standstill and bearing huge losses in view of the order as now several commercial, individual, institutions are approaching the authority seeking re-settlement of dues in view of the eight per cent cap imposed by the top court in its June 2020 order.

Kumar said that on June 9, 2020, considering the problems in cash flow created by the COVID pandemic and its aftermath, the state government had directed a reduction of the interest being charged by the authority but this reduction in interest rates was only to apply prospectively and there was no question of refunding any interest already recovered, or reducing past demands of interest.

However, builders have opposed the application of the authorities. On June 10, 2020, the real estate companies in Noida and Greater Noida areas which were reeling under slowdown and impact of Covid-19 induced lockdown had got the much needed relief when the Supreme Court had capped the rate of interest at eight per cent to be charged by authorities on the outstanding dues of land against the exorbitant 15 to 23 per cent.

The top court had said considering the current state of real estate sector, the projects have come to a standstill and the sector needs to be given impetus mainly considering plight of home buyers. (PTI)

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