Noida homebuyers pin hope on authority to resolve issue of interest rate on land dues

A day after the Supreme Court ordered realtors in Noida and Greater Noida to pay their land cost dues with penal interest, instead of simple interest of 8.5%, homebuyers on Tuesday said they hope that the Noida and Greater Noida authorities will step in to pave the way for their flat registry, which has been delayed for years because of the dispute over the rate of interest.

The Supreme Court on Tuesday clarified that its order capping the interest rate at 8% is applicable only to Amarapali projects, which are being completed by state owned NBCC since June 2019. All other builders, the top court said, will have to pay their land cost dues at interest rates calculated by the two authorities.

A bench of Chief Justice of India Uday Umesh Lalit and justice Bela M Trivedi said, “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.”

There are at least 100,000 homebuyers in 100 realty projects in Noida and 90 in Greater Noida, who are unable to execute their flat registries because builders defaulted on land cost payments to the tune of 7,000 crore n Noida and 7,000 crore in Greater Noida.

“We do not think that the realtors are in a condition to clear these dues. So, it is expected that the realtors will file pleas in national company law tribunal to start corporate insolvency proceedings to declare themselves bankrupt. This would again make things uncertain for us buyers. But the SC order has at least ended the ambiguity and the government can address this issue now,” said Kapil Chauhan, a buyer who invested in Greater Noida’s Prime Rose housing project 10 years ago and is yet to get the flat.

As per the policy, the realtors paid 10% of the land cost at the time of allotment and the remaining 90% was to be paid in instalments. The realtors’ failure to pay land dues has caused distress to homebuyers, who are unable to get the property title despite paying the total unit cost.

On July 10, 2020 the Supreme Court ordered that realtors may pay dues with 8.5% simple interest instead of penal interests which goes up to 23%, making the realty projects ”financially non-viable”. On November 7, 2022, the apex court quashed that order and said realtors have to pay dues as per the terms and conditions set by the authorities concerned.

“In the fight between the authorities and the realtors, we are the ultimate sufferers. We are unable to get justice for the past one decade. We have paid the total flat cost but are unable to transfer flat title to our name. Our hope now is that the authority will work out a solution,” said Deepak Garg, a homebuyer of Gardenia Glory society in sector 46, Noida. Gardenia Glory alone has dues of around 700 crore.

Aims Max Garden Group promoter Manoj Rai said, “Our dues in 2017 was 150 crore and now it has gone up to 700 crore due to unwarranted penal interest. We are ready to settle the dues by handing over our unsold flats to the authority to resolve buyers’ issues.”

Like Aims Max Gardenia Group, other realtors too want the two authorities to come up with a one-time settlement policy or an “out of the box” solution to restructure these loans.

Manoj Gaur, president of Confederation of Real Estate Developers Association of India (CREDAI), a realtors’ lobbying group and CMD of Gaur Group, said the Supreme Court’s recall of the order had removed ambiguity, and the subsequent stalemate, on the key issue of interest rates.

“But the authority must rethink the interest rate and the way it is levied on outstanding dues. It’s not just high interest rates but also penal interest, which is compounding monthly, that has affected the viability of real estate projects in Uttar Pradesh’s main economic city of Noida,” said Gaur.

The Noida and the Greater Noida authorities chief executive officer Ritu Maheshwari said, “We will follow SC order and take action as per law. We will follow the terms of lease deed made to realtors to handle this issue.”