CAG report flags how Noida Authority let homebuyers down

A performance audit report by the CAG on land acquisition and allotment of properties in Noida between 2005-06 and 2017-18 highlighted many anomalies and discrepancies resulting in loss to the exchequer. As per the report, in 24 schemes in which allotments were made from 2005 to 2018, 1,30,005 flats were sanctioned for construction, against which only 72,697 were completed as of March 31, 2020: “As a result, the home buyers are saddled with incomplete projects wherein they have invested their life savings.”

“Instead of monitoring and regulating the allottees, the conditions were watered down in successive brochures to the detriment of Noida and to the benefit of the allottee builder,” the report said. In several cases, schemes were not submitted before the Board, the highest decision-making unit of the Authority, the report found.

The audit observed that laying down the terms and conditions of the scheme and allotment is a crucial function of the Board of Noida. Non-consideration entails a control failure on part of the Board, the report read.

The audit also found that allotments were given to those incapable of completing the project. “The allotments made by Noida to the group housing allottees during the period covered by the audit is one marked by the utter disregard for the conditions for allotment, allocation of plots to a number of ineligible allottees, along with subsequent permission to transfer, mortgage or exit from the project; in many cases where large outstandings were due to Noida,” the audit said.

The audit observed that apart from shortcomings in the brochure conditions, the Authority also diluted existing stipulations in the brochures to further facilitate the builders.

The Noida Authority changed the eligibility criteria for allotment which reduced the onus on the allottees to complete the project and “also compromised the position of home buyers”, the report read. It further noted that for the successful execution of a project, the consortium consisting of different companies was required to work in unison but Noida’s relaxations of conditions served to weaken the consortiums.

In two cases concerning Logix Builders, allotments were made to entities that did not possess the required turnover in relevant fields of business. Those entities should have been disqualified at the technical bid stage, the audit said. Further, the Authority proposed allotment of land that they did not possess and resultantly had to provide a zero period to allottees. They also failed to cancel allotment of plots which resulted in the non-realisation of potential revenue of Rs 869.76 crore.