Noida, Greater Noida to get nearly Rs 40,000 crore

NOIDA: The Supreme Court's recall on Monday of its 2020 judgment allowing developers to repay their legacy land dues at 8%, in line with SBI's MCLR (marginal cost of lending rate), clears the decks for the development authorities in Gautam Budh Nagar - Noida and Greater Noida - to initiate measures to realise nearly Rs 39,500 crore in dues that real estate developers have accrued over the years.
Senior officers said the two development authorities would have to, between them, forgo nearly 50% of this amount had the Supreme Court not recalled its order. The officers pegged the amount that was at stake, going by current calculation of dues, at Rs 19,301 crore. In the total dues, the Noida Authority's share alone is Rs 26,000 crore.
"Even if we separate the liabilities of Unitech, Amrapali and other projects that are sub-judice in the Supreme Court, Rs 5,860 crore of Noida Authority and Rs 3,838 crore of the Greater Noida Industrial Development Authority have been secured by the SC's recall," said an officer.
The recall was a big setback for developers, who were banking on a significant reduction of dues and had stopped payments in the meantime. However, it brings clarity to Noida's troubled real estate sector, which has seen some of the country's biggest defaulters over the years.
In 2020, after the Ace Group filed an interlocutory application in the Amrapali case, the Supreme Court had instructed the Noida and Greater Noida authorities to calculate liabilities of developers by levying interest on the basis of SBI MCLR rates instead of the rate mentioned in lease documents for land allotted to developers. The Noida and Greater Noida authorities challenged this order and sought its recall.
According to the lease deed, developers were required to pay 11.5% compounding interest for non-payment of instalments. The authorities also levied a penal interest of 3% on the defaulted amount from developers.
The accumulation of dues and the deadlock between developers and the development authorities manifested mainly in three ways - scores of unfinished projects for which realtors claimed to have run out of funds and sought interest relief, incomplete amenities at societies many builders handed over, citing the same cash stress, and thousands of flat owners failing to register their homes with builders not clearing their dues and the authorities holding back occupancy certificates.
While the recall brings no immediate relief to buyers, it'll give AOAs and RWAs the clarity to pursue a redress mechanism. The developers' argument was that stiff penal interest rates charged by Noida and Greater Noida had led to dues snowballing and the interest component had, in several cases, far exceeded the principal amount. Noida's policy of allotting land for a small upfront payment and the rest in instalments led to large land parcels being allotted in the 2000s and early 2010s. Many of the developers defaulted on the EMIs, which began the cycle of dues. Noida itself was heavily criticised by the Comptroller and Auditor General for this policy in an audit report that was tabled last year by the state government in the assembly.
Ritu Maheshwari, the CEO of both authorities, said, "The Supreme Court's latest judgment has given clarity over how much builders have to pay. Following the 2020 SC order, apart from developers of group housing projects, allottees of other projects in the commercial, institutional and industrial sectors, and sports city, were demanding the same benefit. Cases were being filed in various courts as well. If all these projects had benefited from the previous orders, the losses to the authorities would have increased unexpectedly. The damage was likely to affect development projects adversely."
Due to non-payment of dues, the registry of flats of more than 40,000 homebuyers in Noida and Greater Noida has been pending for several years, Maheshwari said.