NEW DELHI: A year after Supreme Court directed Noida and Greater Noida authorities to cap the interest rate for delayed payments by builders at around 8% instead of charging an exorbitant 15-23%, the authorities on Monday told the court that real estate companies have deposited “not a single paisa” to clear their dues and sought recall of the order.
Observing that there is a need to “give impetus” to the real estate sector and relief should be granted to builders as many of them were struggling to survive due to the slowdown in the economy and the Covid-19 pandemic, the apex court in June last year had said charging a reasonable rate of interest of around 8% would enable them to complete the housing projects and had passed the order to grant relief to real estate industry operating in NCR.
However, home buyers will be affected if the dues are not paid. Some of the projects could already be in the IBC process while others would not be able to provide registration or occupancy certificates to home buyers as the authorities have not received payments from builders for lease, penalties and interest.
Seeking recall of the order, advocate Ravindra Kumar told the bench that the order was passed without examining all issues. He said that the court was hearing Amrapali case and examining ways to protect homebuyers but the order passed was general in nature, applicable to all developers who were not even party in the case.
As a bench of Justices U U Lalit and Ajay Rastogi raised the question on how can the order be recalled after one year as some of the builders might have availed the relief which could not be deprived to other companies, Kumar said that the entire thing had come to a standstill after June 10 order passed by court last year.
“Not a single paisa has been paid in the last one year,” Kumar told the bench.
The plea of the athorities was opposed by builders and senior advocate Kapil Sibal, appearing for one of them, told the bench that recall application filed by Noida and Greater Noida was abuse of process of law. He said the authorities agreed to charge a low interest rate but later on changed their stand. He said that they waited for the judge (who dictated the order) to retire and then they filed an application seeking recall of the order.
The court had passed the order on a plea of Ace Group of Companies which alleged that various projects are stalled and became dormant due to excessive lease rent, penalty and interest charged by the authorities. It had contended that SBI MCLR (Marginal Cost of Funds-based Lending Rate) rate of interest for three years is only 7-8%, and Noida authorities be directed to reduce the rate of interest.
“Considering the current state of real estate and in order to give impetus to such housing projects and mainly considering the plight of home buyers and as pointed out by Noida and Greater Noida Authorities that of 114 plots allotted from 2005 onwards, most of the projects are incomplete, we direct that the rate of interest on the outstanding premium and other dues to be realised in all such cases be at the rate of 8% per annum and let the Noida and Greater Noida Authorities do a restructuring of the repayment schedule,” the court had said.
The court, however, had made it clear that if the builders failed to clear the dues within reasonable time, the concession granted will be withdrawn.
