In a significant ruling, the Allahabad High Court has exposed significant irregularities in the allotment and development of the Noida Sports City project. The division bench comprising Justice Mahesh Chandra Tripathi and Justice Prashant Kumar delivered its judgment in M/s Three C Green Developers Pvt. Ltd. & Ors. vs. State of U.P. & Ors. (Writ – C No. 31823 of 2019), highlighting large-scale corruption, violation of land use regulations, and fraudulent dealings that resulted in losses exceeding ₹9,000 crore to the state exchequer.
Background of the Case
The case revolved around a consortium led by M/s Three C Green Developers Pvt. Ltd. that was allotted a massive 7,27,500 square meters of land in Sectors 78, 79, and 150 of Noida under the Sports City Scheme launched by the Noida Authority in 2011. The project was envisioned as a world-class sports facility, with 70% of the land reserved for recreational purposes, including golf courses, stadiums, and other sporting infrastructure. However, the High Court found that the developers, instead of constructing the promised sports facilities, focused on monetizing the residential and commercial components of the project in violation of the scheme’s terms.
Legal Issues Involved
Fraud and Misrepresentation: The court found that the Noida Authority allotted the land to entities that did not meet eligibility criteria, and later, these entities subleased plots to their subsidiaries, violating the terms of the original lease.
Corporate Veil and Insolvency: The judgment emphasized the need to pierce the corporate veil, noting that the directors of Three C Green Developers Pvt. Ltd. and its subsidiaries had manipulated corporate structures to evade their obligations under the project.
CBI Inquiry and State Losses: The court cited the Comptroller and Auditor General’s (CAG) Report, which uncovered financial irregularities and suggested a loss of ₹9,000 crore due to underpricing of land and unauthorized transfers.
Failure to Develop Sports Facilities: The court strongly condemned the consortium for failing to fulfill its contractual obligation to develop sports infrastructure while aggressively selling residential units.
Judicial Oversight and Government Action: The court analyzed the role of the Noida Authority, questioning its inaction in enforcing the lease terms and monitoring project progress.
Key Observations by the Court
“The entire project was a well-planned scam where government officials and developers colluded to defraud the state and the public.”
“The developers never had the intention to build sports facilities; instead, they prioritized selling residential and commercial properties.”
“This case demands a full-scale investigation by the Central Bureau of Investigation (CBI) to hold those accountable for financial fraud and dereliction of duty.”
Decision of the Court
CBI Investigation Ordered: The court directed the Central Bureau of Investigation to conduct a thorough probe into the role of Noida Authority officials and private developers in the scam.
Cancellation of Leases: The court ordered the cancellation of fraudulent sub-leases and directed that strict action be taken against defaulters.
Recovery of Dues: The Noida Authority was instructed to recover outstanding dues, penalties, and transfer fees from developers and sub-lessees.
Accountability of Noida Officials: The judgment called for departmental action against Noida Authority officials who facilitated the irregularities.
Corporate Insolvency Review: The court allowed the National Company Law Tribunal (NCLT) to review the insolvency claims of Three C Green Developers Pvt. Ltd. and related entities to prevent misuse of bankruptcy laws for evading liabilities.
Legal Representation
For the Petitioners: Senior Advocate Sanjeev Kumar Rai, with Advocates Monika Vaish and Kaushalendra Nath Singh
For the Respondents: Senior Counsel Manish Goyal, along with C.S.C. (Chief Standing Counsel) representing the State of Uttar Pradesh and the Noida Authority.
