In a major setback to real estate companies in Noida and Greater Noida areas, the Supreme Court on Tuesday refused to rescind its November 7 order refusing to recall an earlier decision that had capped the rate of interest at eight per cent on dues for land given on lease to different builders.
“We have examined the interim applications which have now been filed by various group of companies for recalling of the order dated November 7, 2022, pursuant to which we consciously recalled our orders dated June 10, 2020, August 19, 2020 and August 25, 2020 and in the present facts and circumstances, we find no reason/justification to recall our order dated 7th November 7, 2022. Consequently, the interim applications are without substance and deserve to be dismissed,” said a bench of justices Ajay Rastogi and Bela M Trivedi.
The top court had passed various orders including the one issued on June 10, 2020, during the COVID-19 pandemic period, by which it had capped the rate of interest at eight per cent on the dues for land given on lease to several builders in order to provide them the succour.
The bench noted that the undisputed facts which have come on record are that the initiation of proceedings in the first instance in Amrapali case was only confined to consider how to secure the interests of homebuyers of Amrapali Group of companies and at a later stage, interim application was filed by the Ace Group of companies and later few other group of companies also intervened in the proceedings.
It said that admittedly either of the builders who have moved the top court for recall of the November 7, last year order are in no manner were related to the functioning of the Amrapali Group of companies.
On November 7 last year, the top court had recalled its order of June 10, 2020 which had capped the rate of interest at eight per cent on the dues for land given on lease to different builders, according to a lawyer.
It had allowed the application of Noida and Greater Noida seeking recall of the 2020 order on the ground that both the authorities have been suffering huge losses and their functioning have virtually come to a standstill.
The Noida and Greater Noida authorities had submitted that both the authorities were to incur loss of more than Rs 7500 crore, if the June, 2020, order was not recalled.
Both the authorities had alleged that different builders have suppressed the facts from the court leading to the passing of June 10, 2020 order favouring the real estate companies in Noida and Greater Noida areas.
Advocates ML Lahoty and Anchit Sripat had espoused the cause of home buyers in the Amrapali case.
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Senior advocate Ravindra Kumar, appearing for both the Noida and Greater Noida authorities, had told the court that the top court by its order dated June 10, 2020 has curtailed the interest charged by the authority from the year 2010 onwards, under contracts entered into by it with builders and under which large tracts of lands belonging to the state have been made available for private exploitation by builders.
He had submitted that though Noida authority had argued the matter before passing of the 2020 order but the fact of the matter is that a builder (Ace Group) on whose plea the order was passed had colluded with lower rank officials and no notice was served upon the authority as a result no proper response was filed to the petition.
He had also pointed out that it was not a case that many builders were involved in the matter as at the time of order only Ace Group was before the court and Panchsheel builders and Supertech Group came before the court at a later stage.
The Noida authority had further submitted that the Ace Group suppressed the facts on land interest rates, default in paying lease premiums while the company itself charged 18 per cent compound interest from buyers and the fact that they had already delivered a couple of projects even before the Amrapali case was filed in 2017.
Kumar had said that the builders charge 18 percent interest while authority used to charge 11 per cent compounded annually payable in easy instalments but they were penalised because of the order.
He had said that the authority’s working is at standstill and bearing huge losses in view of the order as now several commercial, individual, institutions are approaching the authority seeking re-settlement of dues in view of the eight per cent cap imposed by the top court in its June 2020 order.
Kumar had said that on June 9, 2020, considering the problems in cash flow created by the COVID pandemic and its aftermath, the state government had directed a reduction of the interest being charged by the authority but this reduction in interest rates was only to apply prospectively and there was no question of refunding any interest already recovered, or reducing past demands of interest.
However, builders have opposed the application of the authorities.
On June 10, 2020, the real estate companies in Noida and Greater Noida areas which were reeling under slowdown and impact of Covid-19 induced lockdown had got the much needed relief when the Supreme Court had capped the rate of interest at eight per cent to be charged by authorities on the outstanding dues of land against the exorbitant 15 to 23 per cent.
The top court had said considering the current state of real estate sector, the projects have come to a standstill and the sector needs to be given impetus mainly considering plight of home buyers.