DLF will be taking appropriate legal action against New Okhla Industrial Development Authority’s (Noida) demand for payment of over Rs 234 crore —which is about half of the company’s Rs 487 crore net profit reported for the quarter ended September 30, 2022. The authority has raised the demand as compensation to the previous owner of the land on which one of DLF’s well-known ‘Mall of India’ has been built.

“DLF shall take all appropriate legal action against Noida’s demand based on legal advice,” company said in a BSE filing.

The development comes in the backdrop of a Supreme Court order on May 5, in which it had directed Noida to ensure payment of compensation for the land to its previous owner Veeranna Reddy.

The dispute relates to a parcel of 54320.18 square metres of land that DLF had won in an open auction conducted by Noida in sector-18 of Noida in the National Capital Region in 2004, which now houses one of India’s largest mall, with several luxury brands, called the Mall of India.

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According to DLF, after the payment of the entire consideration for the land as demanded by Noida at the time, a lease deed dated February 25, 2005 was executed by Noida in favour of DLF in respect of the “demised premises”.

Reddy had raised the issue that compensation be paid as per the prevailing market value of land ad-measuring 7,400 square metres in a writ petition filed before the Allahabad High Court. The high court in its order dated October 28, 2021 had directed the Noida to carry out the determination of the compensation. Reddy then filed an appeal before the Supreme Court against the order of the Allahabad High Court.

The Supreme Court then in its judgment dated May 5, 2022 stated that since, the acquisition of the land in question was made by Noida which was purchased by DLF in a public auction, the liability to pay the amount of compensation would be of the authority.

The apex court also dismissed the review petition filed by Noida in the matter in an order dated August 10, 2022.

In the stock exchange filing, DLF said that rejecting the review petition, the Supreme Court said, “Having carefully gone through the review petitions, the order under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record, warranting reconsideration of the order impugned. The Review Petitions are accordingly dismissed.”

According to DLF, the Supreme Court judgement does not impose any liability for any enhanced compensation payable in relation to the land area of 7,400 sq. mtr. or the subject land on DLF. “The demand upon DLF is completely in contravention of the directions passed by the Supreme Court. The demand notice issued by the Noida is completely contrary and a violation of the order of the Supreme Court orders and bereft of any merits,” the company said in a stock exchange filing. The company also said that the subject land is not part of the demised premises.

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DLF Ltd reported a 28% year-on-year increase in the company’s net profit to Rs 487 crore for the quarter ended September 30, 2022, primarily due to increase in joint venture profits and 39% reduction in finance cost. The company’s revenue during the quarter came in lower by 13% y-o-y at Rs 1,360 crore, while the Ebitda (earnings before interest, tax, depreciation and amortisation) margins improved 200 basis points to 36%. The Ebitda during the quarter at Rs 495 crore was marginally lower by 1% on a y-o-y basis on account of lower other income, higher fixed cost and higher variable expenses driven by business scale up costs.

DLF reported Rs 2,052 crore of new sales booking during the quarter, while the collections stood at Rs 1,252 crore.

The company reduced its net debt by Rs 117 crore during the quarter through operating cash flows to Rs 2,142 crore as on September 30, 2022 versus Rs 2,259 at the end of June 30, 2022.