Realtors’ body CREDAI-NCR on Tuesday urged development authorities of Noida and Greater Noida to come up with one-time settlement scheme for builders to clear all their outstanding payments against land. The association’s suggestion comes a day after the Supreme Court 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.
The apex court order is a setback for builders of Noida and Greater Noida in Uttar Pradesh (UP). On Monday, a bench of Chief Justice UU Lalit and Ajay Rastogi 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.
Reacting to the judgement, CREDAI-NCR President Manoj Gaur said the Supreme Court’s recall of the order removed ambiguity, and the subsequent stalemate, on the key issue of interest rates.
However, he said: “But the authority must rethink the interest rate and the way it is levied on outstanding dues of developers. It is not just high interest rates but also penal interest that is compounding monthly that have affected the viability of real estate projects in UP’s main economic city.” Gaur also expressed concern that this could lead to bankruptcy of many real estate projects.
He feared that “a continuing regime of stiff interest and penal interest rates would send many more projects to the National Company Law Tribunal under the insolvency and bankruptcy code.” Such an eventuality would adversely affect all stakeholders, including buyers, financiers and the authority itself, according to Gaur.
“We developers and authorities have a common objective of delivering homes to the buyers. In view of the Supreme Court judgement, we hope the authority will bring the one-time settlement scheme for balance dues which will ultimately help buyers in getting the homes and also will help authority in getting the dues in a timely manner,” Gaur said.
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.
However, on Monday, the apex court has recalled its last year’s order.