Noida homebuyers seek govt policy to resolve issues of 30 stuck realty projects

In the absence of a concrete policy to address issues of 30 stuck realty projects in Noida and Greater Noida, launched by developers who are currently facing bankruptcy proceedings, homebuyers are in a fix as they have no definite timeline as to when they would get ready flats or a refund of their money despite waiting for over a decade.

Several realty giants such as Jaypee Infratech Limited and 3C group are undergoing corporate insolvency resolution process (CIRP) before the National Company Law Tribunal (NCLT) and have admitted that they do not have the funds necessary to complete these projects.

With the stalemate continuing, around 100,000 homebuyers or investors who have been waiting for over a decade to get their flats are now hoping that the government comes to their aid.

Noida authority officials on Thursday said the Uttar Pradesh government may soon come up with a policy in this regard.

“A committee has recommended that a policy be formulated by the Uttar Pradesh government in this regard. The decision cannot be taken at the authority level and needs policy formation by the state government,” said Ritu Maheshwari, chief executive officer, Noida and the Greater Noida authority.The problems of these stuck projects are so tangled that even if the NCLT orders the firms taking over the bankrupted realty companies to pay the land cost dues to the authority concerned, the authority is reluctant to waive the interest on the defaulted amount, said officials.

There are 15 realty projects each in Noida and neighbouring Greater Noida that are in a deadlock owing to CIRP. According to the Indian Bankruptcy Code, 2016, a committee of creditors (CoC) comprising homebuyer representative, lenders and other stakeholders would pick a new company to take over the debt-ridden realty firm that failed to complete and deliver the project.

Subsequently, the NCLT would approve or disapprove the CoC choice. If approved, then the decision is binding on all stakeholders.The problem begins when the new company wants to pay only the principal amount which is due to the authority as land cost and want the penal/simple interest waived to make the stuck project economically viable.

For example, the NCLT approved the resolution plan submitted by Suraksha Group for Jaypee Infratech Limited recently. But the new Mumbai based company wants to pay only 10 lakh to the Noida authority against financial dues amounting to 1,600 crore. Similarly, it wants to pay only 20 lakh against 6,000 crore dues to the Yamuna Expressway Industrial Development Authority (Yeida).

Now Yeida is planning to approach national company law appellate tribunal to protect its interests.

Close on the heels of the Jaypee deal, the NCLT approved Max Estate Limited’s resolution plan for 3C’s Delhi One project. The new company wants a haircut of at least 600 crore on the interest and is ready to pay only 400 crore principal amount.

“The Uttar Pradesh government or the Noida authority must come up with a new policy to break the deadlock. Homebuyers are suffering as these projects have been stuck for more than 10 years,” said Sahil Vachani, chief executive officer and managing director of Max Estates.

The Confederation of Real Estate Developers Association of India (CREDAI), a realtors lobbing group, and the National Real Estate Development Council (NAREDCO) have also urged the government to come out with a policy soon.

“We have held talks with the government and authority officials and are hoping that the government will soon come up with a scheme. Realty sector needs handholding right now; else investors and buyers will continue to suffer. If the government will not offer a waiver on the interest component, then no developer will be able to pay the dues,” said Amit Modi, secretary, CREDAI (western UP).

A delegation of homebuyers led by Abhishek Kumar, president of Noida Extension flat owners welfare association, had met chief minister Yogi Adityanath in Lucknow before Holi and discussed the issues. “They assured us that they would find a solution to our long-standing issues,” said Kumar.