GNIDA asks commercial allottees to give it first right on assets, may impose penalty

GREATER NOIDA: The Greater Noida Industrial Development Authority (GNIDA) has decided that all allottees, barring those in the residential category, will have to mandatorily create charges in its favour and update them with the registrar of companies.

A charge is a right created by a registered company in favour of the financial institution or the lender on its assets and properties to finance their immediate or long-term financial needs. Experts
said that the GNIDA’s latest decision would be difficult to implement on the existing allottees and defaulters. “While the creation of rights before the registrar of companies for prospective allottees will certainly help the GNIDA, the existing allottees or the ones who have defaulted on payment might not be able to do so,” said Abhishek Yadav of DY Law Offices

Yadav explained that while taking loans to set up the units, the allottees would have already mentioned the name of the agency that holds the first charge on their assets. Changing the status now, he said, would be a difficult process since the agency that already holds the first right on the company’s assets would obviously not want to give it up. The charges created on any particular company are available on the portal of the Union ministry of corporate affairs. This helps financial institutions to find out the current debt on a company and the assets that have been pledged against it.
GNIDA officials said the setback they had suffered before the National Company Law Tribunal while fighting cases with companies under the Insolvency and Bankruptcy Code had forced them to take the decision. GNIDA’s legal team is handling 21 cases under the bankruptcy code and an amount between Rs 1,800 crore and Rs 2,000 crore is at stake.

Amandeep Duli, the additional chief executive officer of GNIDA, said all the allottees (other than residential), who are paying six monthly installments or have outstanding dues, would be sent a copy of the order. If any allottee fails to comply, GNIDA might impose a penalty. Also, while sanctioning maps, revalidation, additional floor area, occupancy certificates, and any other such services, the officials will check if the allottee has created the charges. “Otherwise, we will reject or hold back such approvals,” said Duli.

The officials pointed out that at the time of allocating land, GNIDA, in its lease deed, clearly mentions that it will have the first charge on the assets of the company. However, the status of the authority as the financial creditor has not been accepted by NCLT or NCLAT (appellate tribunal) as its lease deed failed to qualify as a financial document under provisions of the Indian Accounting Standards.