Top court dismisses plea on interest cap for Noida homebuyers

The Supreme Court on Tuesday declined to recall its November 2022 order whereby it had lifted a cap on interest payable by builders to Noida and Greater Noida authority at 8% per annum on outstanding payments, and permitted the Uttar Pradesh government to decide appropriately. The court had at that time clarified that that the ceiling of 8% would apply only to Amrapali projects, being constructed by state-owned NBCC since July 2019 under the monitoring of the top court.

Dismissing a bunch of applications moves by a group of builders and real estate industry organisations, a bench of justices Ajay Rastogi and Bela M Trivedi held that there was no reason or justification to recall the previous order, which was passed after due consideration of all the attending circumstances.

“On an application being filed at the instance of Noida/Greater Noida authorities, this Court has looked into and revisited the material available on record at length and arrived at a conclusion that order passed on June 10, 2020 followed with orders dated August 19, 2020 and August 25, 2020 deserve to be recalled… in the present facts and circumstances, we find no reason/justification to recall our order dated November 7, 2022,” said the bench.

The applications dismissed by the bench included the ones filed by CREDAI & NAREDCO, Prateek Infraprojects India Pvt Ltd, Paramount Propbuild Pvt Ltd and ET Infra Developers Pvt Ltd.

Seeking recall of the November 2022 order, their applications complained that if the projects run by the Amrapali Group of Companies are entitled for certain financial benefits, it should also be extended to other companies who also faced the same financial crunch during the Covid-19 pandemic and continue to reel under similar monetary handicap.

Senior advocate Ravindra Kumar, representing Noida, had countered the applications arguing that they were not maintainable and deserved to be rejected since the November 2022 order was passed after hearing all the parties concerned. Kumar also pointed out that the present proceedings cannot be allowed to become a ruse for the builders and promoters whose projects were completed much before the cognizance was taken by this Court in the Amrapali group of matters or when such entities were not even remotely concerned with the projects of Amrapali Group of Companies.

The bench accepted the senior counsel’s submissions, and noted in its order that the applicants are not in any manner concerned with the plight of homebuyers of Amrapali Group of Companies, of which judicial cognizance was taken by this Court.

“Merely filing of IAs (interlocutory applications) by other group of companies who are stranger to the cognizance taken by this Court in reference to Amrapali Group of Companies, do not deserve any indulgence at least in the instant proceedings,” said the bench.

The November 2022 order was passed by the Supreme Court on an application moved by Noida and Greater Noida authority claiming that the builders were misusing an order passed by the Supreme Court on June 10, 2020 which fixed interest on outstanding premiums at 8% per annum. The authority claimed that this order was passed in the context of Amrapali housing projects and will not apply for other builders.

Allowing the plea, the top court recalled its previous orders on capping of the interest rate, and asked the Noida and Greater Noida authority to calculate the rates payable by builders other than Amrapali.

The decision of the court brought a windfall to the authorities which had earlier informed the bench that more than 7,000 crore was locked as dues payable by builders due to the ceiling on the interest rate. As per the terms of agreements between the builder and the authorities, the rate of interest for delayed payment comes in the range of 15-23%.

The June 2020 order capping the interest rate was passed by the Supreme Court “in order to give impetus to such housing projects and mainly considering plight of home buyers”, particularly in view of the pandemic. It had then taken note that while 114 plots were allotted by the authorities to different builders from 2005 onwards, most of projects remained incomplete due to the financial crunch.