The Supreme
Court on Thursday set aside the Noida Authority’s penalty for delayed
construction of two housing projects under insolvency proceedings, ruling
that homebuyers and the successful resolution applicant cannot be made to pay
for delays caused by the original developer.
The top court was hearing a plea by homebuyers of Noida’s Lotus
Boulevard and Lotus Panache projects, developed by Granite Gate Properties
Private Limited, who challenged a July 2025 order of the National Company Law
Appellate Tribunal (NCLAT)
directing them to pay “time extension” charges to the Noida Authority.
The developer had taken two plots on lease from the authority to
build high-rise apartments. However, after facing financial difficulties, it
entered the Corporate Insolvency Resolution Process (CIRP), with the homebuyers
constituting the Committee of Creditors (CoC). A resolution plan by SMV
Agencies Private Limited was later approved, making it the successful
resolution applicant.
During the insolvency process, the homebuyers pooled their money
under a CoC-approved “Pool and Build” mechanism to continue construction.
However, the Noida Authority sealed
three towers of Lotus Panache on October 16, 2024, over unpaid time extension
charges.
Homebuyers cannot be made to pay for the “past sins” of the
Corporate Debtor, the court held.
A bench comprising
Justices JB Pardiwala and K Vinod Chandran said, “The project was to be
completed in the year 2016, and despite another decade having passed, the
homebuyers are still left in the lurch. The essential purpose of development
would fail if Noida brings in a stipulation of payment of default charges,”
according to a Hindustan
Times report.
“The homebuyers and the
SRA (Successful Resolution Applicant) are sought to be penalised for past sins
of the Corporate Debtor, which cannot be allowed, especially in the context of
the authority imposing penalty, ie: the local authority being concerned
essentially with the development of the area under its control,” the bench
observed.