The court would deliver a verdict on the rate of interest to be charged from builders by authorities for delay in payment for cost of land and whether unused FAR in Amrapali projects could be allowed to be sold.
The verdict on rate of interest would be delivered by a bench of CJI Lalit and Justice Ajay Rastogi and the judgement on Amrapali’s FAR would be read out by a bench of the CJI and Justice Bela M Trivedi. The CJI is to demit office on November 8.
The real estate companies in Noida and Greater Noida and also both the authorities have been waiting for the verdict on the rate of interest. As per the terms of agreements between the builder and the authority the rate of interest for delayed payment come in the range of 15-23% but the apex court had capped it at 8% and linked it with SBI MCLR (Marginal Cost of Funds based Lending Rate) while adjudicating a plea between authority and a company in June 2020.
The court had said that there was a need to “give impetus” to the real estate sector and relief should be granted to builders as many of them were struggling to survive due to the slowdown in the economy and because of Covid-19 pandemic. It said that charging a reasonable rate of interest of 8% will enable them to invest the money to complete the housing projects. It gave the order on a plea of Ace Group of Companies which alleged that various projects are stalled and became dormant due to excessive lease rent, penalty and interest charged by authorities.
Both the authorities claimed that they would lose around Rs 7,500 crore due to cap on rate of interest. They had submitted that they would be “ruined” financially if the order is not recalled and it would lead to “unjust enrichment” of builders. As per their response in court, Greater Noida would lose around Rs 4,279 crore and Noida authority would have to forgo Rs 3,266 crore. The court had last year reserved its order on a recall plea of the authorities.
A bench of CJI and Justice Trivedi would decide whether sale of FAR be allowed in the Amrapali project as proposed by the court-appointed receiver and attorney general R Venkataramani.
As Amrapali homebuyers strongly opposed the proposal of selling of unused FAR and dividing the plot to sell its unused portion to raise the money for construction, the court on November 2 had questioned the homebuyers for seeking all their problems to be resolved by the court but not ready to sacrifice anything.
Venkataramani, who is managing the affairs of Amrapali group as receiver and has been exploring various options in the last three years to raise the money to complete the housing projects, floated the proposal for selling unused FAR. He told the bench there is no magical solution available to the problem of fund crunch and it was the best and the easiest way to generate money and it can fetch around Rs 1,000 crore.
The apex court, after taking over Amrapali group, gave the task to NBCC to construct a total of 16 projects consisting of 46,575 units of which nine projects are situated in Noida and the remaining seven projects are in Greater Noida. As per NBCC, Rs.8,016.68 crore is required for completion of all the projects.
NBCC has been given approximately Rs 3,000 crore and it has completed around 11,000 flats out of which 5,000 flats have been handed over and around 26,000 flats are yet to be constructed.