New Delhi, Sep 20 The Noida and Greater Noida authorities on Monday told the Supreme Court that they will incur over Rs 7,500 crore loss, if the top court's order capping the interest rate, at around 8 per cent, for delay in payment of land cost by builders were to sustain.
The Supreme Court, in June 2020, had directed Noida and Greater Noida to cap the interest rate at around 8 per cent for delay in payment of land cost by builders, instead of a steep 15-23 per cent.
On Monday, advocate Ravindra Kumar, representing the authorities, submitted before a bench of Justices U.U. Lalit and Ajay Rastogi that this order was not based on facts.
Kumar, who argued for nearly two hours, contended before the bench that this order will financially ruin the authorities and over Rs 7,500 crore would be gone with a stroke of the pen. "Builders will get unjust enrichment of over Rs 7,500 crore," he said.
Emphasising on the necessity of interest on land cost, he contended that in Noida city, there is no house tax, yet it is maintaining metro services and good infrastructure, and also that not one builder came to the court after the allotment, claiming the rate of interest was very high.
"No reduction in rate of interest (for the builders) would be passed on to the home buyers," he argued vehemently.
At this, Justice Rastogi queried Kumar that if there would be bad times for the real estate sector three years down the line, will the authority come up with a policy decision to rescue the builder. He also asked that when builders were going through a bad phase, was there a thought to find out a way to reduce the interest rate.
Justice Rastogi added the top court has received a lot of complaints from the home buyers to refund the money, when possession was not handed over by the builder on time. "Tribunals have passed the orders and this court has not interfered. We have to balance both side," the bench noted.
Citing the diversion of money which took place in Unitech housing scam, Kumar said: "It was not due to rate of interest."
The top court has scheduled the matter for further hearing on October 1.
Kumar Mihir, counsel for home buyers, said: "The Supreme Court is trying to balance equities between the authorities and the builders and to ensure that no extra burden is passed on the buyers. At the same time, I think they will consider that the defaulters may not get benefit over those who complied with law and paid on time."
On September 13, the authorities had urged the top court to recall its order, citing that the builders have not deposit "a single paisa" to clear their dues.
In its June last year order amid the pandemic, the top court had cited the bad state of real estate sector and the need to give impetus to such housing projects, mainly considering plight of home buyers and as pointed out by Noida and Greater Noida Authorities that 114 plots were allotted from 2005 onwards, but most of projects are incomplete.
"We direct that rate of interest on the outstanding premium and other dues to be realised in all such cases at the rate of 8 per cent per annum and let the Noida and Greater Noida authorities do a restructuring of the repayment schedule so that amount is paid and Noida and Greater Noida authorities are able to realise the same," it had said.
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