Homebuyers Can't Suffer Due To NOIDA Authority's Failure To Fully Implement Project: Allahabad HC On Withholding Of Occupancy Certificate

In a plea concerning the development of Noida Sports City, the Allahabad High Court said that the homebuyers–some of whom had booked apartments in completed towers but where the builders were not granted permanent completion certificate–cannot be penalised due to New Okhla Development Authority's failure (NOIDA) to perform its statutory duty in "ensuring planned and systematic development" of the project.It underscored that homebuyers cannot suffer due to dereliction of duties by NOIDA authority's officers as well as failure of builders to complete their obligations. In the present case the developer was supposed to create sports facilities over 70% of the entire land allotted to them while rest was to be used for residential and commercial purpose. Due to allegations of discrepancies in allotment of Sports City, the further allocation was put on hold by the authority. Referring to judgments in Bhupinder Singh v. Unitech Ltd., Jaypee Orchard Resident Welfare Society v. Union of India & ors. and Chitra Sharma v. Union of India, where the Supreme Court made observations regarding protecting the interests of home buyers, the bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held“The Noida Authority was well aware of the judgements but still took no action to protect the interest of the home buyers. The Noida Authority/development authority has a statutory duty to ensure planned and systematic development. This includes statutory duty to monitor the progress of real-estate projects and ensure their timely completion. The Authority had repeatedly failed to exercise due diligence in supervising the projects and also had failed to ensure proper implementation of the Sports City project.”Further, the Court held that:“Another reason why the Authority should not be allowed to penalise the home buyer is because the current stage of the sports city is due to the dereliction of statutory duty by the officers of the Authority, and their failure to (a) Monitor the progress of the project; (b) Take timely action against defaulting builders; (c) Enforce completion timelines; and (d) ensure that Tender Guidelines are scrupulously followed. Home buyers cannot be made to suffer because of dereliction of their duties and failure of builders to complete their obligations.”The Court also held that sub-lessees were bound by the terms of original lease as well and could not claim independent existence. It was further held that no deviation from the Act, original brochure and lease deed could be made by NOIDA while sanctioning the maps for development of the Sports City. “The sanction of the map, even if it exists, has to be read along with the scheme and the terms of the lease deed as well as the statutory provisions. Any sanction contrary to the provisions of the Act, brochure, allotment and lease deed will by itself be a deviation and this deviation being not recognized under the law. Hence, the Grundnorm Principle would be applicable.”Factual BackgroundNOIDA launched a scheme for development of Sports City in Sector Nos. 78, 79, and 150 in 2011. The reserve price for the scheme was set at Rs.11,500/- per square metre with the intention for development of sports facilities over 70% of the entire land allotted to the developer and on top of it, the developer had to infusehis funds to develop the same. Out of the 30% land on which construction was allowed, 28% was to be developed for Group Housing and 2% for commercial purpose.The entire project was for an area of 7,27,500 sqm., out of which 5,92,300 sqm. land was immediately allotted to the Consortium of companies lead by M/s. Xanadu Estates Private Limited on 04.05.2011. Possession of the land was handed over to M/s Xanadu Realcon Pvt. Ltd. on 11.11.2011. An application to sub-divide the land was approved by NOIDA. One such sub-divided land was allotted to M/s Xanadu Realcon Pvt. Ltd which was taken over by the petitioner company and the name was changed to M/s Gaursons Sportswood Private Limited.Thereafter, Special Purpose Company had submitted integrated plan for development of the entire Sports City Plot No. SC-01 in Sector 78, 79. This Map was sanctioned on 16.06.2014, wherein as an internal arrangement of allottees, the obligation of various Companies was divided and entire Sports facilities was to be developed by two companies M/s Three C Green Developers Pvt. Ltd. and M/s Xanadu Infratech Pvt. Ltd. However the obligation of the rest of the Companies, was to develop residential and commercial facilities without the Sports facility. Thereafter, the petitioner company applied for the sanction of the Map for construction of Residential and Commercial Complex in 40,000 sq. metre land which was allotted to them. After evaluating the Map, NOIDA Authority sanctioned the Map of the petitioner on 21.06.2016. As per the Map, the petitioner was supposed to construct 800 flats. Petitioner was granted temporary occupation certificate for 704 out of 800...

Homebuyers Can't Suffer Due To NOIDA Authority's Failure To Fully Implement Project: Allahabad HC On Withholding Of Occupancy Certificate

Upasna Agrawal

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Homebuyers Can't Suffer Due To NOIDA Authority's Failure To Fully Implement Project: Allahabad HC On Withholding Of Occupancy Certificate

Upasna Agrawal

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Upasna Agrawal

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