Housing – Urban Housing – Time extension charges, if to be treated as Corporate Insolvency Resolution Process-CIRP costs – Housing project itself ran into difficulties, and lessee/developer declared as a Corporate Debtor – Homebuyers together pooled money to carry on the project during the CIRP period – Resolution Plan of the SRA accepted by the CoC consisting of the homebuyers alone – Numerous IAs before the adjudicating authority – NCLT passed various directions – Appeal filed by the Authorized Representative-AB and NOIDA-lessor – Order by the NCLAT directing the time extension charges with regard to both the lease deeds to be treated as CIRP costs for the maximum period of three years provided in the lease deed, for completion of the project – Challenge before this Court by AR and NOIDA-respondent, wherein case of the respondent that the time extension charges are sought, not for three years alone, but for the further period as introduced by office order which are also to be included as CIRP costs – Correctness:
Held: Project was commenced to provide housing, an essential part of development – Lured by the opportunity, many persons had invested their savings with the intention of obtaining a roof over their heads – Project was to be completed in the year 2016, and despite another decade having passed, the homebuyers still left in the lurch – Essential purpose of development would fail if NOIDA brings in a stipulation of payment of default charges – Default charges, as imposed in the lease deed as also now introduced as per the new policy, specifies a percentage of the lease premium to penalise a defaulting developer – Intention is also to motivate completion within time lines and to act as a deterrent to avoid time lags – On facts, defaulting developer is out of the picture and the half baked project can be completed only if the Resolution Plan is put into operation and completed – Thus, it is only proper that NOIDA waives the penalty charges since it is neither the default of the homebuyers nor the default of the SRA, which led to the delay – Homebuyers and the SRA 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, i.e., the local authority being concerned essentially with the development of the area under its control – Hence, the penalty as imposed by the NOIDA on delay, now mulcted on the SRA and the homebuyers, cannot be so validly imposed – Directions to consider the time extension charges as CIRP costs set aside and the impugned order modified to that extent – NOIDA’s appeal praying for time extension charges even beyond the three years upto the 10th year rejected. [Paras 13-16]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.