Noida Developers Yet to Honour Rs 500 Crore in Recovery Certificates Issued by UP-Rera
Noida developers in standoff with government over UP-Rera RCs. Only 5% of Rs 500 crore realized, with offices sealed. Developers claim actions are illegal, violating resolution process. Homebuyers await refunds. #NoidaDevelopers #UPReraRCs #HomeBuyerRefunds
Developers in Noida are facing pressure from the government to honour recovery certificates (RC) issued by the Uttar Pradesh Real Estate Regulatory Authority (UP-Rera), which collectively amount to Rs 500 crore. However, only around 5% of the total amount has been realized so far, leading to stricter measures being implemented. In the last two weeks, the Noida administration has sealed the offices of 10 developers, including Supertech, to enforce compliance with the RCs. Despite the collections during this period amounting to a meagre Rs 26 crore, the government is determined to ensure that builders comply with the RCs. This article explores the background of the issue, the actions taken by the government, and the response of the developers.
Since its formation in 2016, UP-Rera has issued over 1,800 RCs against 101 developers in Noida. The RCs are not related to land dues but are meant to facilitate refunds to homebuyers for delayed projects and deliveries. However, many builders have been in a prolonged standoff with the Noida Authority over land dues, which has resulted in delays in complying with the RCs. On April 7, district magistrate Manish Kumar Verma set up 40 teams for collections and gave builders 24 hours to comply with the RCs. The government teams used public announcements, known as "munadi", with drums and loudspeakers to pressure the builders to comply with the RCs. If necessary, similar measures may be taken at the residences of realtors, and directors of companies that ignore the RCs may face arrest.
Actions Taken by the Government
The Noida administration has recently sealed the offices of several developers, including Radicon Vedantam and La Residentia, to enforce compliance with the RCs. Supertech Limited, whose main office in Sector 96 was also sealed, has strongly condemned the action of the district administration, calling it illegal. The company claimed that it is currently under a corporate insolvency resolution process initiated by the National Company Law Tribunal (NCLT), and as per the moratorium clause of the Insolvency & Bankruptcy Code, no dues can be coercively recovered by any authority until the resolution process is over. Supertech further stated that the sealing of offices, including that of the interim resolution personnel appointed by the NCLT, would amount to contempt of court.
Chief secretary DS Mishra has directed district magistrates across the state to initiate recoveries in a time-bound manner to enable refunds to homebuyers. As of January 2023, there were 5,268 pending RCs in different districts of the state, with Noida having the highest number, followed by Lucknow, Ghaziabad, and Varanasi. UP-Rera receives a large number of complaints from homebuyers for refunds from developers who fail to complete projects on time. When refund orders are not complied with, RCs are issued under Section 40 of the Real Estate (Regulation and Development) Act, 2016, and sent to the district magistrate's office for recovery.
Response of the Developers
Developers, including Supertech, have responded to the government's actions by asserting that they are illegal and in violation of the corporate insolvency resolution process initiated by the NCLT. They have also cited the moratorium clause of the Insolvency & Bankruptcy Code, which prevents coercive recovery of dues until the resolution process is completed. However, the Noida administration and UP-Rera officials have maintained that the RCs are separate from the corporate insolvency resolution process and are meant to facilitate refunds to homebuyers. They argue that the developers should comply with the RCs and refund the homebuyers as per the orders issued by UP-Rera. The sealing of offices and the strict measures taken by the government have created tension between the developers and the authorities, with both sides standing firm on their positions.
The issue of recovery certificates (RCs) in Noida, issued by UP-Rera to facilitate refunds to homebuyers, has become a contentious matter with developers and the government at odds. While the government has been taking strict measures to enforce compliance with the RCs, developers, including Supertech, have argued that the actions are illegal and in violation of the corporate insolvency resolution process. The situation remains unresolved, and homebuyers continue to face delays in receiving their refunds. It is imperative for the government and the developers to find a solution through dialogue and legal channels to ensure that the interests of homebuyers are protected.
Note: The information provided in this article about Uttar Pradesh Real Estate Regulatory Authority is for informational purposes only. It is not intended as legal or professional advice and readers should consult qualified professionals for advice specific to their circumstances.
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