The Supreme Court has in the past come up with novel and unique solutions when homebuyers were left high and dry. But in Supertech NOIDA case it has punished the buyers more than the builder
On August 31, the Supreme Court ordered the demolition of the twin 40-storey towers of Supertech's Emerald Court project in Noida for violation of building by-laws. The bookings were started in 2010 and the handover was promised in 2012. The Allahabad High Court in 2014 had ordered demotion and the honorable Supreme Court affirmed its decision on August 31 on appeal by Supertech.
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The plaintive plea of the buyers is heartrending—95 percent of the project is over. It is on the cusp of being handed over after nine years of inordinate delay. Most of them have been paying EMI on their home loans and some of them have already moved into their incomplete flats in anticipation of handover.
Caveat emptor has long ceased to be the defining and abiding law ever since strong consumer movements took roots the world over. More so in a regulated industry like housing where construction perforce has to take place under the eagle eyes of civic authorities.
The apex court to be sure has for good measure directed that the entire amount of home buyers be refunded with 12 percent interest from the time of the booking and the Residents Welfare Association (RWA) be paid Rs 2 crore for the harassment caused due to the construction of the twin towers. The order seems to be good on paper but a moment’s reflection would show it is cold comfort for the harried buyers.
Buyers haven’t yet become residents and thus it is putting cart before the horse for compensation to be paid to RWA. Be that as it may, the real issue is will Supertech pay back the amount with interest? In our country where inflicting NPA on banks has become a way of life and banks resignedly and fatalistically accept their fate, where is the chance that lesser mortals can get back their money?
In all probability Supertech would hide behind the Chinese wall—each project is separate—imposed by RERA as well as the Chinese wall—promoter is separate from the company he has promoted—imposed by the company law to circumvent the Supreme Court order. It won’t be surprising if it seeks NCLT sanctuary under IBC when the push comes to shove. Time was when crooks took the shelter of BIFR. Now they laugh up their sleeves when they knock at the doors of NCLT to be declared bankrupt and soon inflict heavy haircuts on banks and a clean shave on suppliers/buyers.
The apex court it is respectfully submitted should have taken the civic authorities to task. It has already won people’s appreciation and hearts by setting two very good examples. In 1996, it invoked Article 142 of the Constitution to give complete justice to the commercial flat bookers in the Videocon Towers project Jhandewalan Delhi. It pierced through the corporate veil and recovered the money from the wily promoters for the buyers.
More recently the top court on October 13, 2020, had permitted the court receiver to incorporate a special purpose vehicle (SPV) to enable the flow of funds from SBI Cap for the completion of unfinished projects of Amrapali involving about 9500 buyers. It is for this reason that the company Amrapali Stalled Projects Investments Reconstruction Establishment (ASPIRE) was floated.
The apex court it is humbly prayed should call upon the Uttar Pradesh government to order acquisition of land in an adjacent area and speedily complete the reconstruction of the project to be razed to ground so that buyers left in the lurch are truly rehabilitated.
It was a municipal collusion as the SC itself has minced no words in condemning the Noida authorities. By extension, the blame should be laid at the doors of the state government which should redress the genuine grievance of the buyers who have been left high and dry. Refund with interest is cold comfort to them, a lollypop, as it were. Twelve percent interest is no match for the heightened cost of properties in the eleven years. And at any rate it together with the overall compensation of Rs 2 crore to the RWA will just scratch the surface of the problem.
Only a peremptory and exemplary order would act as a deterrent. A chastened state government would in its turn chastise the Noida civic authorities, all for the orderly development of the nation in future by sending a strong message. Polluter pays principle proudly worn on their sleeves by Americans should be emulated in India mutatis mutandis.
—S. Murlidharan is a CA by qualification and writes on economic issues, fiscal and commercial laws. The views expressed in the article are his own
Read his other columns here
(Edited by : Ajay Vaishnav)
First Published: IST