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The Noida Authority is challenging a state government order that lets Gardenia Aims Developers use auction proceeds from 122 sealed flats to meet its 25% upfront payment for dues on a stalled Sector 46 project. The May 29 directive also allows the restoration of a 150-acre commercial plot without fees. The Authority claims this contradicts its December 2023 policy, which requires builders to deposit dues first for relief eligibility. Gardenia owes INR 692 crore and hasn't paid the demanded INR 140.5 crore. The issue is now in court, with the Authority seeking a policy review to ensure alignment with its stalled project resolution framework.
The Noida Authority is disputing a recent state government directive related to a developer's plan for clearing outstanding dues. This action, following a ruling issued in late May, impacts a stalled real estate project in Noida's Sector 46. The Authority states the directive's approach to dues clearance conflicts with its established policy for resolving long-delayed projects, and it is seeking a reconsideration of the directive. Advertisement
The dispute involves Gardenia Aims Developers. The state government's order, issued by the principal secretary of the industrial development department on May 29, allows Gardenia to use proceeds from the auction of 122 sealed flats in its Sector 46 project to meet the 25% upfront payment required for relief.
This order also states that a separate 150-acre commercial plot would be restored without fees, with zero-period benefits considered per the December 2023 policy, and any shortfall to be borne by the builder. The order also directed the Authority to decide on the builder's proposal within one month. The builder subsequently submitted a written proposal and requested the Authority to withdraw its case from the Allahabad High Court.
The Noida Authority argues that this May 29 order contradicts a cabinet-approved policy from December 2023 for stalled projects, which mandates defaulting builders to deposit 25% of their dues upfront before they can access relief measures. Gardenia Aims Developers was allotted a 51,719 square meter plot in 2009, and initially deposited approximately INR 60 crore against a premium of INR 151 crore. However, the project faced delays; by October 2019, only 20 of 21 approved towers were completed, and only 551 of 1,586 units had received occupancy certificates.
By December 2023, the total outstanding dues for Gardenia Aims Developers had reached INR 692 crore, which included a INR 130 crore Covid-related rebate. In March 2024, the Authority demanded INR 140.5 crore, representing 25% of the recalculated dues, but no payment was made.
Consequently, in June 2024, the Authority ordered the auction of the 122 sealed flats and canceled the lease of the separate 150-acre commercial plot. The builder obtained a stay from a commercial court, leading the Authority to approach the Allahabad High Court, where the case remains sub judice.
The Noida Authority's board is seeking reconsideration of the May 29 government order, stating its conflict with the established rehabilitation plan for stalled projects. Disputes over outstanding dues are common challenges for stalled real estate projects, often involving legal battles between developers and development authorities. Policies aimed at resolving these issues seek to balance builder relief with the recovery of public dues and the completion of homes for buyers.
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