Authorised Representative for Granite Gate Properties Private Limited Vs New Okhla Industrial Development Authority and Ors. (Supreme Court of India)
Homebuyers Cannot Be Made to Pay for the Developer’s Past Sins: Supreme Court Directs NOIDA to Waive Time-Extension Penalty & Excludes It from CIRP Costs
Summary: The Supreme Court has held that homebuyers & a successful resolution applicant cannot be burdened with time-extension charges imposed for delays attributable to the erstwhile developer. Considering that the defaulting developer had been displaced following commencement of the Corporate Insolvency Resolution Process and that homebuyers themselves had pooled funds to continue construction, the Court directed NOIDA to waive the penalty charges. It consequently set aside the NCLAT’s direction treating such charges as CIRP costs.
A promised home becomes a pipe dream
Granite Gate Properties Pvt. Ltd. obtained two plots from the New Okhla Industrial Development Authority on perpetual lease at a substantial premium. The developer proposed two high-rise residential projects: “Lotus Boulevard” in Sector 100 & “Lotus Panache” in Sector 110, Noida.
Homebuyers invested their hard-earned savings on promises of modern residences in luxurious apartment complexes. However, the developer ran into financial distress & was admitted into insolvency as a Corporate Debtor.
The homebuyers constituted the Committee of Creditors as a class of financial creditors. A resolution plan submitted by SMV Agencies Pvt. Ltd. was approved, making it the Successful Resolution Applicant.
