Supreme Court Waives Noida Authority Delay Penalty on Sectors 100 and 110 Projects
The Supreme Court on Thursday set aside the penalty for delayed construction imposed by the Noida authority on homebuyers of the Lotus Boulevard and Lotus Grande projects in Noida's Sector 100 and Sector 110. A bench comprising Justices JB Pardiwala and K Vinod Chandran ruled that buyers cannot be penalised for the failures of the original developer, observing that homebuyers were still left in the lurch a decade after the scheduled completion date of 2016.
The homebuyers had approached the apex court challenging a July 2025 order of the National Company Law Appellate Tribunal (NCLAT), which had directed them to pay time extension charges to the Noida authority. The two housing projects are currently undergoing insolvency proceedings after the original developer, Granite Gate Properties Private Limited, was declared a corporate debtor.
Following the insolvency declaration, homebuyers initially pooled their own resources to complete the projects. Later, a successful resolution applicant, SMV Agencies, stepped in with a resolution plan that was subsequently approved by the NCLAT. Senior advocate Dhruv Mehta, appearing for the homebuyers, argued that buyers were unfairly being penalised for the past sins of the corporate debtor after failing to finish construction within a 2017 deadline, and argued that enforcing the penalty would only cause further delays.
The bench agreed, noting that the defaulting builder is out of the picture and the half-finished projects can proceed only if the resolution plan is executed. The judges held that neither the homebuyers nor the resolution applicant caused the delay, making it improper for the authority to mulct the developer's dues onto them. The court observed that the essential purpose of development would fail if default charges were demanded.
Appearing for the Noida authority, advocate Rachit Mittal argued that time extension charges should be treated as part of the corporate insolvency resolution process costs. He submitted that the original lease deeds provided for time extension charges of 4%, 5%, and 6% for the first, second, and third years of delay, with lease cancellation being the sole consequence after three years. The court rejected the authority's demand seeking extension penalties beyond that three-year period up to the tenth year.
The ruling brings relief to residents after previous enforcement actions by the authority, which had sealed three towers of the Lotus Panache project in October 2024 pending the final verdict from the apex court.
