Boban John
NOIDA: The Allahabad high court has upheld Yamuna Expressway Industrial Development Authority‘s (YEIDA) decision to cancel the allotment of 1,000 hectares of special development zone land to Jaiprakash Associates Ltd.
In its ruling on March 10, a bench of justices Manoj Kumar Gupta and Kshitij Shailendra directed YEIDA to take over all incomplete housing projects on this land parcel and ensure their completion under the terms that JAL and homebuyers agreed on.
JAL launched 12 housing projects here, which have around 4,600 investors. Another 13 were launched by other developers on land that was sub-leased to them by JAL. YEIDA had cancelled the allotment on Feb 12, 2020, citing JAL’s dues.
JAL projects within SDZ include Jaypee Greens Bougainvilleas, Jaypee Greens Country Homes I & II, Jaypee Greens Greencrest Homes, Jaypee Greens Krowns, Jaypee Greens Kove, Jaypee Greens Buddh Circuit Studios, Jaypee Greens Kassia I, II, III, Jaypee Greens Sportsville and Jaypee Greens Villa Expanza. None of the projects is complete.
While the HC order gives direction to homebuyers, they will still have to move Supreme Court for clarity on the way forward because JAL is in insolvency and a parallel legal process is on at National Company Law Tribunal. In its order, HC set strict timelines, asking YEIDA to ensure housing projects that are at least 75% complete are finished within a year, those at 50% are completed in 18 months and those only 25% done wrapped up in 30 months. The outer limit, to complete all other project-related development work, is 36 months.
It placed on YEIDA the responsibility to ensure funds are available to complete the projects, regardless of the amount collected from homebuyers and clarified that homebuyers’ claims under the Insolvency and Bankruptcy Code (IBC) will remain protected, and their rights in the ongoing NCLT proceedings against JAL will not be affected.
HC also ordered a monitoring committee established in four weeks to oversee the completion of projects with the principal secretary (housing and industrial development), the chairman of UP-Rera, the CEO of YEIDA or a designated nominee, and an authorised representative (AR) of homebuyers as its members.
The panel, according to the court, will supervise the selection of new developers, resolve grievances of homebuyers and formulate an exit policy for homebuyers who wish to withdraw and seek a refund.
The court declared the period between Feb 11, 2020 and the day of the judgment as ‘zero period’, which means no interest, penalties or any other financial charges related to the properties will be levied for this phase. It also directed YEIDA to appoint a nodal officer within four weeks to resolve any dispute related to outstanding payments within four weeks. HC directed YEIDA to refund within six weeks to the resolution professional all the money deposited by JAL during the litigation process, along with interest calculated at the State Bank of India’s prime lending rate (PLR), as well as any other payment made by JAL in proportion to the land resumed under the cancellation order.
YEIDA introduced the SDZ policy in 2008 to attract investment in sports, education and health care in sectors along Yamuna Expressway. JAL was allotted 1,000 hectares on June 11, 2008, with a commitment to develop a sports-centric zone that included the Formula One Buddh International Circuit. According to the agreement, JAL was to pay 20% of the provisional premium and lease rent within 90 days, and the rest in instalments. By Sept 4, 2017, JAL claimed to have invested Rs 2,500 crore in the project, including construction of the F1 circuit. The company claimed it paid Rs 2,295 crore as land premium and Rs 196 crore as lease rent.
However, YEIDA argued JAL defaulted on a significant portion of its obligations. In its 61st board meeting on Sept 4, 2017, it decided to reclaim portions of the land due to non-payment. JAL moved court on Nov 3 that year. YEIDA, however, proceeded with the cancellation order.
Financial negotiations between JAL and YEIDA continued between 2020 and 2022 after HC’s interim stay on cancellation but did not yield a resolution. Under interim court orders, JAL deposited Rs 207 crore. As of Nov 2022, YEIDA calculated JAL’s dues at Rs 3,622 crore – Rs 998 crore in land premium, Rs 358 crore in lease rent and Rs 2,266 crore in additional compensation.
ICICI Bank initiated insolvency proceedings against JAL in 2018 over defaults. NCLT admitted the plea on June 3, 2024, placing JAL under the corporate insolvency resolution process.
Homebuyers said the Allahabad HC der gives back ownership of land to YEIDA, which places them outside the purview of NCLT.
However, they plan to move the Supreme Court for clarification.
“The high court did not specify if the NCLT-appointed AR or a state-appointed representative will advocate homebuyers’ interests. Another concern is what will happen to the Rs 2,000 crore homebuyers have paid to JAL? Will it be returned to the authority for completing the construction?” said Sunil Sharma, vice-president of the Jaypee Sports City Homebuyers Welfare Society.
“We are grateful for the high court’s intervention. Most homebuyers made their bookings in 2011-2012, with possession promised 2014 onwards. Except for Kassia, Kove, and Buddh Circuit studio, the other projects are plotted developments. We hope the authority will soon bring in a developer to complete the projects,” Sharma added.
