Homebuyers Can't Suffer Due To NOIDA Authority's Failure To Fully Implement Project: Allahabad HC On Withholding Of Occupancy Certificate

In a plea concerning the development of Noida Sports City, the Allahabad High Court said that the homebuyers–some of whom had booked apartments in completed towers but where the builders were not granted permanent completion certificate–cannot be penalised due to New Okhla Development Authority's failure (NOIDA) to perform its statutory duty in "ensuring planned and systematic development" of the project.

It underscored that homebuyers cannot suffer due to dereliction of duties by NOIDA authority's officers as well as failure of builders to complete their obligations.

In the present case the developer was supposed to create sports facilities over 70% of the entire land allotted to them while rest was to be used for residential and commercial purpose. Due to allegations of discrepancies in allotment of Sports City, the further allocation was put on hold by the authority. 

Referring to judgments in Bhupinder Singh v. Unitech Ltd., Jaypee Orchard Resident Welfare Society v. Union of India & ors. and Chitra Sharma v. Union of India, where the Supreme Court made observations regarding protecting the interests of home buyers, the bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held

“The Noida Authority was well aware of the judgements but still took no action to protect the interest of the home buyers. The Noida Authority/development authority has a statutory duty to ensure planned and systematic development. This includes statutory duty to monitor the progress of real-estate projects and ensure their timely completion. The Authority had repeatedly failed to exercise due diligence in supervising the projects and also had failed to ensure proper implementation of the Sports City project.”

Further, the Court held that:

“Another reason why the Authority should not be allowed to penalise the home buyer is because the current stage of the sports city is due to the dereliction of statutory duty by the officers of the Authority, and their failure to (a) Monitor the progress of the project; (b) Take timely action against defaulting builders; (c) Enforce completion timelines; and (d) ensure that Tender Guidelines are scrupulously followed. Home buyers cannot be made to suffer because of dereliction of their duties and failure of builders to complete their obligations.”

The Court also held that sub-lessees were bound by the terms of original lease as well and could not claim independent existence. It was further held that no deviation from the Act, original brochure and lease deed could be made by NOIDA while sanctioning the maps for development of the Sports City.

“The sanction of the map, even if it exists, has to be read along with the scheme and the terms of the lease deed as well as the statutory provisions. Any sanction contrary to the provisions of the Act, brochure, allotment and lease deed will by itself be a deviation and this deviation being not recognized under the law. Hence, the Grundnorm Principle would be applicable.”

Factual Background

NOIDA launched a scheme for development of Sports City in Sector Nos. 78, 79, and 150 in 2011. The reserve price for the scheme was set at Rs.11,500/- per square metre with the intention for development of sports facilities over 70% of the entire land allotted to the developer and on top of it, the developer had to infusehis funds to develop the same. Out of the 30% land on which construction was allowed, 28% was to be developed for Group Housing and 2% for commercial purpose.

The entire project was for an area of 7,27,500 sqm., out of which 5,92,300 sqm. land was immediately allotted to the Consortium of companies lead by M/s. Xanadu Estates Private Limited on 04.05.2011. Possession of the land was handed over to M/s Xanadu Realcon Pvt. Ltd. on 11.11.2011. An application to sub-divide the land was approved by NOIDA. One such sub-divided land was allotted to M/s Xanadu Realcon Pvt. Ltd which was taken over by the petitioner company and the name was changed to M/s Gaursons Sportswood Private Limited.

Thereafter, Special Purpose Company had submitted integrated plan for development of the entire Sports City Plot No. SC-01 in Sector 78, 79. This Map was sanctioned on 16.06.2014, wherein as an internal arrangement of allottees, the obligation of various Companies was divided and entire Sports facilities was to be developed by two companies M/s Three C Green Developers Pvt. Ltd. and M/s Xanadu Infratech Pvt. Ltd. However the obligation of the rest of the Companies, was to develop residential and commercial facilities without the Sports facility. Thereafter, the petitioner company applied for the sanction of the Map for construction of Residential and Commercial Complex in 40,000 sq. metre land which was allotted to them. After evaluating the Map, NOIDA Authority sanctioned the Map of the petitioner on 21.06.2016. As per the Map, the petitioner was supposed to construct 800 flats. 

Petitioner was granted temporary occupation certificate for 704 out of 800 flats. After completion of the final phase of residential block development, petitioner applied for issuance of final completion/occupancy certificate for entire project and also requested the NOIDA to execute tripartite deed in favour of the subsequent allottees/buyers. Since the same was not granted within 90 days, permission was deemed to be granted.

Thereafter there were allegations of bungling in the allotment of the Sports City and the implementation and development of the project pursuant to which the matter was referred to Controller and Auditor General of India for audit, wherein it was found that “various irregularities in the allotment and development of the Sports City, which resulted in a loss of almost Rs.9000/- crores to the State Exchequer.” As a reaction to this, NOIDA convened a meeting and decided that till State Government took a decision on the case, further sub division of the Sport City as well as the revalidation of Map were put on hold. Accordingly, petitioner approached the High Court, inter alia, seeking grant of completion certificate.

A homebuyer also approached the High Court claiming that though the possession was handed over, occupation certificate and transfer deed in his favour had not been executed.

Findings

Petitioner obligated to develop proportionate Sports facility while developing residential project

The Court held that petitioner from different from other developers who had filed similar petitions as the petitioner had no applied for revalidation of map and completed its project within the stipulated time following the norms prescribed.

Noting that the petitioner was a sub-lessee, the Court held that

“the sub-division in favour of the subsidiary is fully binding on the subsidiary company and the subsidiary company is to perform the obligations as are contained in the original terms of the lease and to develop the Sports City Project and cannot claim any independent existence for an independent project.”

It further held that the entire Sports City was to be developed by the consortium in proportion and so the sub lessee is also bound by the terms of the lease deed and the brochure therefore the part completion can only be issued once the recreational facilities/sport facilities are also developed in proportion. 

"The approval of the map of the petitioner is nothing but an offshoot of the connivance of the officials of Noida Authority as well as builders/allottees. Once the Scheme clearly laid down that the residential portion is to be developed in proportion to the Sports City, then it is not open for the petitioner to say that they are not obligated to develop any Sports facility," the court said.  

It held that the petitioner could not take advantage of the map sanctioned against the norms of the Scheme of development of the Sports City.It further underscored that petitioner cannot get away from its obligation to develop the proportionate Sports facility while developing the residential part of the project.

“The entire project of Sport City has to be looked as one integrated project even though the sub leases have been executed in favour of petitioner and others, but that do not absolve them from their obligations of providing sports facilities”.

Interest of Homebuyers

Regarding the interest of the homebuyers, the Court took note of the Expert Committee headed by Amitabh Kant which was constituted by the Ministry of Housing and Urban Affairs to look into stalled real-estate projects. The report recommended that “where the projects are completed, the occupancy certificates may by issued and the lease deed may be executed.”

It noted that the homebuyers were worst affected since the maps were duly approved by Noida Authority, they had no reason to suspect a foul play. "After paying for the flats, the completion and bankable title is still a mirage for them," the court said. 

While observing that NOIDA authority had failed to fulfil its statutory obligations, the Court held that while it was is true that the development plan was sanctioned by the authority on June 16, 2014, wherein all the liabilities of developing the Sports facilities were fastened on two companies, and whereas all the cream of the project was kept in other smaller companies, "this division was nothing but a part of well thought design to cheat the Noida authority by not developing the sports facilities, and making a huge profit by selling the residential part". 

The Court thereafter directed that the petitioner company has to proportionately provide the same Sports facilities or in the alternative to pay for these sports facilities as per the current market price, which may now be indicated by the Noida Authority.

"All the sub-lessees are jointly and severally liable for the development of the sports facilities. Keeping 70% land vacant in their part is not an option. The sports facilities need to be developed as per the guidelines of the Sports City Scheme and its brochure. In case the development already carried out is in such a way in this project that the Sports facilities cannot be developed then in that case the sub-lessee/allottee has to pay proportionately for the development of the Sports facilities as prescribed in the brochure," it said. 

Further directions were issued to NOIDA to grant occupancy certificate, completion certificate and execute the tripartite agreements as soon as the petitioner complies with the conditions.

Case Title: M/S Gaursons Sportswood Private Limited vs. State of U.P. and Another 2025 LiveLaw (AB) 73 [WRIT - C No. - 41880 of 2019]

Case Citation: 2025 LiveLaw (AB) 73

Counsel for Petitioner: Nikhil Agrawal, Sanjay Kumar Mishra

Counsel for Respondent : Kaushalendra Nath Singh

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