The developer had taken two plots on lease from the authority to build high-rise apartments. However, after facing financial difficulties, it entered the Corporate Insolvency Resolution Process (CIRP), with the homebuyers constituting the Committee of Creditors (CoC). A resolution plan by SMV Agencies Private Limited was later approved, making it the successful resolution applicant.

Homebuyers cannot be made to pay for the “past sins” of the Corporate Debtor, the court held.

A bench comprising Justices JB Pardiwala and K Vinod Chandran said, “The project was to be completed in the year 2016, and despite another decade having passed, the homebuyers are still left in the lurch. The essential purpose of development would fail if Noida brings in a stipulation of payment of default charges,” according to a Hindustan Times report.

The court noted that imposing the charges on the homebuyers or the SRA would penalise parties that were not responsible for the project’s delay.

The top court noted that the time extension charges, imposed as a percentage of the lease premium, are intended to penalise defaulting developers and deter delays. However, in this case, the original developer was “out of the picture”, while the stalled project could only be completed through the implementation of the resolution plan, it observed.

“The penalty as imposed by the NOIDA on delay, now mulcted on the SRA and the homebuyers, cannot be so validly imposed. We set aside the directions to consider the time extension charges as CIRP costs and modify the impugned order to that extent,” the Court held, according to LiveLaw.