New Delhi,  In a major setback to the builders in Noida and Greater Noida, the Supreme Court on Monday recalled its 2020 order, capping the interest rate at 8 per cent, for delay in payment of land cost by builders to the authorities.

A bench headed by Chief Justice U.U. Lalit recalled the June 2020 order, which directed Noida and Greater Noida to cap the interest rate at 8 per cent for delay in payment of land cost by builders, instead of a steep 15-23 per cent.

During the hearing, senior advocate Ravindra Kumar, representing the Noida and Greater Noida authorities, had told the apex court that the authorities will incur over Rs 7,500 crore loss, if it's order capping the interest rate, at around 8 per cent, for delay in payment of land cost by builders were to sustain.

Kumar had vehemently argued that this order was not based on facts and it will financially ruin the authorities and over Rs 7,500 crore would be gone with a stroke of the pen. "Builders will get unjust enrichment of over Rs 7,500 crore," he had submitted.

Emphasising on the necessity of interest on land cost, the authorities had contended that in Noida city, there is no house tax, yet it is maintaining metro services and good infrastructure, and also that not one builder came to the court after the allotment, claiming the rate of interest was very high. "No reduction in rate of interest (for the builders) would be passed on to the home buyers," Kumar had argued before the apex court.

In September last year, the authorities had urged the top court to recall its order, citing that the builders have not deposited "a single paisa" to clear their dues.

In its June 2020 amid the pandemic, the top court had cited the bad state of real estate sector and the need to give impetus to such housing projects, mainly considering plight of home buyers and as pointed out by Noida and Greater Noida Authorities that 114 plots were allotted from 2005 onwards, but most of projects are incomplete.

"We direct that rate of interest on the outstanding premium and other dues to be realised in all such cases at the rate of 8 per cent per annum and let the Noida and Greater Noida authorities do a restructuring of the repayment schedule so that amount is paid and Noida and Greater Noida authorities are able to realise the same," said the top court.