Builders cheated UP, NOIDA and home buyers

Home buyers paid more to builders who paid much less than was due to the state and NOIDA. Both officials and builders lined their pockets

Builders cheated UP, NOIDA and home buyers
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P.K. Mukhopadhyay

The one single activity that subjected NOIDA’s collusive operations to public scrutiny, disappointment and anger is the allotment of group housing schemes.

Some key findings of CAG are:

During 2005-2018, NOIDA floated 28 residential (group housing) schemes and allotted 24 schemes. In these schemes 1.03 lakh flats were sanctioned but 72,697 flats were completed till 2020. However, NOIDA could grant permission for sub-lease for only 43,438 flats (60%) as the builders defaulted on paying their dues for remaining flats. So, these flats, though ready, cannot be leased.

CAG has gone in some details in this activity and made scathing comments against the NOIDA Board’s abdication of responsibility and the CEO’s arbitrary functioning.

The schemes were to be approved by the Board prior to their sanction. But the Board approved only 18% of the schemes while 82% schemes were not approved before their launch. Only in a few cases, the CEO placed the schemes to the Board before approval.

The CAG noticed that plots were allotted to builder companies by the CEO in violation of the set rules. Till 2008-09, the financial eligibility criteria were linked to the size of plots for group housing schemes. But during 2009-11, when the largest number of allotments took place, NOIDA delinked the financial criteria from the size of the plots. Thus, financial criteria remained fixed for plots irrespective of size varying from 50,000 sqm to 2.43 lakh sqm.

That created opportunity for the CEO to allot plots of far bigger size to builders way beyond their financial capacity. No wonder they could not complete the projects in time. Based on the allotments, the builders could lure flat buyers with attractive terms while hiding their lack of capacity to complete the projects and deliver flats in time.

NOIDA provided that the builders can bid for a maximum of two plots out of all plots offered in a scheme or all concurrent schemes taken together. In that case net worth of the applicant should have been more than the net worth required for each plot.


During 2006-07 to 2010-11, many builders got allotment for 3 to 5 plots. That was beyond their financial capacity going by their net worth. For example, Supertech Limited got allotment of 4 plots worth Rs.498 crore with a net worth of Rs 183 crore; Ultrahome Construction Limited got allotment of 4 plots worth Rs.858 crore with net worth of just Rs.69 crore, Gaursons India Ltd Company/Consortium got allotment of 5 plots worth Rs 564.59 on net worth of Rs 73 crore, Gulshan Homz Pvt Ltd Consortium got allotment of 3 plots worth Rs 357.4 crore on a net worth of Rs 15.47 crore. Needless to say, that such dilution of criteria created a set of crony builders who ultimately failed to deliver the flats.

In 2008 and 2009, NOIDA reduced the allotment money to 10% per cent of the premium from the previous rate of 40% on the ground of global economic recession in disregard of GoUP order of 2009. With this unwarranted generosity, builders could now garner more plots with initial deposit of only 10% premium.

Due to many failed/delayed projects, the builder defaulted to pay remaining premium and NOIDA’s outstanding dues soared to Rs 2,664.96 crore. Understanding their folly, the Board withdrew these concessions and restored 40% of the premium in 2017. Meantime, enough damage had been done.

(This was first published in National Herald on Sunday)

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