NOIDA Cannot Levy Delay Penalty As CIRP Costs on Homebuyers And Resolution Applicant For Builder’s Default: Supreme Court

NEW DELHI: In a significant ruling addressing the treatment of statutory delay penalties under the insolvency framework, the Supreme Court of India held that time extension charges levied by the New Okhla Industrial Development Authority (NOIDA) cannot be treated as Corporate Insolvency Resolution Process (CIRP) costs or recovered from homebuyers and the incoming resolution applicant. A Bench comprising Justice J. B. Pardiwala and Justice K. Vinod Chandran set aside the National Company Law Appellate Tribunal’s (NCLAT) directions classifying three years of lease extension charges as CIRP costs, allowing the appeal filed on behalf of the homebuyers and dismissing NOIDA’s plea seeking extension charges up to the tenth year.