However, it will for the first time dispose of the assets of defaulters through online auction. All this while, recovery certificates issued by the three development authorities — Noida, Greater Noida and Yamuna Expressway — and UP-RERA were proving to be difficult to execute. The administration has now asked the three authorities to share a list of defaulters along with the properties they own.
Traditionally, the collector of a district had powers to attach movable and immovable properties under provisions of the Uttar Pradesh Revenue Code, 2006. However, the process to realise the amount was extremely complicated and tedious.
The local sub-divisional magistrate had to announce the execution of recovery certificates to begin the proceedings. The procedure also involved issuing or pasting notices at the registered addresses of the defaulters and asking them to pay up the amount or appear before the authorities within a certain timeframe.
If the defaulters breached the deadline, SDMs had the authority to recommend their arrest for non-payment. Bank accounts, lockers and other assets owned by them were attached if nobody showed up or were arrested. The attached assets were then sold to recover the amount.
But over the years, the number of defaulters has been increasing, not so much the recovery. As of now, the Noida administration has to recover more than Rs 400 crore from the top 30 defaulters — all of them builders. The present rate of recovery is under 15%.
“A majority of the defaulters are not available at their registered address. Land was allotted to them more than a decade ago and their whereabouts are not known now. Also, we can initiate recovery proceedings only against the names mentioned in the official correspondence provided by UP-RERA or the other authorities. The third issue is finding a buyer who is willing to pay a reasonable price for the land or other properties that have been attached. The real estate sector is down at the moment and local players are not showing interest in taking up big land parcels at the moment,” district magistrate Suhas LY said.
Officials said e-auction of the assets could yield higher productivity as players from different parts of the country would be able to participate in the bids. “Plus, a developer from Mumbai, Bengaluru or Chennai interested in foraying into NCR will have a sense of security as he will buy land from the government,” said an official at the Surajpur collectorate.
The e-auction route was mooted by UP-RERA in September 2019 in order to improve the recovery rate. The then district magistrate, BN Singh, had forwarded a detailed note to the government in January 2020, stressing upon the need to implement the online auctioning process.
On December 15 this year, the UP cabinet took a decision to introduce the fourth amendment in the existing Revenue Code to allow e-auction of immovable properties of the defaulter.
“With changing time, the government departments also need to evolve new strategies to deal with legacy issues. Online auctions will certainly lead to a better recovery ratio,” said Pankaj Kapoor, the managing director of property analytics company Liases Foras.
The money generated through the auction will be transferred to UP-RERA or the authorities and eventually used to compensate the buyers for delay in handover of flats or for completing the projects.