Writ petition titled ‘Sequel Buildcon Private Limited v. State of Uttar Pradesh & Anr.’, bearing Writ-C No. 21238 of 2024, was filed by the Interim Resolution Professional (IRP) of Sequel Buildcon Private Limited (under insolvency) (“Company”) before the Hon’ble Allahabad High Court (“High Court”), inter alia, for directions to be issued to the NOIDA Authority and UP RERA to renew the approvals/licenses/maps for the projects comprising of residential units in the Sector 79 of NOIDA, Uttar Pradesh. The said approvals were essential for the completion of construction of the residential units being constructed by the Company.

The High Court in its judgment dated February 24, 2025, observed that an integrated sports city, with 70% of the land dedicated to sports facilities and the remaining 30% allocated for residential and commercial development, was proposed to be built on the said land parcels and the sports city project was initially awarded to a consortium of developers, including the Company. The High Court dismissed the Writ Petition and, inter alia, held that there was financial mismanagement and regulatory failures by the NOIDA Authority and directed investigations against the erstwhile promoters as well as against the NOIDA Authority officials. Though the High Court has recognized the plight of the Homebuyers, and the necessity to safeguard their interests, the Homebuyers however did not get any protection or relief from the court.

Brief Background

Due to the Company’s failure to deliver possession of the residential flats/units to Homebuyers, a group of Homebuyers initiated insolvency proceedings against the Company under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The National Company Law Tribunal, New Delhi Bench (“NCLT”) admitted the Section 7 Petition and commenced the Corporate Insolvency Resolution Process (“CIRP”) against the Company on June 16, 2023.

The Promoters/ erstwhile management of the Company challenged the NCLT’s order admitting the Company into Insolvency before the Hon’ble National Company Law Appellate Tribunal, New Delhi Bench (“NCLAT”). The Hon’ble NCLAT, by its order dated July 7, 2023, stayed the constitution of the Committee of Creditors (“CoC”) and, further vide its orders July 25, 2023 and October 16, 2023, inter alia, directed the commencement of reverse CIRP for the Company. Under the proposed framework, the Promoter Group was required to cooperate with the Interim Resolution Professional (“IRP”) and arrange interim finance for project’s completion.

NOIDA’s Role and the Judgment

 NOIDA’s role in the irregular allotment of land under the Sports City Scheme and how it failed to monitor compliance with the scheme’s conditions was examined by the Court. The Court also observed that the Comptroller and Auditor General (“CAG”) report exposed severe financial irregularities, including the undervaluation of land, resulting in a loss of Rs. 9,000 Crores to NOIDA and the State Government.

Despite such findings, NOIDA failed to enforce compliance, purportedly allowing developers to proceed with unauthorized sub-divisions and transfers of land. The Board Meeting of NOIDA on January 18, 2021, halted all project approvals and map revalidations, citing pending investigations. However, this decision adversely impacted Homebuyers, who had already invested in the project and were left with no way to recover their investments or receive their flats.

As part of the resolution process, the IRP was obligated to secure requisite approvals, including renewals and map revalidation from NOIDA and UP RERA. Despite requests, NOIDA did not respond, effectively stalling construction of the project. Therefore, IRP filed a Writ Petition before the High Court, inter alia, seeking directions to be issued to NOIDA to revalidate the maps and facilitate the project’s completion.

However, as mentioned above, the High Court dismissed the writ petition, inter alia, holding that the Company’s previous management had mismanaged funds, failed to meet project milestones, and attempted to use insolvency proceedings as a shield against regulatory action and directed investigations by the Enforcement Directorate in the transaction involving the former management and NOIDA Authority.

The High Court’s judgment at several points refers to the Homebuyers and the need to protect their rights, however, the judgment did not provide an effective remedy to enable the Homebuyers to get their flats/units.

In our view, inherent powers should have been exercised in the present matter to protect the interest of the Homebuyers and NOIDA should have been directed to revalidate/approve the plans for the project, so that construction could be completed with the financial aid from the interim financier and that the Homebuyers could receive their flats/units with the least possible delay. Nonetheless, the Homebuyers may still approach the Hon’ble High Court or the Supreme Court for seeking such directions. Watch this space for more as we keep tracking this matter!