NOIDA: Now in the limelight as the agency in charge of developing the area around the upcoming Noida International Airport, YEIDA‘s functioning has drawn fire from the Comptroller and Auditor General, which found major lapses in both policy and procedures adopted by it in the 16-year period from 2005-2021 that it assessed.
All these lapses have added up and manifested today as the country’s biggest stalled projects problem – if YEIDA, Noida and Greater Noida are taken together – that different kinds of govt and court interventions have found hard to crack. Among irregularities the audit found was YEIDA’s allotment of residential township and group housing plots which, according to the govt auditor, led to financial losses of Rs 4,226 crore.
CAG found that eligibility criteria for these schemes were grossly inadequate, allowing applicants with minimal financial capacity to bid for high-value plots. This led to a mismatch between project scale and the bidder’s capability. In some cases, developers secured plots valued at up to 18 times their declared net worth. The irregularities are similar to those CAG found in its earlier assessment of Noida Authority‘s performance.
YEIDA allotted 14 residential township plots, measuring 2.5 lakh square metres to 8 lakh sqm under three schemes for the construction of ‘plotted and flatted’ residential dwellings in 2010-2011. After the sub-division of one plot into two, sub-leases by four allottees to 11 sub-lessees, and by one sub-lessee to three sub-lessees, there were a total 29 allottees.
Out Of these, plots of 16 allottees were either cancelled or surrendered, and 13 ran its delays, resulting in overdues of Rs 4,185 crore as of Sept 30, 2022, according to the CAG report.
YEIDA allotted five group housing plots between Feb 2011 and Sept 2014, measuring 82,346 sqm to 1.37 lakh sqm, under three schemes. Allotment of three of these plots was cancelled by YEIDA, and one plot was partially surrendered by the allottee. Projects on the remaining plots (including the partially surrendered plot) were delayed.
Further, CAG pointed out, eligibility conditions laid down by YEIDA were inconsistent with the size and value of the plots. The same technical and financial criteria applied to smaller plots were used for larger, high-value plots, allowing applicants with insufficient capabilities to secure big projects.
This became evident in cases like that of Greenbay Infrastructure, which secured a plot measuring 4 lakh sqm in Sector 22D worth Rs 192 crore despite the company being able to show little in terms of completed construction. The project suffered long delays, leaving Rs 703 crore in dues as of Sept 30, 2022, CAG found.
YEIDA, the auditor said, also failed to account for applicants’ existing commitments and prior allotments. Applicants were allowed to leverage the same net worth and solvency credentials to obtain multiple allotments. For instance, Orris Developers secured a plot measuring 8 lakh sqm in Sector 22D valued at Rs 388 crore despite the consortium’s lead member not meeting technical eligibility criteria. Again, the project was delayed, accumulating dues of Rs 989 crore.
The authority also allowed consortium members with minor stakes to fulfil 100% of the eligibility criteria in certain cases, according to the audit. For example, Sunworld City Ltd was allotted a plot measuring 4 lakh sqm in Sector 22D worth Rs 195 crore, even though none of the lead members met the financial or technical requirements. The project was delayed by over five years, with dues exceeding Rs 703 crore.
In four cases, key consortium members, including Odeon Builders, Three C Universal Developers, Dashmesh Promoters and Developers and Vistar Constructions, exited the projects before completion. Two of these cases led to YEIDA cancelling the plots in 2022, as the lead members left before obtaining temporary occupancy or completion certificates, the audit said.
CAG also said YEIDA permitted sub-lease deeds without evaluating sub-lessees’ capabilities to execute projects or pay YEIDA’s dues. This resulted in financial losses and undue enrichment of developers, CAG said. For instance, Orris Developers sub-leased land to ATS Realty in Sector 22D at a significantly higher price than the original allotment rate, reaping wat CAG called undue profit of at least Rs 103 crore. Additionally, YEIDA did not levy transfer charges in such cases, causing a direct revenue loss of Rs 28 crore.
The central auditor criticised YEIDA’s leniency towards defaulting allottees. It said penalties for delayed lease deed execution were insufficient to cover lease rent losses and YEIDA also failed to cancel allotments despite inordinate delays in submitting layout plans, completing development work and adhering to floor area ratio.
One such case involved Supertech Township Project Ltd, which secured a plot of 4 lakh sqm in Sector 22D worth Rs 193 crore by submitting “tampered documents”. The project faced prolonged delays, and dues remained unpaid, showing, according to CAG, the authority’s failure to act against errant developers promptly.
It also said YEIDA granted unwarranted benefits to allottees, including allowing retention of excess land, not forfeiting prescribed amounts on cancelled allotments, and granting “zero periods” without justification.
Flagging lack of safeguards in YEIDA’s scheme brochures, the report said there were no provisions for recovering post-allotment cost increases, opening escrow accounts, or obtaining performance bank guarantees. These omissions left YEIDA financially vulnerable. Additionally, conditional permissions to mortgage land were granted to some allottees despite no provision for such permissions in the brochures, further undermining the authority’s financial interests, CAG noted.
Besides, all residential township and group housing projects experienced delays, failing to meet their objectives of timely housing delivery and revenue collection, the report said.
CAG recommended several reforms, including revising eligibility criteria to align with the size and value of plots, beefing up penalties for project delays, and incorporating financial safeguards like performance bank guarantees.
It also called for strengthening provisions related to consortiums to ensure accountability and continued commitment from all members. The auditor suggested vigilance inquiries to investigate deliberate framing of deficient conditions favouring ineligible firms and holding those responsible accountable.
YEIDA provided a detailed response to the observations made by CAG. On the issue of eligibility criteria, it said technical and financial requirements outlined in the scheme brochures were duly approved by its board.
It emphasised that allotments were made to successful bidders based on recommendations from the plot allotment committee and subsequent approval by the CEO. YEIDA justified the criteria by citing factors such as financial liquidity, market demand and the authority’s relatively nascent status during the initial years of the schemes.
Regarding the uniform eligibility criteria for plots of varying sizes and values, YEIDA acknowledged the deficiency. It argued that the terms were framed based on prevailing conditions of the time and assured CAG that future schemes would incorporate eligibility requirements commensurate with plot size, value, and an applicant’s overall capacity.
YEIDA acknowledged that its scheme brochures lacked provisions to restrict the premature exit of consortium members, which compromised project execution and accountability, and committed to addressing this shortcoming.
It also conceded that earlier scheme brochures lacked essential financial safeguards, such as provisions for escrow accounts and performance bank guarantees. YEIDA, however, defended the nominal penalties by referencing the policy framework at the time. However, it acknowledged the need for stronger deterrents and agreed to revisit the penalty provisions in future schemes.
YEIDA has changed the allotment process. Developers are now required to deposit 40% of the total premium of the plot at the time of submission of the application or bid within 60 days of issuance of the allotment letter.
The balance is required to be paid in two years in four half-yearly instalments with interest at the rate of 10% per annum. No amalgamation or subdivision is now allowed on allotted plots, making the developer solely responsible for construction. While a consortium is allowed, it cannot have exits till the project is complete.
