NOIDA: Calling them a “scam”, the Allahabad high court has ordered a CBI and ED investigation into three of four Sports City projects and brought within the ambit of the inquiry their developers and consortium members for misappropriating homebuyers’ money and Noida Authority officials for forming a “dirty nexus”.
A division bench of justices Mahesh Chandra Tripathi and Prashant Kumar issued 10 separate judgments covering the three projects on Monday. The court examined various alleged violations — from land use irregularities to financial misconduct as well as the promised sports facilities remaining incomplete.
“This court has no other recourse but to refer the investigation to CBI. CBI would also investigate the role of all the persons involved in this scam. We hope and trust that the investigation would be carried out and completed expeditiously,” read the order pertaining to some of the cases.
The bench observed that developers prioritised commercial development for profit while neglecting the mandated sports infrastructure on 70% of the project site, despite receiving substantial benefits from Noida Authority.
The orders specifically addressed the Sports City project in sectors 78, 79, and 101 (where Xanadu Estate was the lead developer) and two others in Sector 150 (developed by Logix Infra Developers and Lotus Greens Constructions). The Xanadu and Logix projects are currently under insolvency proceedings, which the court criticised as a deliberate strategy to avoid obligations.
The 10 judgments came after hearings on pleas filed by some of the developers and consortium members, seeking handover of encumbrance-free land, waiving of lease rent and penalties, cancellation of demand notices, and proper execution of the Sports City development plan.
The court dismissed their claims, pointing out that since they failed to develop sports infrastructure in keeping with the original plan, insolvency could not be used as a shield to escape liabilities.
The court strongly criticised the “dirty nexus” between builders and Noida Authority officials, noting that “benefits after benefit were doled out to the builders, completely contrary to the scheme, MOA and the implementation of the Sports City scheme”.
A Comptroller and Auditor General (CAG) audit had in 2021 revealed major financial irregularities in Sports City allotments, resulting in a Rs 9,000-crore loss to Noida Authority and the state govt. The audit highlighted underpriced land, unauthorised ownership transfers, unpaid lease premiums, and improper issuance of occupancy certificates by Noida Authority despite sports facilities nowhere near completion.
The court observed that even after the CAG report was tabled, neither Noida Authority nor UP govt registered any FIR against officials concerned or recovered dues from builders. The only step Noida took was to send notices to the developers demanding payment of dues, which remained unaddressed. The judges expressed particular concern that the inaction continued despite multiple leadership changes.
“In the last so many years in Noida Authority, a number of officers would have come and gone, and surprisingly no one blew a whistle to the scam, or took any action against them,” the bench observed in a case filed by Lotus Green. The “nexus” was mentioned in another judgment passed by the court in a case related to Esthetic Buildtech, one of the consortium members of the project helmed by Logix.
“Since very senior officers of Noida Authority, state, and other influential persons seem to be involved and because of them no inquiry has yet been conducted for this reason, the court does not inspire any confidence in referring the matter for investigation to any of the state agencies. Hence, this is a fit case where the inquiry should be instituted by the Central Bureau of Investigation,” one of the orders read.
In one notable case involving Three C Green Developers, the court identified promoters Nirmal Singh, Surpreet Singh Suri, and Vidur Bhardwaj as operating through a web of companies to circumvent regulations. The court found that they transferred shares to third parties without proper authorisation and used insolvency proceedings as a “strategic manoeuvre” to evade responsibilities.
The court asked Noida Authority to issue notices to all stakeholders, demanding payment of outstanding dues, including interest and penalties. Failure to comply will result in automatic cancellation of allotments, it added. To protect homebuyers’ interests, the bench ordered that their investments be safeguarded through forfeited deposits and additional support from Noida Authority if necessary.
“In case the allotments are cancelled, Noida Authority can call for fresh bids as per the current market rate, which will certainly be far much higher than the allotted rate…. However, since this court is also conscious that the interest of homebuyers has to be protected, if the petitioners are not able to complete the project strictly as per the brochure condition of the Sports City scheme and the lease deed conditions, the money deposited by them be forfeited and used for paying back the homebuyers. If there is any shortfall, Noida Authority will pay the same,” read an order in the Lotus Greens case.
