Escrow and mortgage arrangements did not defeat homebuyers' right to NOC and sale deeds after full payment

Homebuyers who had paid the full sale consideration were held entitled to NOC and execution of sale deeds despite the project mortgage and escrow arrangements in favour of HUDCO. The record showed that project receipts were to pass through the escrow mechanism and that HUDCO had a charge over the assets, but HUDCO had earlier issued NOCs for similarly situated units after receipt of proportionate or full consideration. The authorities found that the homebuyers were not responsible for the escrow operation and were entitled to the same treatment as earlier purchasers, so balancing equities justified the directions permitting conveyance.

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Issues: Whether the homebuyers were entitled to NOC and execution of sale deeds in respect of their units despite the mortgage and escrow arrangements in favour of HUDCO.

Analysis: The loan and escrow arrangements showed that the project receipts were to be routed through the escrow mechanism and that HUDCO had a charge over the project assets. At the same time, the record showed that HUDCO had earlier issued NOCs for similarly situated units after receipt of proportionate or full consideration, and the homebuyers had already paid the entire sale consideration for their units. The Court held that the homebuyers were not at fault for the manner in which the escrow account was operated and that they stood on the same footing as the earlier purchasers who had received NOCs. On that basis, the Adjudicating Authority's directions were found to be a proper exercise of balancing equities.

Conclusion: The direction to grant NOC and permit execution of sale deeds was upheld, and the challenge by HUDCO failed.

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