Supreme Court Advocates for Homebuyer Protection: Guidelines to Revive Stalled Real Estate Projects
The Supreme Court has urged the Union government to protect homebuyers and proposed several measures to prevent the liquidation of viable residential projects. The court emphasized the need for a robust real estate sector and a fair system for homebuyers.
Real EstateHomebuyersSupreme CourtNarclSwamihReal Estate NewsSep 12, 2025
It asked the Centre to consider establishing a revival fund under NARCL (National Asset Reconstruction Company Ltd) and expanding the SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund to provide bridge financing for stressed projects undergoing Corporate Insolvency Resolution Process.
The bench of Justices J B Pardiwala and R Mahadevan said housing is a facet of the Fundamental Right to Life under Article 21. The court also suggested the creation of a corporate body on the lines of NARCL, promoted by real estate and construction-focused PSUs or formed via public-private partnership, to identify, take over, and complete stalled projects under the Insolvency and Bankruptcy Code (IBC).
“Unsold inventory from such projects could be utilised towards affordable housing schemes like PMAY or for government quarters, addressing both the housing shortage and revival of sick projects,” the court said.
The court made these recommendations while dismissing a challenge to two orders by the National Company Law Appellate Tribunal (NCLAT) that rejected the claims of speculative buyers in IBC proceedings. Writing for the bench, Justice Mahadevan said: “Such speculative arrangements artificially inflate demand, fuel asset bubbles, and prejudice genuine buyers.”
The bench also delved into the issues facing the housing industry. “With India rapidly industrialising and the rural-to-urban mobility proceeding at a lightning pace, the demand for housing has risen sharply. Yet, the plight of tax-paying middle-class citizens paints a disheartening picture. Having invested their lifelong savings in pursuit of a home, many are compelled to shoulder a double burden — servicing EMIs on one hand, and paying rent on the other — only to find their ‘dream home’ reduced to an unfinished building.”
“It is imperative that the life savings of a common person culminate in timely possession of their promised home. Article 21 would mandate nothing less,” the court said.
In its judgement, the bench also issued a series of guidelines to strengthen the real estate sector and protect home buyers. The bench directed that a committee chaired by a retired High Court Judge, with representatives from the Ministry of Law, Ministry of Housing, domain experts in Real Estate, Finance, and IBC from the National Institute of Urban Affairs (NIUA), HUDCO’s Human Settlement Management Institute (HSMI), IIMs, National Law Universities, and NITI Aayog, as well as two eminent industry representatives be constituted within three months to “suggest commercially viable systemic reforms for cleansing and infusing credibility into the real estate sector. NITI Aayog/ NIUA shall provide research and secretarial support. The Committee shall submit its report within six months of its constitution.”
The SC also rued the lack of a homegrown consulting industry in the country. “It is a matter of grave concern that despite funding hundreds of crores into various government-run think tanks and management institutions such as IIMs and IITs, India still requires a robust homegrown consulting industry. Collaboration with Indian think tanks and academic institutions should be strengthened to build indigenous capacity for sectoral restructuring. This has the potential to improve India’s ease of doing business and accelerate economic growth.”
The court said that the Insolvency and Bankruptcy Board of India (IBBI) “may consider introducing ‘Basel-like’ early warning frameworks, drawing from comparative practices, such as pre-bankruptcy mediation and preventive restructuring, requiring directors to initiate restructuring before defaults spiral out of control.”
The court said: “The Union Government should undertake a consultative exercise to bring about uniformity in RERA Rules across states, to remove ambiguity and fill lacunae in what is otherwise a watershed legislation. Housing Boards, State-level Urban Development Authorities… and CPSUs should establish dedicated wings to revive and complete stalled projects under IBC mechanisms.”
The bench said that while some of its suggestions are policy matters falling within the exclusive domain of the government, it cannot remain a silent spectator. “The government is constitutionally obliged to protect the interests of homebuyers and the economy at large. It is not merely about houses or apartments; the banking sector, allied industries, and employment for a large populace are also at stake,” it said.
Frequently Asked Questions
What is the main concern of the Supreme Court regarding homebuyers?
The Supreme Court is concerned about the protection of homebuyers' interests, especially those who have invested their life savings in residential projects that have become stalled or unfinished.
What did the Supreme Court suggest to prevent the liquidation of viable residential projects?
The Supreme Court suggested establishing a revival fund under NARCL and expanding the SWAMIH Fund to provide bridge financing for stressed projects undergoing Corporate Insolvency Resolution Process.
How does the Supreme Court view housing in relation to the Fundamental Right to Life?
The Supreme Court views housing as a facet of the Fundamental Right to Life under Article 21, emphasizing the importance of timely possession of homes for homebuyers.
What committee has the Supreme Court directed to be constituted?
The Supreme Court has directed the constitution of a committee chaired by a retired High Court Judge, with representatives from various ministries and institutions, to suggest reforms for the real estate sector.
What is the Supreme Court's stance on speculative buyers in IBC proceedings?
The Supreme Court has dismissed the claims of speculative buyers in IBC proceedings, stating that such arrangements artificially inflate demand, fuel asset bubbles, and prejudice genuine buyers.
Related News Articles
Pune's PCNTDA Residents to Get Freehold Status, Promises Maharashtra Minister Uday Samant
Maharashtra Minister Uday Samant has assured PCNTDA residents that a decision will be made on freehold status without causing financial loss to the state government.
Veriff Boosts Biometric Security to Combat Account Takeover Fraud
Biometric authentication, account takeover fraud, identity verification, facial recognition, fraud prevention
Inside Mumbai's Luxurious Abodes: A Glimpse into the Homes of India's Elite
Mumbai, often dubbed the 'Billionaire Capital of Asia,' boasts a real estate landscape that mirrors its status as India's commercial and financial hub. From opulent mansions to sleek high-rises, the city is home to some of the most stunning and expensive
Kapil Sharma: From Rs 500 Salary to Rs 300 Crore Net Worth
Kapil Sharma, the king of Indian comedy, has come a long way from his humble beginnings. Today, he owns luxurious properties and cars, and his net worth is estimated at Rs 300 crore. Explore his inspiring journey from rags to riches.
Mumbai and Delhi Emerge as Leading Luxury Real Estate Markets in Asia-Pacific
India's real estate sector is witnessing a significant boom, driven by robust economic growth, infrastructure improvements, and changing lifestyle trends. Mumbai and Delhi, in particular, are ranking among the fastest-growing luxury real estate markets in
Important Steps to Ensure Your Apartment is Free from Legal Issues Before Purchase
MahaRERA has recently directed a real estate developer near Mumbai to disclose details about any pending litigation to the public. This highlights the importance of checking for legal issues before buying an apartment.