Supreme Court Advocates for Homebuyer Protection: Urgent Measures Needed
The Supreme Court has called on the Union government to protect homebuyers and prevent the liquidation of viable residential projects. The court has made several recommendations to strengthen the real estate sector and ensure the timely completion of stalled projects.
Real EstateHomebuyersSupreme CourtNarclSwamihReal EstateSep 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 (CIRP).
The bench of Justices J B Pardiwala and R Mahadevan emphasized that 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 utilized towards affordable housing schemes like PMAY or for government quarters, addressing both the housing shortage and revival of sick projects,” the court stated.
The court made this ruling 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 delved into the issues facing the housing industry, noting that the rapid industrialization and rural-to-urban mobility in India have sharply increased the demand for housing. However, the plight of tax-paying middle-class citizens paints a disheartening picture. Many have invested their lifelong savings in pursuit of a home, only to find themselves shouldering a double burden—servicing EMIs on one hand and paying rent on the other—only to see 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 emphasized.
In its judgment, the bench issued a series of guidelines to strengthen the real estate sector and protect home buyers. It directed the formation of a committee chaired by a retired High Court Judge, with representatives from various ministries, domain experts, and industry representatives, to suggest commercially viable systemic reforms for the real estate sector.
The committee is to be constituted within three months and will submit its report within six months of its constitution. The SC also expressed concern over the lack of a homegrown consulting industry in the country and called for strengthened collaboration with Indian think tanks and academic institutions to build indigenous capacity for sectoral restructuring.
The court suggested that the Insolvency and Bankruptcy Board of India (IBBI) consider introducing “Basel-like” early warning frameworks, drawing from comparative practices such as pre-bankruptcy mediation and preventive restructuring. It also recommended that the Union Government undertake a consultative exercise to bring uniformity in RERA Rules across states, to remove ambiguity and fill lacunae in the legislation.
While some of the court’s suggestions are policy matters falling within the exclusive domain of the government, the bench emphasized that 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,” the court concluded.
Frequently Asked Questions
What did the Supreme Court suggest to protect homebuyers?
The Supreme Court suggested establishing a revival fund under NARCL and expanding the SWAMIH Fund to provide bridge financing for stressed projects. It also proposed creating a corporate body to identify and complete stalled projects under the IBC.
Why is housing considered a facet of the Fundamental Right to Life?
The Supreme Court ruled that housing is a fundamental right under Article 21, emphasizing that it is imperative for the life savings of a common person to culminate in timely possession of their promised home.
What is the role of speculative buyers in the housing market?
Speculative buyers artificially inflate demand, fuel asset bubbles, and prejudice genuine buyers, according to the Supreme Court.
What committee has the Supreme Court directed to be formed?
The Supreme Court has directed the formation of a committee chaired by a retired High Court Judge, with representatives from various ministries, domain experts, and industry representatives, to suggest reforms for the real estate sector.
What are the court's recommendations for the IBBI?
The court suggested that the IBBI consider introducing 'Basel-like' early warning frameworks, drawing from comparative practices such as pre-bankruptcy mediation and preventive restructuring.
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