Supreme Court Directs Real Estate Reforms, Declares Housing a Fundamental Right
The Supreme Court has directed major reforms in the real estate sector, including changes to the IBC and RERA, to protect homebuyers' rights. Developers and legal experts welcome the move, seeking a multi-stakeholder approach for systemic reforms.
Real EstateIbcReraHousing RightsSupreme CourtReal Estate MumbaiSep 14, 2025
Stating that housing is neither a luxury nor a speculative instrument but a fundamental human need, a two-judge bench of justices J B Pardiwala and R Mahadevan issued 12 binding directions. These included asking authorities to frame specific guidelines for insolvency proceedings in real estate, with timelines for project-wise corporate insolvency resolution processes (CIRPs) and safeguards for allottees. Abhishek A Rastogi, founder of Rastogi Chambers, said the judgment provides much-needed doctrinal clarity by carving out speculative investors from genuine homebuyers under the IBC framework. “The way forward now lies in a fact-sensitive application of this principle so that bona fide buyers, who often sign builder-dictated agreements, are not unfairly excluded,” he added.
The court also directed the government to fill vacancies in the National Company Law Tribunal (NCLT), NCLAT, and state Real Estate Regulatory Authority (Rera) bodies on a war footing, along with constituting dedicated IBC benches with additional strength. Sujay Kalele, founder and managing director of TRU Realty, said the court’s directions to fill vacancies in Rera and NCLT will cut down delays and systemic bottlenecks that have long penalised honest developers. “With over 412,000 new housing units launched across the top seven Indian cities in 2024, buyers’ demand remains robust, but regulatory gaps and stalled projects continue to pose challenges, making these reforms both urgent and necessary,” he added.
The government has also been asked to file a compliance report within three months on measures taken to upgrade NCLT and NCLAT infrastructure nationwide. While developers welcomed the move, they demanded that stakeholders be involved in policy improvements. Tarun Bhatia, vice-chairman of NAR India, said any improvements to the Rera Act or related policies must be developed in active partnership with the industry, bringing together developers, realtors, homebuyer associations, financial institutions, legal experts, and regulators. “Such collaborations will be key to ensuring reforms are both practical and future ready, striking the right balance between consumer protection and ease of doing business,” he said.
To this end, the Centre has been tasked with creating a committee within three months to suggest commercially viable systemic reforms. The committee, chaired by a retired High Court judge, will include representatives from the law and housing ministries, domain experts in real estate, finance and IBC, and two eminent industry members. Experts said the implications of this ruling are twofold: safeguarding the integrity of the IBC as a collective resolution mechanism and reaffirming housing as a constitutional right. Kushagr Ansal, director of Ansal Housing, said that protecting homebuyers’ interests, ensuring timely project completion, and strengthening Rera will restore trust and confidence in housing as a fundamental right.
Salil Kumar, director for marketing and business management at CRC Group, said the measures will improve transparency, accelerate delivery, and strengthen buyer confidence, laying the foundation for sustainable growth. Rastogi cautioned that consistent application by NCLTs and coordination with Rera will be critical to ensure the balance struck by the court translates into real protection for stakeholders. Calling the ruling a significant step for India’s housing market, G Hari Babu, National President of Naredco, said project-wise insolvency proceedings and escrow accounts for early-stage projects will safeguard homebuyers’ investments while curbing speculative practices that have delayed many developments.
Technology-led practices such as digital escrow tracking, online project monitoring, and transparent disclosure systems will play a vital role in implementing the court’s vision. It will also boost global investor confidence, Kalele added. Developers also welcomed the decision to consider establishing a revival fund under the National Asset Reconstruction Company Limited (NARCL) or expanding the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund to provide bridge financing for stressed projects under insolvency. “The directives to enhance last-mile funding, consider revival funds, and undertake systemic reforms across the sector are expected to revive stalled projects, improve accountability, and accelerate the delivery of affordable and mid-income housing,” Babu said.
Frequently Asked Questions
What are the key reforms directed by the Supreme Court in the real estate sector?
The Supreme Court has directed major changes in the Insolvency and Bankruptcy Code (IBC) and the Real Estate Regulatory Authority (RERA) to protect homebuyers' interests. This includes framing specific guidelines for insolvency proceedings in real estate, filling vacancies in NCLT, NCLAT, and RERA, and constituting dedicated IBC benches.
How does the Supreme Court ruling impact homebuyers?
The ruling declares housing as a fundamental right under Article 21 of the Constitution. It provides specific guidelines for insolvency proceedings and safeguards for homebuyers, ensuring their interests are protected in real estate projects.
What is the role of the National Company Law Tribunal (NCLT) in these reforms?
The NCLT is directed to frame specific guidelines for insolvency proceedings in real estate, with timelines for project-wise corporate insolvency resolution processes (CIRPs) and safeguards for allottees. The government is also tasked with filling vacancies in NCLT to reduce delays and systemic bottlenecks.
How will these reforms affect the real estate market?
The reforms aim to improve transparency, accelerate project delivery, and strengthen buyer confidence. They will also help in reviving stalled projects, enhancing accountability, and accelerating the delivery of affordable and mid-income housing.
What is the role of technology in implementing these reforms?
Technology-led practices such as digital escrow tracking, online project monitoring, and transparent disclosure systems will play a vital role in implementing the court’s vision, boosting global investor confidence, and ensuring the reforms are effectively implemented.
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