Supreme Court Urges Centre to Create Revival Fund for Stalled Housing Projects
The Supreme Court has directed the Centre to consider establishing a revival fund to provide bridge financing for stressed real estate projects, safeguarding the interests of middle-class homebuyers.
Real EstateHousing MarketSupreme CourtRevival FundReraReal Estate NewsSep 13, 2025
A bench of Justices J B Pardiwala and R Mahadevan emphasized that the State has a constitutional obligation to create and strictly enforce a framework where no developer is permitted to defraud or exploit homebuyers. Timely project completion must be a cornerstone of the country's urban policy.
The top court also stressed the importance of ensuring that RERA authorities are not reduced to 'toothless tigers.' These authorities must be equipped with adequate infrastructure, empowered tribunals, and effective enforcement mechanisms to ensure that their orders are implemented swiftly and effectively.
Observing that the government cannot remain a 'silent spectator,' the bench said that the government is constitutionally obliged to protect the interests of homebuyers and the economy at large. The bench suggested that the Centre may consider establishing a body corporate, similar to the National Asset Reconstruction Company Ltd (NARCL) or through public-private partnerships, to identify, take over, and complete stalled projects under the Insolvency and Bankruptcy Code, 2016, framework.
Unsold inventory from such projects could be utilized towards affordable housing schemes like PMAY (Pradhan Mantri Awas Yojana) or for government quarters, thereby addressing both the housing shortage and the revival of sick projects. The bench noted that with India rapidly industrializing and the rural-to-urban mobility proceeding at a lightning pace, the demand for housing has risen sharply.
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 servicing EMIs on one hand and paying rent on the other, with their 'dream home' reduced to an unfinished building. In some cases, construction has not even commenced despite full or substantial payment, leading to serious health, productivity, and dignity issues.
The Union government is advised to consider establishing a revival fund under NARCL or expanding the SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund to provide bridge financing for stressed projects undergoing CIRP (Corporate Insolvency Resolution Process). This would prevent the liquidation of viable projects and safeguard homebuyer interests. The SWAMIH fund is a commendable initiative, but as a large fund involving public money, every rupee must be utilized strictly for its intended purpose of last-mile financing.
To prevent misuse, the court directed that a comprehensive periodic performance audit by the CAG be carried out, with reports placed in the public domain in a form comprehensible even to laypersons. The bench also passed a slew of directions to concerned authorities in the larger interests of bona fide homebuyers and the stability of the real estate sector.
The bench directed that vacancies in NCLT/NCLAT be filled on a war footing, and dedicated IBC benches with additional strength should be constituted. Services of retired judges may be utilized on an ad hoc basis until regular appointments are made. The bench asked the Centre to file within three months a compliance report on measures taken to upgrade NCLT/NCLAT infrastructure nationwide.
The recent closure of Chandigarh NCLT and portions of Delhi NCLT due to water seepage in courtrooms and chambers of members underscores the urgency of robust infrastructural support. The bench directed states to ensure RERA authorities are adequately staffed with infrastructure, experts, and resources.
Within three months, a committee chaired by a retired high court judge should be constituted, with representatives from the Ministry of Law, Housing, and domain experts in real estate and finance, to suggest commercially viable systemic reforms for cleansing and infusing credibility into the real estate sector. Every residential real estate transaction for new housing projects shall be registered with local revenue authorities upon payment of at least 20 per cent of the property cost by the buyer/allottee.
In projects at nascent stages, such as where land is yet to be acquired or construction has not commenced, proceeds from allottees shall be placed in an escrow account and disbursed in phases aligned with project progress, as per a RERA-sanctioned SOP. Every RERA shall devise such SOPs within six months from today. The bench suggested that the Centre should undertake a consultative exercise to bring about uniformity in RERA rules across states.
Before parting, the bench observed that the right to housing is not merely a contractual entitlement but a facet of the fundamental right to life under Article 21. Genuine homebuyers represent the backbone of India's urban future, and their protection lies at the intersection of constitutional obligation and economic policy.
Frequently Asked Questions
What is the Supreme Court's directive to the Centre regarding homebuyers?
The Supreme Court has directed the Centre to consider establishing a revival fund to provide bridge financing for stressed real estate projects, ensuring the protection of homebuyers' interests.
Why is the establishment of a revival fund important?
The establishment of a revival fund is important to prevent the liquidation of viable projects and safeguard the interests of homebuyers who have invested their lifelong savings in unfinished housing projects.
What role do RERA authorities play in this context?
RERA authorities must be equipped with adequate infrastructure, empowered tribunals, and effective enforcement mechanisms to ensure that their orders are implemented swiftly and effectively, preventing developers from defrauding homebuyers.
How will the unsold inventory from stalled projects be utilized?
Unsold inventory from stalled projects could be utilized towards affordable housing schemes like PMAY (Pradhan Mantri Awas Yojana) or for government quarters, addressing both the housing shortage and the revival of sick projects.
What is the significance of the SWAMIH fund in this context?
The SWAMIH fund is a commendable initiative to provide bridge financing for stressed projects. However, every rupee must be utilized strictly for its intended purpose of last-mile financing, and a comprehensive periodic performance audit by the CAG is required to prevent misuse.
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