Supreme Court Urges Centre to Establish Revival Fund for Stressed Real Estate Projects
The Supreme Court has called on the Centre to set up a revival fund to provide bridge financing for struggling real estate projects, aiming to protect the interests of homebuyers and ensure timely project completion.
Real EstateRevival FundHomebuyersReraSupreme CourtReal EstateSep 13, 2025
A bench of Justices J B Pardiwala and R Mahadevan said the State carries a constitutional obligation to create and strictly enforce a framework where no developer is permitted to defraud or exploit homebuyers, and ensuring timely project completion must be a cornerstone of the country's urban policy.
The top court also emphasized the importance of strengthening RERA authorities to ensure they are not reduced to 'toothless tigers.' These authorities must be equipped with adequate infrastructure, empowered tribunals, and effective enforcement mechanisms to swiftly implement their orders.
Observing that the government cannot remain a 'silent spectator,' the bench said 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 revival of sick projects,' the court stated.
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 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.
In some cases, construction has not even commenced despite full or substantial payment, and the anxiety of not having a home despite paying a fortune can take a serious toll on health, productivity, and dignity. The Union government was directed 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), thereby preventing liquidation of viable projects and safeguarding homebuyer interests.
The SWAMIH fund was praised as a commendable initiative, but the court emphasized that 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 comprehensible form.
The bench passed several directions to concerned authorities in the larger interests of bona fide homebuyers and the stability of the real estate sector. It 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 Centre was asked to file a compliance report within three months 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. States were directed 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.
Outlining suggestions for future reform, the bench said the Centre should undertake a consultative exercise to bring about uniformity in RERA rules across states. 'Before parting, we observe 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,' the bench said.
Frequently Asked Questions
What is the main purpose of the revival fund proposed by the Supreme Court?
The main purpose of the revival fund is to provide bridge financing for stressed real estate projects, ensuring timely completion and protecting the interests of homebuyers.
Why is the Supreme Court emphasizing the need for stronger RERA authorities?
The Supreme Court is emphasizing the need for stronger RERA authorities to ensure they are not reduced to 'toothless tigers' and can effectively enforce their orders, protecting homebuyers from fraudulent practices.
What is the SWAMIH Fund and how is it relevant to the revival fund?
The SWAMIH Fund is a Special Window for Affordable and Mid-Income Housing. It is relevant as the Supreme Court suggested expanding this fund to provide bridge financing for stressed projects.
What are the key directions given by the Supreme Court to the Centre and states?
The key directions include establishing a revival fund, ensuring RERA authorities are adequately staffed, filling vacancies in NCLT/NCLAT, and conducting periodic audits to prevent misuse of funds.
How does the Supreme Court view the right to housing?
The Supreme Court views the right to housing as a facet of the fundamental right to life under Article 21, emphasizing the constitutional obligation to protect genuine homebuyers.
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