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The Supreme Court has provided relief to thousands of homebuyers by exempting Unitech Ltd's housing projects across seven states from RERA registration. This decision is expected to facilitate the disbursal of stalled loans and expedite project completion. The court also directed banks and financial institutions to reconsider their classification of buyer loans as NPAs and resume payments, as Unitech projects are now under a government-appointed board. Measures were taken to ensure security and environmental clearances at project sites in Noida. The case highlights systemic issues in the real estate sector, including past financial mismanagement at Unitech, which affected over 12,000 homebuyers.
In a significant move to assist thousands of homebuyers, the Supreme Court recently exempted Unitech Ltd's housing projects in seven states from registration under the Real Estate (Regulation and Development) Act (RERA). This exemption, granted by a bench of Justices Surya Kant and N Notiswar Singh, aims to expedite the disbursal of loans for stalled housing units and facilitate their completion. Advertisement
The court stated that all ongoing Unitech projects would remain exempt from RERA registration until further orders. Under the 2016 RERA Act, any project larger than 500 sq m or with more than eight units must register, but the exemption was deemed necessary to resolve procedural hurdles and ensure justice for homebuyers.
Notices were issued to banks and financial institutions that had labelled buyer loans as Non-Performing Assets (NPAs) due to project delays. These delays were attributed to financial mismanagement by Unitech's previous management and issues with RERA compliance. Unitech, now run by a government-appointed board, argued that many buyers had already paid around 70% of their dues but faced stalled loan disbursals from financial institutions. With the projects now revived, the board sought directions for banks to resume loan payments.
Additionally, the Supreme Court addressed security concerns at three Unitech projects in Noida. It instructed the Uttar Pradesh government to deploy police forces at these sites to address local disturbances and remove encroachments. A nodal officer was to be appointed to manage security at the projects. Environmental clearances and other approvals for these projects were also ordered to be expedited.
The court highlighted past efforts to reform Unitech, including a 2020 decision to transfer the firm's management to a Centre-appointed board. This board, led by retired IAS officer Yudvir Singh Malik, was granted authority to make commercial decisions for the benefit of homebuyers, such as raising funds, selling unsold inventory, and monetising unencumbered assets.
A forensic audit conducted earlier revealed financial irregularities in Unitech's operations. Between 2006 and 2014, the company collected over INR 14,270 crore from 29,800 homebuyers and INR 1,805 crore from financial institutions for 74 projects. However, about INR 5,063 crore of buyers' funds and INR 763 crore from institutions were diverted, with substantial investments made in offshore tax havens. These findings led the court to order an investigation under the Prevention of Money Laundering Act (PMLA).
The case underscores the challenges faced by India's real estate sector, including financial mismanagement and regulatory inefficiencies. It also reflects the judiciary's role in safeguarding the interests of homebuyers.
The Supreme Court's intervention offers hope to thousands of Unitech homebuyers, ensuring progress on stalled projects while addressing systemic financial mismanagement. By exempting the projects from RERA registration, the court has removed key procedural barriers, enabling banks to resume loan disbursals and facilitating project completion. The decision also strengthens accountability, with measures to improve security and environmental compliance at project sites. This case highlights the pressing need for reform in India's real estate sector, ensuring developers remain transparent and accountable to buyers while adhering to legal and financial regulations.
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