Supreme Court's Suggestions for Protecting Homebuyers
The Supreme Court has emphasized the need for the Union government to safeguard homebuyers and offered solutions to prevent the liquidation of viable residential projects.
Key Recommendations
- Revival Fund Proposal:
Consider establishing a revival fund under the National Asset Reconstruction Company Ltd (NARCL) and expand the SWAMIH Fund for bridge financing of stressed projects in the Corporate Insolvency Resolution Process. - Article 21 and Housing:
Reaffirmed housing as a facet of the Fundamental Right to Life under Article 21. - Corporate Body Formation:
Create a corporate body similar to NARCL, to identify, take over, and complete stalled projects under the Insolvency and Bankruptcy Code (IBC). - Utilization of Unsold Inventory:
Use unsold inventory for affordable housing schemes like PMAY or government quarters to address housing shortages. - Addressing Speculative Buying:
Reduce speculative arrangements that inflate demand and harm genuine buyers, as highlighted in a dismissal by the National Company Law Appellate Tribunal (NCLAT).
Challenges in the Housing Sector
- Rapid urbanization increasing housing demand, with middle-class citizens facing dual financial burdens due to unfinished projects.
- Emphasized that life savings should culminate in timely home possession as mandated by Article 21.
Guidelines for Real Estate Sector Reform
- Committee Establishment:
Form a committee led by a retired High Court Judge with representatives from various ministries and domain experts to propose reforms for the real estate sector within three months. - Collaboration and Capacity Building:
Encourage partnerships with Indian think tanks and academic institutions to develop indigenous consulting capacities. - Insolvency and Bankruptcy Board of India (IBBI):
Introduce "Basel-like" early warning frameworks and preventive restructuring measures. - Uniformity in RERA Rules:
Undertake a consultative exercise for uniform RERA Rules across states to address ambiguities. - Stalled Projects Revival:
State-level urban authorities and CPSUs should establish wings dedicated to reviving stalled projects under IBC.
The court highlighted the government's constitutional obligation to protect homebuyers and the economy, emphasizing the broader implications on banking, industry, and employment.
