Will Supreme Court’s Stay on NCLAT’s Order Further Delay Relief for Supertech Homebuyers?

Feb 24

3 min read

Introduction

The Supreme Court of India has stayed the operation of an order passed by the National Company Law Appellate Tribunal (NCLAT), which had permitted the National Building Construction Corporation (India) Limited (NBCC) to take over and complete the stalled housing projects of real estate developer Supertech Limited. The Court has also directed all relevant stakeholders to submit alternative proposals for the completion of these projects by March 21, 2025.

Background of the Case

NBCC had sought approval from the NCLAT to undertake the completion of 16 incomplete housing projects of Supertech Limited, which is currently undergoing insolvency proceedings initiated by the Union Bank of India. The company has been engaged in the construction of residential projects in Noida, Greater Noida, and other cities. With over 50,000 homebuyers awaiting possession of their homes, many of them facing severe financial distress, the NCLAT had earlier ruled in favor of NBCC stepping in to complete these projects.

Supreme Court’s Observations

A bench comprising Chief Justice of India Sanjiv Khanna, and Justices Sanjay Kumar and K.V. Viswanathan, while issuing the stay order, emphasized that the primary question to be examined is whether the NCLAT's decision to transfer the projects to NBCC adhered to the procedure outlined in the Insolvency and Bankruptcy Code (IBC), 2016.

During the hearing, Senior Advocates Shyam Divan and Dhruv Mehta, representing the corporate guarantors, argued that the NCLAT had not provided a fair opportunity for other interested parties to present their proposals. The secured creditors also raised concerns regarding the lack of clarity in NBCC’s plan concerning the repayment of outstanding dues. Further, the Yamuna Expressway Industrial Development Authority (YEIDA) contended that the NCLAT’s order did not address the issue of unpaid dues to the landowning authorities.

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The NCLAT Order

In its order dated December 12, 2024, the NCLAT, through a bench led by Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), ruled that NBCC must comply with all statutory requirements, including those prescribed under the Real Estate (Regulation and Development) Act, 2016 (RERA). The Tribunal, relying on the Supreme Court’s judgment in Bikram Chatterji & Ors. v. Union of India, held that the public trust doctrine requires the State and its instrumentalities to take proactive steps in ensuring effective management of such real estate projects.

The NCLAT also made key observations regarding the financial implications for homebuyers, stating that:

Homebuyers shall not be required to bear additional costs beyond what is stipulated in their respective Builder-Buyer Agreements.
The completion of the stalled projects shall be financed through the sale of unsold inventory, receivables from homebuyers, and funding from NBCC.
Quality construction must be prioritized, with third-party audits conducted by reputable institutions to ensure compliance with safety and quality standards.
The pending projects must be completed within a timeframe of 12 to 36 months.

Implications of the Supreme Court’s Stay

The Supreme Court’s decision to stay the NCLAT order has significant implications for the insolvency resolution process of Supertech Limited. By directing the stakeholders—including corporate guarantors, YEIDA, and Supertech’s promoter, R.K. Arora—to submit alternative proposals, the Court has opened the door for competitive and potentially more effective solutions to complete the pending housing projects.

With thousands of homebuyers awaiting relief, the final resolution of this matter will be crucial in determining the future course of stalled real estate projects under insolvency proceedings. The case is set to be further examined by the Supreme Court in light of the submissions made by all concerned parties.