In a landmark decision on Thursday, the Supreme Court provided major relief to thousands of home buyers involved with Unitech Ltd by exempting its housing projects in seven states from registration under the Real Estate (Regulation and Development) Act, 2016 (RERA). This exemption is expected to facilitate the disbursal of stalled loans for flats, significantly aiding buyers financially.
The bench, led by Justices Surya Kant and N Notiswar Singh, delivered the order emphasizing justice and the need to dispense with procedural delays in the release and advancement of loans to Unitech’s home buyers. “We accordingly direct that all the ongoing projects of Unitech shall remain exempted from registration under the RERA till further orders,” the justices declared.
This exemption under RERA, which usually requires projects over 500 sq m or those comprising more than eight apartments to register, aims to restart the financial flows stalled due to previous mismanagement.
The issue came to the forefront following significant delays in project completions, which led banks and financial institutions to declare the loan accounts of many home buyers as Non-Performing Assets (NPAs). These complications arose from financial mismanagement by the former management of Unitech Group and non-compliance with RERA.
In response to these challenges, Unitech, now managed by a government-appointed board of directors, petitioned the Supreme Court to direct the disbursement of the stalled loan amounts to home buyers. The company argued that while buyers had paid about 70% of their dues, banks had ceased further payments due to the stalled project developments.
Further supporting Unitech’s revival, the Supreme Court also directed the Uttar Pradesh government to provide police protection at three project sites in Noida, addressing issues with local disturbances and ensuring the removal of any encroachments. The Noida Commissioner of Police has been tasked with appointing a nodal officer to manage this deployment.
Moreover, the court has instructed the chairperson of the Uttar Pradesh State Pollution Control Board to expedite environmental clearances for these projects. Additionally, the CEO of NOIDA is required to approve these projects, ensuring any unresolved issues are brought before a committee led by former Supreme Court Justice AM Sapre.
The Supreme Court’s involvement with Unitech began intensively in January 2020 when it allowed the Ministry of Corporate Affairs to take over management to protect distressed home buyers. This was part of a broader effort to resolve long-standing issues within Unitech, which had been exacerbated by a forensic audit revealing substantial financial mismanagement, including unutilized funds and questionable offshore investments.
