In a sweeping decision regarding the insolvency of Supertech, the Supreme Court has upheld the National Company Law Appellate Tribunal’s (NCLAT) decision to have the state owned National Building Construction Corporation (NBCC) (India) Ltd finish construction on Supertech’s unfinished projects. This ruling represents a significant change for thousands of purchasers who once made a down payment for their home or apartment but remain in limbo due to Supertech’s continuing inability to deliver.
How the crisis began
Supertech, a former major player in N.C.R. real estate, defaults on its loans causing an Insolvency Proceedings (I.P.) to be brought against it in 2021, stopping all work on all of Supertech’s projects and leaving thousands of purchasers having to continue paying LMI’s as well as their R.E.C. to continue making their house payment and living rent free. As this occurred, the Developer’s financial situation was brought into greater focus through the developer’s financial conduct and continued delays in completing projects.
Projects covered under the NBCC plan
The approved resolution plan covers 16 major projects:
- Greater Noida: Eco-Village (I, II and III), Romano, Czar Suites, Sports Village
- Noida: Eco City, Northeye, Capetown
- Yamuna Expressway: Upcountry
- Meerut: Meerut Sports City, Green Village
- Gurugram: Hilltown, Araville
- Dehradun: Doon
- Bengaluru: Micasa
All of the above mentioned projects have home buyers waiting for the possession of their housing as they are in the hundreds of thousands.
Why NBCC’s role matters
NBCC is a Navratna PSU that has capabilities to complete under-delivered real estate assets through managing building construction, funding construction and managing construction completion timelines. As part of the NCLAT restructuring plan given by the NCLAT court, NBCC will be able to use the home-buyers’ advance receipts toward unsold housing stock and regulated funding sources to revive these projects while protecting home-buyers’ interests.
What happens next
Now that the Supreme Court of India has approved the restructuring plan, all legal uncertainties have ended. NBCC will now be able to start phased construction of the projects, set new completion timeframes and have confidence that the homes will be delivered. The transparency and accountability shall be maintained to home-buyers.
Why this ruling is significant
This decision has established the precedent of home-buyers being protected during insolvency cases. Additionally, this would support that projects that are currently stalled could be revived without liquidating any asset(s) and provide practical guidance on how to resolve distressed real estate assets in India.
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