Under RERA, real estate projects exceeding 500 square meters or eight apartments must be registered. However, Unitech’s financial struggles and delays led to the Supreme Court’s intervention, which is seen as a measure to ensure justice for affected homebuyers.
NEW DELHI: The Supreme Court of India has stepped in to help thousands of homebuyers by facilitating the release of stalled loans for flats built by Unitech Ltd., a real estate company.
On January 16, a bench comprising Justices Surya Kant and N Notiswar Singh granted exemption for Unitech’s housing projects from registration under the Real Estate (Regulation and Development) Act, 2016 (RERA). This decision covers various projects across seven states.
The bench stated, “We accordingly direct that all the ongoing projects of Unitech shall remain exempted from registration under the RERA till further orders.”
This exemption aims to streamline the procedural requirements necessary for releasing and advancing loans to homebuyers of different Unitech projects.
Under RERA, real estate projects exceeding 500 square meters or eight apartments must be registered. However, Unitech’s financial struggles and delays led to the Supreme Court’s intervention, which is seen as a measure to ensure justice for affected homebuyers.
The apex court issued notices to banks and financial institutions that had classified homebuyers’ loans as Non-Performing Assets (NPAs) due to project delays. The delays were primarily caused by financial challenges faced under the previous management of Unitech Group and compliance issues under RERA.
Unitech Ltd., now managed by a government-appointed board, pleaded with the court for directions to financial institutions for disbursing the stalled loan amounts. It was pointed out that homebuyers had already paid approximately 70% of their dues, but banks had stopped disbursing the remaining loan amounts due to the stagnation of projects.
To address local issues at project sites, the Supreme Court directed the Uttar Pradesh government to deploy police forces at three Noida projects facing encroachments. The Noida Commissioner of Police was asked to appoint a nodal officer for handling any emergencies.
Additionally, the court instructed the Uttar Pradesh State Pollution Control Board to grant environmental clearances and asked the CEO of NOIDA to approve the three projects. Any unresolved issues were directed to be presented to a committee led by former Supreme Court judge Justice A.M. Sapre by January 21.
The Supreme Court’s involvement with Unitech Ltd. dates back to January 20, 2020, when the court allowed the Union Ministry of Corporate Affairs to take over the company’s management. The newly formed board, led by retired IAS officer Yudvir Singh Malik, was given immunity from legal proceedings for a period and authorized to make critical commercial decisions in the interest of homebuyers.
Key measures included raising funds from homebuyers, selling unsold inventory, and monetizing unencumbered assets to complete pending projects. In earlier proceedings, the court had emphasized the need for a specialized agency to complete Unitech’s projects on a time-bound schedule.
In 2018, the Supreme Court ordered a forensic audit of Unitech Ltd. and its subsidiaries. The audit, conducted by Samir Paranjpe of Grant Thornton India, revealed that between 2006 and 2014, Unitech received approximately Rs 14,270 crore from 29,800 homebuyers and Rs 1,805 crore from financial institutions for 74 projects. However, a significant portion of these funds—Rs 5,063 crore from homebuyers and Rs 763 crore from financial institutions—was diverted to offshore tax-haven countries between 2007 and 2010.
The audit findings prompted the Supreme Court to order an investigation into the actions of Unitech’s former promoters under the Prevention of Money Laundering Act (PMLA). This investigation aims to uncover financial mismanagement and ensure accountability for misused funds.
