SC order on Supernova gives hope to buyers of housing projects in limbo

New Delhi: By ordering to bring in a new developer to finish Supertech Supernova project in Noida, which is currently under insolvency, and removing the company's erstwhile promoters, the insolvency resolution professional (IRP) and committee of creditors (CoC), the Supreme Court has rekindled hope among lakhs of homebuyers that other frozen housing projects could be rescued in a similar way.Construction has halted in several projects after insolvency process were initiated.
To secure homebuyers' interest, SC recently sidelined all entities under the Insolvency and Bankruptcy Code and appointed a 3-member committee to rope in another builder to complete Supernova project.The committee should appoint a new developer after inviting proposals and due vetting, keeping in mind the time-bound proposal, track record, experience and financial viability of such a new developer. We make it clear that any developer associated with or related to the corporate debtor or the erstwhile management shall not be allowed to participate in the process, said the order passed by CJI Surya Kant-led bench.The number of homebuyers left in the lurch due to financial mismanagement and siphoning of funds by builders runs into lakhs. The Centre had informed Parliament that Corporate Insolvency Resolution Processes (CIRP) were initiated against 526 real estate companies between 2016 and March 2025. The problem is acute in NCR.In an admission of how insolvency proceedings in the real estate sector have failed to yield desired results, housing and urban affairs minister Manohar Lal Khattar said in Aug, "Jitna system sudharna chahiye tha NCLT ke karan se woh nehin hua hai. Agar koi project bach bhi sakta tha, NCLT mein agar chala gaya toh uska samapt hona nischit hai (NCLT has not been able to improve the system, as was envisaged. If a project, which could otherwise have been revived, goes to the NCLT, it is certain that it will never get completed)."Welcoming the SC order as a realistic approach to the problem, legal experts and homebuyers said the court should adopt the same approach in similar cases, as appointing an IRP and initiating proceedings under IBC take years with no guaranteed solution."Taking a cue from bad experiences of the past in the resolution of failed real estate projects, the SC, by invoking Article 142, has vested the committee with powers of board of directors of the corporate debtor, with the onerous duty to select a bidder to complete the project through fair means, ensuring timely completion. The long-drawn process envisaged under IBC has been short-circuited for good reasons," advocate Govind Jee said.Retired army officer Anil Kumar Singh, a resident of Supertech Ecovillage-3, who has been fighting for homebuyers before the IRP, said, "I realised that the IRP is a drain on limited resources. Both in Jaypee and Supertech projects, homebuyers shunted between the IRP and the builder."SC not only allowed the entry of a new builder to complete the Supernova project but also gave primacy of homebuyers' interest over that of banks and the land-owning agency , Noida Authority, by ruling that they would not be paid any amount till construction is completed.Advocate Chandrachur Bhattacharyya alleged that builders are misusing IBC provisions to shirk responsibility. "IBC has become a tool for erring promoters and directors to first indulge in improper conduct and then escape liability and punishment for this by resorting to IBC. For example, provisions like Section 14 moratorium against the corporate debtor bring all pending litigation against the corporate debtor to a grinding halt, thereby causing a great amount of inconvenience to homebuyers," he said.Abhay Upadhyay, president of FPCE, a pan-India homebuyers' body, said, "The SC order in the Supernova case once again shows how IBC, like RERA, has failed to deliver justice in real estate. The larger question is why projects are cleared with dues unpaid and why laws that work in other industries collapse only in real estate. Unless accountability is fixed, we will keep seeing committee after committee without any real reform."

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