In a landmark decision that could set a precedent for thousands of stalled housing projects across India, the Supreme Court has directed the appointment of a new developer to complete the insolvency-hit Supertech Supernova project in Noida. The order, which effectively sidelines the company's erstwhile promoters, has rekindled hope among lakhs of homebuyers left in the lurch by financially troubled real estate ventures.
A New Path for Stalled Projects
The apex court, in a significant departure from the standard insolvency process, has empowered a three-member committee to bring in another builder to finish the Supernova project. This committee, formed by sidelining all entities under the Insolvency and Bankruptcy Code (IBC), including the insolvency resolution professional (IRP) and the committee of creditors (CoC), is tasked with a critical mission. The bench led by Chief Justice of India Surya Kant mandated that the committee must appoint a new developer after inviting and vetting proposals, with a focus on time-bound completion, proven track record, experience, and financial viability. Crucially, the court barred any developer associated with the corporate debtor or its former management from participating.
This judicial intervention comes against a grim national backdrop. The Centre informed Parliament that Corporate Insolvency Resolution Processes (CIRP) were initiated against 526 real estate companies between 2016 and March 2025, with the National Capital Region (NCR) being particularly affected. The problem of halted construction after the start of insolvency proceedings is widespread, leaving countless homebuyers in financial and emotional distress.
Admitting Systemic Failure
The Supreme Court's proactive stance aligns with growing criticism of the IBC's effectiveness in the real estate sector. Housing and Urban Affairs Minister Manohar Lal Khattar, in August, made a stark admission, stating that the National Company Law Tribunal (NCLT) system had not improved matters as envisaged. He remarked that if a project which could have been revived goes to the NCLT, its completion becomes nearly certain.
Legal experts and homebuyers have welcomed the court's order as a realistic and pragmatic solution. Advocate Govind Jee explained that the SC, by invoking Article 142 of the Constitution, has vested the committee with the powers of the corporate debtor's board of directors. "The long-drawn process envisaged under IBC has been short-circuited for good reasons," he said, highlighting the move to ensure timely project completion through fair means.
Homebuyers' Interest Given Primacy
Perhaps the most impactful part of the ruling is the primacy given to homebuyers' interests over financial institutions and land-owning authorities. The Supreme Court ruled that banks and the Noida Authority would not be paid any amount until the construction of the Supernova project is fully completed. This places the completion of homes for buyers at the forefront of the resolution process.
Retired army officer Anil Kumar Singh, a resident of Supertech Ecovillage-3 who has been advocating for homebuyers, shared his frustrating experience with the IRP process, calling it a "drain on limited resources." He noted that in both the Jaypee and Supertech cases, homebuyers were left shuttling pointlessly between the IRP and the builder.
Advocate Chandrachur Bhattacharyya raised concerns about the misuse of IBC provisions by builders to evade responsibility. He alleged that IBC has become a tool for errant promoters to first indulge in misconduct and then escape liability, citing how the moratorium under Section 14 halts all litigation against the corporate debtor, greatly inconveniencing homebuyers.
Abhay Upadhyay, President of the pan-India homebuyers' body FPCE, pointed to a larger systemic issue. "The SC order in the Supernova case once again shows how IBC, like RERA, has failed to deliver justice in real estate," he said. He questioned why projects are cleared with unpaid dues and why laws that function in other industries collapse in real estate, emphasizing that without fixing accountability, the cycle of committees without reform will continue.
The Supreme Court's decisive order in the Supertech Supernova case is now being viewed as a potential blueprint for rescuing other frozen housing projects, offering a glimmer of hope to lakhs of waiting homebuyers across the country.
