Monitoring real estate projects not our job: Apex court on plea under Article 32

Day-to-day monitoring of construction projects is not the job of the courts and homebuyers should seek remedy against unscrupulous builders from the consumer court, the Real Estate Regulatory Authority or under the Insolvency and Bankruptcy Code, the Supreme Court has said.

The order passed on Thursday by the top court, which in previous orders had come to the rescue of homebuyers left in the lurch by major real estate firms, is set to deal a blow to several homebuyers contemplating to file a direct petition in the top court under Article 32 for completion of stalled projects or securing refunds.

Article 32 guarantees citizens right to move the Supreme Court for enforcement of fundamental rights.

The bench of Justices DY Chandrachud, Indira Banerjee and Sanjiv Khanna said, “Managing a construction project is not within the jurisdiction of the court... This will inevitably draw the court into the day-to-day supervision of the project, including financing, permissions and execution, something which lies beyond the ken of judicial review and the competence of the court.”

Purchasers of a commercial real estate project in Noida Sector 62 had approached the court against builders Premia Structures Limited who promised to construct office spaces for petitioners and allegedly collected ₹49 crore for the purpose. The commercial spaces were booked in 2014 with the possession to be handed over by 2018-19, the petitioners said. “Neither the construction took place nor the developer returned the invested sums,” said advocate Shikhil Suri who represented the petitioners. A criminal case was lodged against the developers but the key director has remained absconding till date, the petition stated.

Disposing their plea under Article 32, the bench allowed petitioners to avail their remedies under the Consumer Protection Act, Real Estate (Regulation and Development) Act or the Insolvency and Bankruptcy Code (IBC).

“It’s a huge burden on the court. We are an adjudicating body. Should the Supreme Court begin monitoring, there will be hundreds of projects of this nature spread across the country. We will be bogged down by these cases. Let’s not get into policy matters and start running industries. Just because the real estate industry is not running, should Article 32 be the remedy?” observed the court during the hearing.

This was in contrast to the top court entertaining writ petitions under Article 32 filed by aggrieved homebuyers led by Chitra Sharma against Jaypee group in August 2017 and another set of homebuyers led by Bikram Chatterji against the Amrapali group in September 2017. In case of Unitech, the Court took up the petitions which came in appeal from the National Consumer Disputes Redressal Commission (NCDRC) in October 2016.

Incidentally, Justice Chandrachud is heading the bench which is monitoring the Unitech case where close to 25,000 homebuyers are awaiting the court’s nod on a resolution plan offered by Unitech’s reconstituted board to complete the pending housing projects within fixed timelines. Even the Jaypee projects involving nearly 18,000 homebuyers are stuck as no construction has begun on the pending residential projects. The Supreme Court last year reserved orders on a resolution plan submitted by National Building Construction Corporation (NBCC) for beginning construction of these projects.

The Amrapali projects, involving nearly 47,000 homebuyers, are being monitored by a two-judge bench of the Supreme Court which holds a special sitting every week to know the progress of construction and availability of funds. These projects too are being executed by NBCC after the Supreme Court cancelled the registration of Amrapali under the Real Estate (Regulation and Development) Act, 2016. This judgment came in July 2019 after a forensic audit ordered by the top court found siphoning of huge amounts of homebuyers’ funds by Amrapali directors.

The court acknowledged the pain of the present petitioners but clarified that the Parliament has enacted a statutory regime to protect the rights of purchasers of real estate. These include the Consumer Protection Act 1986, the Real Estate (Regulation and Development) Act 2016 and the Insolvency and Bankruptcy Code 2016, the bench added.