SC allows Supertech to get fresh funds, deliver 20,000 flats in two years

The Supreme Court on Thursday, in an interim order, allowed Noida based realty major Supertech Limited to infuse funds in delayed realty projects and work with the National Company Law Tribunal (NCLT) appointed resolution professional to deliver 20,000 flats in unfinished projects within two years.

The order has come as a relief to homebuyers as they now have a chance to get their dream homes soon, after over a decade’s delay. The interim order is also very positive for the real estate sector because it could pave the way for resolving other stuck projects, said realty experts.

The apex court was hearing an ongoing case between Supertech Limited’s RK Arora and housing finance company Indiabulls Asset Reconstruction Company Limited along with the Union bank of India that had in February 2022 dragged the realty major to corporate insolvency resolution process after the developer failed to repay its debt.

On March 25, 2022, in response to the Union Bank of India’s petition, the NCLT had appointed Hitesh Goel as interim resolution professional (IRP) who started taking all decisions pertaining to the company.

Subsequently the National Company Law Appellate Tribunal (NCLAT) on December 4, 2022, stayed the formation of a committee of creditors (CoC) in the corporate insolvency resolution proceedings. Unhappy with NCLAT order, Indiabulls and the Union bank of India went to the Supreme Court challenging the order. Supertech opposed the plea and said it wanted to infuse funds and deliver flats, said sources.

Finally, on Thursday, the bench of justice Dinesh Maheshwari and justice Sanjay Kumar gave relief to the realty major by allowing it to work with the IRP to deliver 20,000 delayed flats in two years.

“The result of the directions of the impugned order dated 10.06.2022 is that except Eco Village-II project, all other projects of the corporate debtor (Supertech Limited) are to be kept as ongoing projects and the construction of all other projects is to be continued under the supervision of the IRP with the ex-management, its employees and workmen. Infusion of funds by the promoter in different projects is to be treated as interim finance, regarding which total account is to be maintained by IRP,” said the bench.

It further said, “If at the present stage, on the submissions of the appellants, CoC is ordered to be constituted for the corporate debtor as a whole in displacement of the directions of the appellate tribunal, it is likely to affect those ongoing projects and thereby cause immense hardship to the homebuyers. In our view, greater inconvenience is likely to be caused by passing any interim order of constitution of CoC in relation to the corporate debtor as a whole; and may cause irreparable injury to the homebuyers.”

As per the corporate insolvency proceedings, the IRP takes control of the debt ridden firm, seeks claim from homebuyers and investors and then forms a committee of creditors (CoC) comprising banks, buyers and investors, who then decides the future of the company. It is the committee that decides though voting as to who should take over the debt-ridden company.

“We opposed the formation of CoC because we have made arrangements of ₹1,600 crore from US based Oaktree Capital Management to infuse funds and deliver flats. The SC order is a big boost as it will resolve homebuyers’ issues,” said RK Arora, chairman, Supertech Limited.

There are at least 20,000 flats yet to be delivered or registry to be done in different projects of Supertech. “The SC order has come as a big relief because now we can deliver 20,000 flats in the next two years. The funds will be start coming by next month and construction work will start by next month . The SC decision is a landmark one and it will pave the way for resolving issues of other stuck projects too,” said Mohit Arora, managing director, Supertech Limited.

Homebuyers also welcomed the SC order. “We hope that Supertech arranges the funds and deliver our flats. We invested our life savings to buy the flats and we hope that these are delivered without any further delay,” said Bharat Arora, who bought a flat in Supertech Romano in Sector 118, which is yet to be delivered.

“The SC’s interim order is very positive for the real estate sector because the formation of CoC and decisions related to it are a lengthy process affecting interests of homebuyers. We welcome this order as it will open up a new way to resolve other stuck projects,” said Nikhil Havelia, secretary, Confederation of Real Estate Developers Association of India.

“The SC order is a landmark judgment because it has taken a decision that paves the way to resolve the grievances of homebuyers in Noida and Greater Noida region,” said Sunil Mishra, lawyer and realty expert.