NCLAT Appoints NBCC as Consultant to Complete Supertech's 16 Housing Projects: Everything Home Buyers Need to Know

The National Company Law Appellate Tribunal (NCLAT) has appointed NBCC (India) Limited as the project management consultant (PMC) to complete 16 stalled housing projects of Supertech Ltd across multiple states. This order comes as a crucial development for thousands of homebuyers who have been waiting for the completion of their homes. The project, involving nearly 50,000 homes, is valued at around ₹9,445 crore. The completion timeline has been set for three years, bringing hope to homeowners and investors who have faced long delays due to the financial instability of Supertech Ltd.

Background of the Supertech Crisis

Supertech Ltd, a prominent real estate company in India, had initiated several large-scale housing projects in various states, including Uttar Pradesh, Uttarakhand, Haryana, and Karnataka. However, due to financial issues and insolvency proceedings, many of these projects were stalled, leaving homebuyers in a state of uncertainty. In 2022, insolvency proceedings were initiated against Supertech after a petition by Union Bank of India, which alleged defaults in the company’s Eco Village-II project in Greater Noida. As the situation unfolded, the NCLAT intervened, first with modifications to the handling of the projects and later by appointing NBCC to oversee their completion.

The Role of NBCC in the Projects

NBCC, the government-owned construction and infrastructure development company, has already gained experience in handling stalled real estate projects. It was previously appointed to complete similar projects of Amrapali Group, following a Supreme Court order. In this case, NBCC has been given the responsibility of ensuring the completion of Supertech’s 16 projects, which collectively involve 49,748 residential units.

NBCC's key role as a project management consultant involves overseeing the construction, ensuring the quality of work, managing project timelines, and liaising with various stakeholders to resolve any roadblocks. The total cost of completing these projects is pegged at approximately ₹9,445 crore, which includes a 3% contingency fund.

Important Updates of NBCC and NCLAT's Role that Homebuyers Should Know

NBCC’s Role as PMC: As seen in the Amrapali case, NBCC will serve as the designated project management consultant (PMC) for the 16 Supertech projects. The completion timeline is set for three years, with construction beginning by May 1, 2025.

Fixed Timeline for Contract Awards: NCLAT has set March 31, 2025, as the deadline for fulfilling all requirements, including obtaining approvals from authorities. NBCC has been instructed to award all contracts by April end 2025, with work commencing shortly thereafter.

No Escalation for Buyers: NBCC cannot charge additional amounts from buyers who have already been allotted apartments. The unsold inventory, about 10,000 units, can be monetized to fund construction.

Compensation Requests Rejected: NCLAT has dismissed homebuyers' demands for compensation related to project delays, upholding that the focus will remain on completing the projects.

Quality Assurance: NBCC is mandated to maintain high-quality construction standards and ensure uniformity across all projects to meet buyer expectations.

Compliance with Statutory Regulations: The tribunal stressed that NBCC must adhere to building regulations and the RERA Act 2016, ensuring legal compliance in all phases of the construction.

Apex Court & Project-wise Committees: NCLAT has directed the formation of an Apex Court Committee and Project-wise Court Committee for each of the projects. NBCC will have a representative on each project-specific committee to facilitate oversight and ensure smooth progress.

Joint Account for Project Funding: A dedicated account for the Supertech Unfinished Project will be managed by NBCC and the Interim Resolution Professional (IRP), ensuring transparent handling of funds raised for the completion of these projects.

Financing the Projects: The NCLAT order outlines the funding mechanism for the projects, including ₹1,800 crore from sold units and ₹14,000 crore from unsold inventory. The receivables generated will primarily fund construction costs, with any surplus to be distributed to stakeholders.

Simultaneous Construction: The construction of all 16 projects will proceed simultaneously, with a timeline of 12 to 36 months for their completion. This change marks a shift from the previous phased approach, ensuring faster overall completion.

Timeline and Financial Implications

Under the NCLAT’s order, the timeline for completing these projects is set at three years, with an emphasis on stringent project management. The tribunal has set specific milestones for the commencement of work, which include the awarding of contracts by April 2025 and the start of construction by May 1, 2025. The financial framework for these projects will also include an 8% fee for NBCC, which includes a 1% marketing fee.

The Tribunal's decision also mandates that the project funding should be handled through a special account managed by NBCC, in collaboration with the Interim Resolution Professional (IRP). This structure aims to ensure transparency and accountability in the utilization of funds for the project’s completion. The projects will operate under the supervision of an Apex Court Committee, which will be empowered to transfer surplus amounts between projects if necessary.

The Homebuyers' Perspective

For the homebuyers, this order is a welcome relief, as it assures them of the completion of their homes. Thousands of buyers who have invested in these projects have faced significant delays, some of which have stretched over several years. The NCLAT's order provides a clear path forward, offering a timeline and structure for completing the projects and giving homebuyers confidence that their investments will not be lost.

Rajiva Singh, President of the Noida Federation of Apartment Owners Associations (NOFAA), expressed optimism about the projects being completed within the next three years. Homebuyers are now looking forward to seeing the projects take shape, with the hope that this intervention will restore trust and deliver the homes they’ve been waiting for. He also stated that, NCLAT’s directive that no additional charges would be levied on homebuyers whose units have already been allotted is another key benefit for them. Buyers will not be subjected to cost escalation except for dues already agreed upon in the builder-buyer agreements.

However, the NCLAT has rejected pleas from homebuyers demanding compensation for the delays. This decision has led to mixed reactions, with some homebuyers accepting the ruling as a practical solution, while others remain disappointed with the lack of compensation for the prolonged waiting period. Project

Management and Legal Oversight

A unique aspect of this order is the constitution of an Apex Court Committee and Project-wise Court Committees for each of the 16 projects. The role of these committees is critical in overseeing the financial and operational aspects of the projects. The Apex Court Committee will have the authority to manage funds across various projects, while the Project-wise Court Committee will focus on individual projects.

Additionally, the NCLAT has stressed that statutory authorities, such as those responsible for approving building plans and ensuring compliance with the RERA Act 2016, must fulfill their obligations within 30 days of receiving applications. This directive aims to streamline the approval process and avoid any further delays in project implementation.

Ensuring Quality and Compliance

The NCLAT has emphasized the importance of maintaining construction quality and uniformity across the 16 projects. NBCC has been directed to ensure that the construction meets the necessary standards, which is critical for ensuring the long-term durability and safety of the buildings. Furthermore, NBCC will be required to comply with all regulatory requirements under the relevant building and real estate laws.

One of the key concerns for homebuyers in stalled projects is the quality of work after such long delays. The NCLAT's order addresses this concern by mandating that NBCC maintain the highest construction standards, providing a sense of security to buyers who may have been worried about potential compromises in quality due to the financial issues surrounding Supertech.

Future Implications for the Real Estate Sector

The completion of these 16 projects will have significant implications for the real estate sector, especially in terms of restoring confidence in delayed or stalled projects. This development also highlights the growing role of government-owned companies like NBCC in managing large-scale real estate projects, particularly those in distress.

The NCLAT’s intervention serves as an important precedent for the handling of other stalled real estate projects in India. It demonstrates that the legal system is willing to take proactive steps to ensure the completion of projects that affect thousands of homebuyers. The decision could pave the way for similar resolutions for other delayed housing projects, thereby contributing to the stabilization of the real estate market.