Supreme Court Allows Builder to Complete Delayed Housing Project Under Homebuyers' Supervision

The case of Anand Murti vs. Soni Infratech Private Limited & Anr. revolves around a stalled housing project where homebuyers were left without their promised flats. The Supreme Court set aside the National Company Law Appellate Tribunal’s (NCLAT) decision and allowed the builder to complete the project under the oversight of homebuyers and the Interim Resolution Professional (IRP).

Background of the Case

The dispute arose when homebuyers filed insolvency proceedings against Soni Infratech Pvt. Ltd. (the developer) due to non-completion of a housing project. The National Company Law Tribunal (NCLT) admitted the case under the Insolvency and Bankruptcy Code, 2016 (IBC), leading to the appointment of an Interim Resolution Professional (IRP).

Key events:

2018: A homebuyer canceled their booking and demanded a refund of Rs. 32,27,591, which was not returned.
2019: The homebuyer filed a petition before the NCLT under Section 7 of the IBC.
November 22, 2019: NCLT admitted the petition and initiated the Corporate Insolvency Resolution Process (CIRP).
2020: The developer proposed a settlement plan and sought to complete the project.
November 22, 2021: NCLAT rejected the modification plea and directed CIRP to continue.
April 27, 2022: Supreme Court allowed the developer to finish the project.

Arguments of the Petitioner (Anand Murti – Developer)

The builder claimed that 70% of the project was already completed and could be finished if given the opportunity.
He had secured funding and assured that no additional costs would be imposed on homebuyers.
The settlement proposal included a commitment to deliver the flats in phases.
The IRP report indicated that most homebuyers preferred possession over a refund.

Arguments of the Respondents (Homebuyers & IRP)

The homebuyers’ counsel argued that the builder had already delayed the project for years and lacked credibility.
They insisted that CIRP was the best way to ensure timely completion.
A group of seven homebuyers opposed the settlement plan, stating that they wanted a refund instead of possession.

Supreme Court’s Ruling

The Supreme Court, comprising Justices L. Nageswara Rao and B.R. Gavai, ruled in favor of the builder, allowing him to complete the project under supervision.

1. Homebuyers’ Interests Must Be Prioritized

The Court emphasized that the primary objective was to ensure homebuyers receive their promised flats.

“There is every possibility that if the CIRP is permitted, the cost that the homebuyers will have to pay would be much higher.”

2. Project Completion Timeline Accepted

The builder provided an affidavit stating that the project would be completed in 6 to 15 months in a phased manner.

3. Refunds for Homebuyers Who Opposed the Plan

The Court noted that only seven out of 452 homebuyers opposed the plan and ruled that they could be refunded with interest.

4. Builder’s Financial Commitment Considered

The Court took note of the builder’s arrangement for Rs. 10 crore in immediate funds and an additional Rs. 100 crore loan from SBI Cap Ventures.

5. Homebuyers and IRP to Monitor Progress

A five-member monitoring committee comprising two homebuyers, two builder representatives, and the IRP was set up.

Final Judgment

The Supreme Court set aside the NCLAT’s decision.
The developer was allowed to complete the project under the agreed timeline.
Homebuyers who opposed the settlement would receive a refund.
The IRP would submit quarterly reports on project progress.

Impact of the Judgment

Protects homebuyers’ interests by prioritizing project completion over insolvency proceedings.
Prevents financial distress for buyers who might have had to pay higher costs under CIRP.
Establishes a precedent for resolving real estate disputes through settlements rather than full-fledged insolvency proceedings.

Conclusion

The Supreme Court’s ruling in Anand Murti vs. Soni Infratech Pvt. Ltd. ensures that homebuyers do not suffer due to a stalled project. By allowing the developer to complete the housing project under supervision, the judgment sets a balanced precedent for resolving similar real estate insolvency cases in the future.

Petitioner Name: Anand Murti.
Respondent Name: Soni Infratech Private Limited & Anr..
Judgment By: Justice L. Nageswara Rao, Justice B.R. Gavai.
Place Of Incident: New Delhi.
Judgment Date: 27-04-2022.

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