New Delhi, Sep 13 (PTI) Flagging the plight of tax-paying middle-class citizens, many of whom find their "dream home" reduced to an unfinished building, the Supreme Court has asked the Centre to consider establishing a "revival fund" to provide bridge financing for stressed projects to safeguard the interests of homebuyers.

A bench of Justices J B Pardiwala and R Mahadevan said the State carries a constitutional obligation to create and strictly enforce a framework where no developer is permitted to defraud or exploit homebuyers, and ensuring timely project completion must be a cornerstone of the country's urban policy.

The top court also said it was imperative that RERA authorities were not reduced to "toothless tigers" and they must be equipped with adequate infrastructure, empowered tribunals, and effective enforcement mechanisms so that their orders were implemented swiftly, in letter and spirit.

Observing that the government cannot remain a "silent spectator", the bench said the government is constitutionally obliged to protect the interests of homebuyers and the economy at large.

The bench said the Centre may also consider establishing a body corporate, on the lines of National Asset Reconstruction Company Ltd (NARCL) or otherwise, promoted by real estate/construction-focused PSUs or through public-private partnerships, to identify, take over and complete stalled projects under the Insolvency and Bankruptcy Code, 2016, framework.

"Unsold inventory from such projects could be utilised towards affordable housing schemes like PMAY (Pradhan Mantri Awas Yojana) or for government quarters, thereby addressing both the housing shortage and revival of sick projects," it said. The bench said that with India rapidly industrialising and the rural-to-urban mobility proceeding at a lightning pace, the demand for housing has risen sharply.

"Yet, the plight of tax-paying middle-class citizens paints a disheartening picture. Having invested their lifelong savings in pursuit of a home, many are compelled to shoulder a double burden – servicing EMIs on one hand, and paying rent on the other – only to find their 'dream home' reduced to an unfinished building," it said in a judgement delivered on Friday.

The bench said in some cases, construction has not even commenced despite full or substantial payment and the anxiety of not having a home despite paying a fortune is bound to take a serious toll on health, productivity and dignity.

"The Union government shall consider establishing a revival fund under NARCL or expanding the SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund, to provide bridge financing for stressed projects undergoing CIRP (Corporate Insolvency Resolution Process), thereby preventing liquidation of viable projects and safeguarding homebuyer interests," it said.

The bench said the SWAMIH fund was a commendable initiative; however, being a large fund involving public money, every rupee must be utilised strictly for its intended purpose of last-mile financing.

To prevent misuse, it directed that a comprehensive periodic performance audit by the CAG be carried out, with reports placed in the public domain in a form comprehensible even to laypersons.

It passed a slew of directions to concerned authorities in the larger interests of bona fide homebuyers and the stability of the real estate sector.

The bench directed that vacancies in NCLT/NCLAT be filled on a war footing, and dedicated IBC benches with additional strength should be constituted.

"Services of retired judges may be utilised on an ad hoc basis until regular appointments are made. This court is cognizant of the fact that similar directions have been issued in the past… but no effective step has been taken on the ground," it said.

It asked the Centre to file within three months a compliance report on measures taken to upgrade NCLT/NCLAT infrastructure nationwide.

It said the recent closure of Chandigarh NCLT and portions of Delhi NCLT due to water seepage in courtrooms and chambers of members underscores the urgency of robust infrastructural support.

The bench directed states to ensure RERA authorities are adequately staffed with infrastructure, experts and resources.

It said that within three months, a committee chaired by a retired high court judge should be constituted, with representatives from the Ministry of Law, Housing and domain experts in real estate and finance and others to suggest commercially viable systemic reforms for cleansing and infusing credibility into the real estate sector.

"Every residential real estate transaction for new housing projects shall be registered with local revenue authorities upon payment of at least 20 per cent of the property cost by buyer/allottee," it said.

The bench said, "In projects at nascent stages, such as where land is yet to be acquired or construction has not commenced, proceeds from allottees shall be placed in an escrow account and disbursed in phases aligned with project progress, as per a RERA-sanctioned SOP. Every RERA shall devise such SOPs within six months from today." Outlining suggestions for future reform, the bench said the Centre should undertake a consultative exercise to bring about uniformity in RERA rules across states.

"Before parting, we observe that the right to housing is not merely a contractual entitlement but a facet of the fundamental right to life under Article 21. Genuine homebuyers represent the backbone of India's urban future, and their protection lies at the intersection of constitutional obligation and economic policy," the bench said. PTI ABA RHL