SC exempts Rera registry for Unitech projects

The government-appointed board that manages Unitech approached the top court, citing practical difficulties faced by homebuyers in getting loans sanctioned from banks

New Delhi

A Unitech project in Noida, as seen in 2017. (Representative photo/HT Archive)

The Supreme Court on Thursday exempted Unitech projects from complying with the Real Estate (Regulation and Development) Act, 2016, paving the way for thousands of distressed homebuyers to secure fresh loans from banks and allowing the board of directors managing Unitech to engage with banks for release of pending loans.

The government-appointed board that manages Unitech approached the top court, citing practical difficulties faced by homebuyers in getting loans sanctioned from banks. One of the key objections cited by the banks was the non-renewal of RERA registration of Unitech projects after it lapsed in 2022.

A bench of justices Surya Kant and N Kotiswar Singh said, “We direct that all ongoing projects of Unitech will be exempt from registration under the Rera until further orders.”

The direction by the court has come as a huge relief to the distressed homebuyers who relied on bank loans to make the balance payments for their flats. Approximately 15,000 residential units are due to be delivered across 10 real estate projects in Noida and Greater Noida. The company also has projects in six other states.

Homebuyers had already invested tens of lakhs of rupees for homes in 2018 that are yet to be delivered by the company. The board comprising government appointees took over these projects in 2020 due to widespread financial wrongdoings by erstwhile Unitech promoters Sanjay Chandra and Ajay Chandra.

Additional solicitor general (ASG) N Venkatraman, appearing for the Unitech board along with advocate Anubha Agarwal, pointed out that Unitech had got all Noida-based projects registered under Rera in 2017 and the registration expired in 2022.

Venkatraman said that one of the conditions for Rera registration is for 70% of sale proceeds to be retained in an escrow account till the completion of the project. This condition could not be met as 70% of sale proceeds collected by the erstwhile management of Unitech is no longer available with the board, he said. Of the total sale consideration of ₹3,525 crore, the erstwhile board received ₹2,444 crore and a balance of ₹1,081 crore remains to be collected from homebuyers.

Further, going for registration at this point will require the board to pay compensation for the delay in the delivery of homes and a deposit penalty for not submitting quarterly reports to Rera authorities in respective states where projects are ongoing.

The ASG pointed out that this being a court-monitored project, similar to those undertaken by Amrapali, the court should waive the requirement of Rera registration and order banks to issue loans. The Rera licence of Amrapali was cancelled by the top court in July 2019 and since then, the construction of the remaining projects has been carried out under the court’s watch by a receiver and the government’s construction arm, NBCC.

“We are receiving emails from homebuyers citing refusal by banks and financial Institutions (FI) not reviving or sanctioning loans for Unitech projects due to which they are not able to make payment of balance dues,” ASG said.

Banks objected citing two major reasons: the loans had become non-performing assets (NPA) as the projects failed to move forward and the lack of the Rera registration was an impediment for banks to act on loan requests.

Venkatraman sought the court order for the banks to activate the NPA loan accounts of sanctioned Unitech homebuyers and to release the remaining loans to whom loans were earlier sanctioned.

On this issue, the court said, “Before issuing any directions in this regard, we need to hear the banks and financial institutions (FIs).” As multiple banks and FIs were involved, the court issued notice to these banks and posted the hearing of the matter on February 6.