Supreme Court stays NCLAT order handing over 16 Supertech projects to NBCC

The Supreme Court on Friday stayed an order by the National Company Law Appellate Tribunal (NCLAT) that allowed NBCC Limited to take over 16 stalled Supertech residential projects, agreeing to examine alternative proposals for their completion. The decision affects over 42,000 homebuyers who have been waiting for years to receive possession of their flats.

Staying the December 12 NCLAT order, a bench headed by Chief Justice of India (CJI) Sanjiv Khanna said, “The primary issue to be examined is whether NCLAT was right in awarding the work of construction to NBCC India Limited without following the procedure under the Insolvency and Bankruptcy Code (IBC), 2016.”

The court directed all stakeholders, including corporate guarantors, Supertech promoter RK Arora, and the Yamuna Expressway Industrial Development Authority (Yeida), to submit alternative proposals by March 21 and scheduled a hearing in the first week of April.

The bench, also comprising justices PV Sanjay Kumar and KV Viswanathan said, “We also give liberty to parties to file written note indicating proposal how to deal with the issue of construction of flats or buildings as an alternative to what is mandated by the NCLAT judgment.”

Arora welcomed the ruling. “We respect the decision of the Hon’ble Supreme Court, which has stayed the NCLAT order that allowed NBCC to take over Supertech’s projects without considering the interests of homebuyers, lenders, and land authorities. We welcome the court’s instructions to invite other companies to propose a more inclusive solution,” he said.

During the proceedings, senior advocate Abhishek Manu Singhvi, appearing for Arora, told the court that the order of NCLAT cannot be sustained under IBC. “This court should first decide on the issue of jurisdiction. I have completed 9 projects, and I am being castigated for nothing. NBCC is not a creditor, nor is it a stakeholder. The order of NCLAT turns IBC on its head,” Singhvi said. The senior counsel added that NCLAT failed to follow the IBC procedures and issued the order even though NBCC had no locus (legal standing) in the matter.

During the proceedings, senior advocates Shyam Divan and Dhruv Mehta, representing corporate guarantors, contended that the NCLAT’s order denied a fair opportunity for other proposals to be considered.

Even the secured creditors, comprising banks, informed the court that the NBCC’s proposal lacked a clear roadmap for repaying dues. Yeida argued that the NCLAT order is “unacceptable” as it does not address repayment of dues payable to the landowning authorities – Noida, Greater Noida, and Yamuna Industrial authorities.

In its order, the court made it clear that the proposals to be submitted will focus on how to complete the construction and not on how to recover their respective dues.

With the stay on the NCLAT order, the management of Supertech returned to interim resolution professional (IRP) Hitesh Goel, who was tasked with keeping the company operational. Senior advocate Nakul Dewan, appearing for IRP, said that the issue concerns 42,000 homebuyers and everybody’s interest will be taken care of once the unsold inventory and lands available with the company gets sold.

On a request by NBCC, represented by senior advocate Gopal Jain, the court allowed parties access to project documents to facilitate proposal submissions.

The NCLAT’s December 12 order had placed significant responsibility on NBCC, directing the company to go beyond its usual project management role to ensure completion. The tribunal noted the prolonged wait of homebuyers and stated, “NBCC shall not treat its obligations only as a project management consultant and shall go an extra mile to ensure that the project is completed, avoiding unnecessary and extra costs due to limited funds.”

The projects span multiple locations, including Noida, Greater Noida, Gurugram, and Bengaluru. On May 25, 2024, NCLAT had first expressed interest in construction of the delayed Supertech housing projects. The same was even supported by some of the homebuyer associations as the original promoter failed to come up with any plans. However, one section of homebuyers also raised concerns about the safety and quality of NBCC constructions.

Insolvency proceedings against Supertech was initiated by Union Bank of India over unpaid loans in 2022. An order passed in May 2023 by the Supreme Court segregated one of the projects – Eco Village 2 from other projects allowing Supertech to be a part of the resolution process of 16 projects by infusing funds.