Supreme Court Eases Pain for Unitech Customers, Orders Project Exemptions & Relief

NEW DELHI (India CSR): In a significant development for thousands of homebuyers who have been waiting for years to get possession of their flats, the Supreme Court of India has issued orders that aim to ease their pain and facilitate the completion of stalled Unitech projects. The court’s recent decisions include exempting Unitech’s ongoing projects from registration under the Real Estate (Regulation and Development) Act (RERA) and recalling a previous order related to the treatment of Unitech’s former promoters in jail. These orders come as a ray of hope for homebuyers who have been caught in the legal and financial quagmire surrounding Unitech, once one of India’s largest real estate developers.

Timeline of Key Events

Background of the Unitech Case

Unitech, once the second-largest real estate developer in India, faced severe setbacks due to financial mismanagement and legal issues. The company was embroiled in numerous cases, with its promoters, Ajay and Sanjay Chandra, accused of siphoning off funds meant for project completion. A forensic audit conducted in 2018 revealed the extent of the financial irregularities. Between 2006 and 2014, Unitech received approximately Rs 14,270 crore from 29,800 homebuyers and Rs 1,805 crore from financial institutions for 74 projects. However, around Rs 5,063 crore of homebuyers’ money and Rs 763 crore from financial institutions were not utilized for the intended purposes. Instead, significant amounts were invested in offshore tax havens between 2007 and 2010. This mismanagement led to the stalling of numerous housing projects, leaving thousands of homebuyers in limbo.

The legal battle against the Chandra brothers began in 2017 when they were arrested in connection with an FIR related to a Unitech project in Gurugram. The real estate firm faced the court’s wrath in a case related to alleged siphoning off of homebuyers’ money. The matter pertained to a criminal case lodged in 2015 by 158 homebuyers of Unitech projects—“Wild Flower Country” and “Anthea Project”—situated in Gurugram. Over the years, the case escalated, involving investigations by the Enforcement Directorate (ED) into money laundering charges and other legal proceedings.

Supreme Court’s Recent Orders

On January 16, 2025, the Supreme Court issued a landmark order that provided much-needed relief to Unitech’s homebuyers. The court exempted all ongoing Unitech projects from registration under RERA until further orders. This exemption is crucial as it allows the new management to proceed with construction without the regulatory hurdles that had previously stalled progress. Under RERA, every project measuring more than 500 square meters or involving more than eight apartments must be registered. However, the court recognized that compliance with RERA had become a significant obstacle for Unitech’s projects, which were already delayed due to financial troubles under the erstwhile management.

The court also issued notices to banks and financial institutions that had declared the loan accounts of homebuyers as Non-Performing Assets (NPAs) due to project delays. This directive aims to address the financial strain on homebuyers and facilitate the disbursement of stalled loans. Additionally, the Supreme Court directed the chairperson of the Uttar Pradesh State Pollution Control Board to grant environmental clearances to Unitech’s projects in Noida, further clearing the path for construction to resume.

Another significant order came on January 23, 2025, when the Supreme Court recalled its October 2021 order directing the suspension of Tihar Central Jail officials who were alleged to have provided undue facilities to Ajay and Sanjay Chandra. The court stated that allowing this order to operate indefinitely would be prejudicial to the state exchequer. This decision was based on a report by the ED, which had alleged that the Chandra brothers were accorded VVIP treatment in Tihar Jail, allowing them to communicate freely and dispose of properties while in custody. The court had previously ordered their transfer to Mumbai’s Arthur Road Jail and Taloja Jail in 2021.

Current Leadership of Unitech

In January 2020, the Supreme Court appointed Yudvir Singh Malik, a retired IAS officer from the Haryana cadre, as the Chairman and Managing Director (CMD) of Unitech. This appointment was part of a broader effort to stabilize the company and protect the interests of homebuyers. The court also granted immunity to the new board from legal proceedings for a certain period, allowing them to focus on reviving the company without fear of litigation.

The new management has been tasked with completing the stalled projects and ensuring that homebuyers receive their flats. In November 2023, the Supreme Court permitted the new management to commence construction activities on the 74 residential and 12 commercial projects that had been stuck for over a decade. This permission was a critical step towards addressing the plight of approximately 12,000 homebuyers who had been waiting for years to take possession of their homes.

Impact on Homebuyers

The Supreme Court’s orders are a significant step towards providing relief to Unitech’s homebuyers. By exempting the projects from RERA registration, the court has removed a major obstacle that was preventing the completion of these projects. Additionally, the court’s directive to banks to address NPAs will help in unfreezing the loans that were stalled due to project delays. This should facilitate the disbursement of funds necessary for completing the construction.

For homebuyers, these orders bring a glimmer of hope after years of uncertainty. Many have been paying EMIs for homes that do not exist, while others have been unable to move into their flats due to incomplete construction. The Supreme Court’s interventions aim to ensure that these long-delayed projects are finally completed, allowing homebuyers to take possession of their properties.

Legal Proceedings Against Promoters

Ajay and Sanjay Chandra have been facing multiple legal battles since their arrest in 2017. In June 2024, a Delhi court granted them bail in a case related to allegedly swindling homebuyers. The Chandra brothers were lodged in separate jails in Mumbai at the time of their bail. The court granted them bail on the condition that they would not leave the country and would furnish sureties of Rs 1 lakh each.

The legal proceedings against the Chandra brothers are still ongoing. They face charges under various laws, including the Prevention of Money Laundering Act (PMLA), for their alleged role in diverting funds meant for project completion. The ED’s investigations have revealed that the Chandra brothers, in collusion with their associates, played a key role in illegally diverting funds from homebuyers, investors, and banks. The agency has also attached assets worth Rs 335 crore in connection with the case, as reported in October 2024.

You Learn

The Supreme Court’s recent orders mark a turning point for Unitech and its homebuyers. By providing exemptions from RERA registration and facilitating the completion of stalled projects, the court has offered a glimmer of hope to those who have been affected by the company’s downfall. Under the leadership of Yudvir Singh Malik, Unitech’s new management is working towards reviving the company and fulfilling its obligations to its customers. While the road ahead may still be challenging, these judicial interventions are crucial steps towards resolving one of the most protracted real estate crises in India’s history.

As of May 6, 2025, there have been no further updates on the Unitech case beyond the January 2025 orders. However, the Supreme Court’s decisions have already set the stage for significant progress in completing the stalled projects and delivering justice to the long-suffering homebuyers.

(India CSR)