Supreme Court notice on NBCC plea to construct Supertech projects

A bench of justices Sanjiv Khanna and Sanjay Kumar also indicated that NBCC would be at liberty to approach the top court if it faces any procedural problem or impediment which requires the exercise of extraordinary powers under Article 142 of the Constitution that allows the Supreme Court to do complete justice in any case.

The top court’s order comes ahead of a crucial hearing before the NCLAT on October 21.

Also Read: NBCC moves SC to complete stalled projects of realty major Supertech Ltd

NBCC has filed terms of reference before NCLAT for considering its proposal to construct the 17 projects involving more than 50,000 flats. At the same time, the Supertech promoters are also keen to get the projects going and have moved separate proposals in this regard before the tribunal.

The bench observed, “We are issuing notice on the NBCC application. The parties will be at liberty to approach the top court for passing orders in the event of any procedural impediment.” The court realised that the NCLAT will have its own limitations in taking up the NBCC proposal within the corners of the Insolvency and Bankruptcy Code.

Senior advocate Gopal Jain, who appeared for NBCC, informed the court that the firm was on the verge of completing the distressed housing projects of Amrapali under the top court’s monitoring.

Also Read: NCLAT allows homebuyers to object to NBCC takeover of Supertech projects

Insolvency proceedings against Supertech were initiated by Union Bank of India over unpaid loans in 2022. A May 2023 order by the Supreme Court segregated one of the projects – Eco Village 2 from other Supertech projects as the court ruled that in case of Supertech projects, other than Eco Village 2, reverse corporate insolvency resolution process can take place, which allows the corporate debtor, in this case Supertech, is allowed to be a part of the resolution process by infusing funds.

Attorney General R Venkataramani appearing for the Union Bank of India, said: “Let the NBCC application be tested. In the Amrapali projects, the NBCC was able to take a broad look on many issues and generate funds.”

Venkataramani is also the court-appointed Receiver in the Amrapali matter tasked with generating funds to complete nearly 46,000 housing units.

The bench said, “We can leapfrog and fast-track the whole thing but we cannot overlook the committee of creditors.”

Concerns over funding were raised as Supertech represented by senior advocate Krishnan Venugopal said, “There is no money that NBCC is bringing to the table.” Another set of Supertech homebuyers led by senior advocate Vibha Datta Makhija told the court that it has filed objections before the NCLAT regarding safety issues among other concerns concerning NBCC projects. She said that all these factors will have to be considered by the NCLAT.

The bench observed, “Nobody is going to bring in a penny until they see money in it. Each project will have its own challenges. It is not going to be easy.”

The bench made it clear that it was not interfering with the resolution process being undertaken by NCLAT and left this issue to be determined by the tribunal on the next date of hearing. Venugopal requested the court to observe in its order asking NCLAT to consider Supertech’s proposal. The bench refused to pass any specific direction in this regard leaving it to the discretion of the tribunal.

In a statement issued later in the day, Supertech chairman RK Arora said, “We welcome the Supreme Court order. The NCLAT will now compare NBCC proposal with those of the promoter and other agencies to complete construction. Whichever proposal will be best for homebuyers, chosen by NCLAT, we will support that proposal.”

Advocate ML Lahoty, who represented Homebuyers of the Eco Village 2 project, informed the court that the May 11, 2023 order of the top court segregating Eco Village 2 needs modification. He pointed out that nearly 7,000 homebuyers of this project are keen on NBCC taking over the project but were bound by the top court’s order which does not permit reverse CIRP to be initiated in their case. He further stated that a transactional audit report of Supertech released in June 2023 (a month after the top court’s order) referred to an amount of ₹619 crore belonging to Eco Village 2 being diverted by the promoters to other projects.

The bench observed that NBCC being a government agency will enjoy more public trust as against the promoter accused of diverting funds. It observed that once the NCLAT decides on the future course, the Eco Village 2 project may also be considered at par with the other projects.

Supertech’s 17 projects are spread across the country. NBCC in its application before NCLAT proposed to complete seven projects in Noida and Greater Noida under first phase, five projects in Noida, Greater Noida and Meerut in second phase, and remaining five projects in Gurugram, Rudrapur, Bengaluru and Dehradun in the third phase. The plan was subject to a set of terms and conditions being approved by the tribunal.

NBCC said it will require 12 to 36 months for completion of various projects subject to various conditions which includes acceptance of terms of reference, completion of due-diligence or audit of such project, obtaining requisite permits/approvals from statutory bodies, award of work(s) to contractors, handover of peaceful and vacant possession of project sites to NBCC being capable of commencement of work, and availability of funds earmarked for each project.

For completion of the projects, NBCC demanded a fee calculated at the rate of 8% on the “Actual Cost of Work” for rendering the project management consultancy services and a marketing fee at the rate of 1% on the sale value of the project.