SC steps in to complete Supernova project, disbands insolvency process
The Supreme Court has invoked its extraordinary powers under Article 142 of the Constitution to issue a series of steps to ensure the completion of the stalled Supernova real estate project in Noida, developed by Supertech Realtors Pvt Ltd., which had been facing insolvency proceedings. “This is a fit case for this Court to exercise its powers under Article 142 of the Constitution of India,” the Bench recorded, adding that the prevailing circumstances warranted a solution beyond the conventional insolvency framework,” said the Bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi.
Invoking Article 142, the Court discharged Supertech’s interim resolution professional (IRP), the committee of creditors, and the suspended board of directors, and constituted a three-member empowered committee to take over the management of the project. The apex court set up a court-monitored mechanism to ensure the completion of construction, protect homebuyers, and oversee further resolution proceedings against Supertech.
As per the Order dated December 16, uploaded recently, the committee comprises: Justice MM Kumar, former Chief Justice of the Jammu and Kashmir High Court and former President of the NCLT, as chairperson; Dr Anoop Kumar Mittal, construction and project management expert; and Rajeev Mehrotra, financial management expert. The committee will operate from New Delhi, with costs borne by Supertech.
Other key directions from the Supreme Court includes Immediate takeover by the three-member court-appointed committee will immediately replace the IRP, the committee of creditors, and the suspended board to take charge of the project. The Chairperson may add members or reconstitute the committee if required for effective implementation.
For completion of the project, the committee will appoint an executor to implement the approved project plan and take all operational decisions. The role of Supertech’s former directors is limited to technical support, while the discharged IRP must assist when required. New developer and fund control: A new developer will be selected through a vetted, proposal-based process, excluding entities linked to the erstwhile management of Supertech. All project inflows will be routed through an escrow account for construction only, said the apex court, ordering a forensic audit on Supertech.
“Although the committee has been asked to consult lenders, homebuyers, and NOIDA while making decisions, the committee’s ultimate decisions will be final and binding. Zero period and approvals: Development authorities must process approvals without insisting on past dues from homebuyers. The Court further said that there will be a zero period, whereby the payments due from Supertech to lenders or NOIDA are to wait until project completion and the handing over of dwelling units to homebuyers, said the order.
“During this period, the NOIDA Authority and the financial lenders shall not initiate or continue any coercive action against home buyers who have paid the consideration for their respective dwelling units. Upon completion of the project, any surplus generated shall be utilized towards the satisfaction of the dues of the financial lenders and the NOIDA Authority,” added the Order.
The case was tied to insolvency proceedings initiated against Supertech Realtors Pvt Ltd in relation to its flagship Supernova project in Sector 94, Noida, a large mixed-use development consisting of residential apartments, studios, office spaces, and commercial units. The National Company Law Appellate Tribunal (NCLAT) had earlier upheld the initiation of the Corporate Insolvency Resolution Process (CIRP) against Supertech at the instance of a financial creditor. A suspended director of Supertech eventually filed an appeal before the Supreme Court. During these proceedings, other stakeholders also approached the Court claiming that their rights were also affected by these proceedings.
With the project remaining stalled for years and multiple stakeholders asserting competing claims, the Supreme Court appointed Senior Advocate Rajiv Jain as amicus curiae to assist it on the way forward.
The amicus prepared a report after consulting with all stakeholders, and told the Court that the financial creditors had failed to take timely action against Supertech when the company was showing early signs of financial distress. This weakened the financial creditors’ claim that the repayment of dues owed to them should be prioritised. The Court also noted that all stakeholders had broadly agreed to having a court-monitored mechanism to oversee future steps
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