Supreme Court Declares Housing a Fundamental Right, Urges Centre to Create Revival Fund for Stalled Real Estate Projects

September 13, 2025

Court says State cannot be a ‘silent spectator’ as millions of homebuyers suffer due to stalled projects

Calls for expansion of SWAMIH Fund, stronger tribunals, and strict action against speculative misuse of insolvency laws

By Our Legal Reporter

New Delhi, September 13, 2025 — In a landmark judgment that could reshape India’s real estate sector, the Supreme Court has ruled that the right to housing is a fundamental right under Article 21 of the Constitution, placing it alongside the right to life and dignity. The Court has directed the Union Government to urgently consider creating a revival fund to rescue stalled housing projects and protect the interests of genuine homebuyers.

The verdict, delivered by a bench of Justices J.B. Pardiwala and R. Mahadevan, came in a case involving insolvency proceedings against two real estate companies. The Court upheld the National Company Law Appellate Tribunal’s (NCLAT) earlier decision rejecting the claims of speculative investors, while making it clear that housing is not a luxury or a speculative instrument, but a basic human need.

The Plight of Homebuyers

The Court painted a grim picture of the struggles faced by middle-class citizens who have invested their life savings into buying homes. Many, it noted, are paying both EMIs and rent while waiting for possession of properties that remain unfinished for years.

“The plight of tax-paying middle-class citizens paints a disheartening picture. Having invested their lifelong savings in pursuit of a home, many are compelled to shoulder a double burden — servicing EMIs on one hand and paying rent on the other — only to find their ‘dream home’ reduced to an unfinished building,” the bench observed.

The judges stressed that Article 21 mandates timely possession of promised homes, and that the State has a constitutional obligation to protect homebuyers and the economy at large.

Revival Fund and SWAMIH Expansion

One of the most significant directions from the Court is for the Centre to consider expanding the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund or create a special revival fund under the National Asset Reconstruction Company Ltd (NARCL). This fund would provide last-mile financing to viable but stalled projects undergoing insolvency, preventing their liquidation.

The Court also ordered that any such fund must be subject to periodic audits by the Comptroller and Auditor General (CAG), with reports made public in a format easily understood by citizens.

Curbing Speculative Misuse of Insolvency Laws

The judgment draws a sharp distinction between genuine homebuyers and speculative investors. The Court ruled that speculative participants — those who enter into buyback or high-return schemes without the intention of taking possession — cannot misuse the Insolvency and Bankruptcy Code (IBC) as a recovery tool.

Such investors, the Court said, have alternative remedies under consumer protection laws, the Real Estate (Regulation and Development) Act (RERA), or civil courts.

Strengthening Tribunals and RERA

The Supreme Court issued 12 binding directions aimed at improving the functioning of the National Company Law Tribunal (NCLT), NCLAT, and state-level RERA authorities:

  • Fill vacancies in NCLT and NCLAT “on a war footing” and create dedicated IBC benches for real estate cases.
  • Upgrade tribunal infrastructure, with the Centre required to file a compliance report within three months.
  • Equip RERA authorities with adequate staff, legal experts, and resources.
  • Ensure project-wise insolvency proceedings instead of company-wide cases, to protect solvent projects and genuine buyers.
  • Mandate escrow accounts for funds in early-stage projects, with phased disbursement linked to construction progress.
  • Require registration of property transactions with local revenue authorities once at least 20% payment is made.
  • For senior citizens, contracts deviating from the Model RERA Agreement must be supported by sworn affidavits confirming awareness of risks.

Committee for Systemic Reforms

The Court also directed the formation of a high-level committee within three months, chaired by a retired High Court judge, with members from the Ministry of Law, Ministry of Housing, NITI Aayog, National Institute of Urban Affairs (NIUA), IIMs, and industry representatives. This committee will recommend systemic reforms to improve transparency, accountability, and credibility in the real estate sector.

Impact on the Real Estate Sector

The ruling is expected to have far-reaching consequences:

  • Boost for genuine homebuyers: By prioritising their rights over speculative investors, the Court has reinforced consumer protection.
  • Pressure on developers: Builders will face stricter scrutiny and will be required to maintain financial discipline.
  • Government accountability: The Centre and states will be under pressure to implement the Court’s directions swiftly.
  • Investor caution: Speculative schemes promising unrealistic returns may face legal challenges.

Why This Matters

India’s real estate sector has been plagued by delays, defaults, and lack of accountability, leaving thousands of projects incomplete. The sector is also a major driver of the economy, linked to banking, manufacturing, and employment. By recognising housing as a fundamental right, the Supreme Court has elevated the issue from a contractual dispute to a matter of constitutional importance.

The judgment also aligns with global trends where housing is increasingly seen as a human right, not just a market commodity.

Next Steps

The Union Government must now:

  1. Evaluate and possibly expand the SWAMIH Fund or create a new revival fund.
  2. File compliance reports on tribunal reforms within three months.
  3. Constitute the reform committee and act on its recommendations.
  4. Ensure state-level RERA bodies are adequately staffed and empowered.

Failure to act could invite further judicial intervention, as the Court has made it clear that inaction will not be tolerated.

Conclusion

This judgment is more than a legal ruling — it is a policy blueprint for cleaning up India’s real estate sector. By linking the right to housing with the right to life, the Supreme Court has sent a strong message: a home is not just a structure of bricks and mortar, but a cornerstone of dignity, security, and well-being.

If implemented effectively, the Court’s directions could restore faith in the housing market, protect millions of homebuyers, and ensure that the dream of owning a home does not turn into a lifelong nightmare.

 

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