Paid but still no home: SC rejects Parsvnath proposal, warns of tougher action

The Supreme Court rejected Parsvnath Developers' proposal to hand over flats or repay buyers within a year. It warned that a High-Powered Committee could be appointed unless a fresh plan addresses all allottees' claims.

In Short

• Court warns of High-Powered Committee if new plan fails
• Homebuyers waited years despite full payments
• RERA orders ignored, favouring builder over buyers

For hundreds of Parsvnath Developers homebuyers, a Supreme Court hearing has brought a sharp message: another promise of possession or repayment will not be enough unless it addresses the claims of allottees waiting for relief.

The Supreme Court has rejected Parsvnath Developers’ proposal on handing over flats or repaying money to homebuyers, calling it “another device” to delay compliance.

The court has now allowed the developer to submit a fresh proposal, but warned that it could appoint a High-Powered Committee if the new plan does not satisfy the claims of allottees across the company and its subsidiaries.

The case has put the spotlight on the prolonged struggle of Parsvnath homebuyers, some of whom have been waiting for their homes for years despite having paid substantial amounts, and in some cases the entire sale consideration.

COURT REJECTS ONE-YEAR POSSESSION PROMISE

During the hearing, Parsvnath proposed to deliver possession of dwelling units to homebuyers within one year. The Supreme Court bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana rejected the proposal.

The bench said the proposal appeared to be another attempt to delay possession and repayment.

Parsvnath Group has 24 housing projects involving around 27,000 dwelling units. Of these, about 24,000 units have been sold, while around 3,000 are yet to be offered for possession, according to the submission made before the court.

The court has now permitted the company to submit another proposal that may be acceptable to the homebuyers.

But it made clear that the proposal must address the claims of allottees across Parsvnath and its subsidiary companies.

HOMEBUYERS HAVE ALREADY WAITED FOR YEARS

The Supreme Court's frustration was particularly evident in its reference to the case of Rita Tikku and Lokaish Tikku, who invested their life savings in the Parsvnath Exotica project in Sector 53, Gurugram.

The couple paid Rs 1.78 crore for their flat. The agreement provided for possession within 36 months, with possession becoming due in February 2013.

Despite paying the full sale consideration, the construction was nowhere near completion. The court noted that until 2021, the buyers had neither received possession nor got their money back.

The case was cited by the bench while dealing with the wider dispute involving Parsvnath and its homebuyers.

The Supreme Court is currently hearing more than 10 cases against the same builder.

COURT WARNS OF HIGH-POWERED COMMITTEE

The court has also indicated that it may take a more direct approach if Parsvnath fails to come up with a workable solution.

It said that unless a fresh proposal satisfying the claims of all the allottees or homebuyers is placed on record, it would be constrained to appoint a High-Powered Committee and entrust it with the responsibilities involved in resolving the matter.

During the hearing, the Chief Justice also asked the company to deposit Rs 500 crore with the Supreme Court registry, saying a High-Powered Committee could then be appointed.

The bench noted that some homebuyers already have money decrees in their favour but are still struggling to get relief.

The Supreme Court also expressed concern over the failure to implement orders passed by Haryana RERA.

The bench observed that state authorities, which should have protected homebuyers' interests, had apparently acted in a manner favourable to the builder, while the developer had failed to follow orders of even a quasi-judicial forum such as Haryana RERA.

The court's comments raise a larger question for homebuyers: what happens when a buyer wins an order from the real estate regulator but still cannot get possession, a refund or compensation?

That issue is particularly relevant in the Parsvnath cases, where the court has taken note of buyers who have spent years pursuing relief.

The court also refused to allow the Insolvency Resolution Professional (IRP) appointed in the insolvency proceedings against the real estate company to operate one of its frozen bank accounts.

The IRP had told the court that it had received around 3,000 claims from homebuyers and sought permission to operate at least one frozen account to run the firm's affairs.

The Chief Justice questioned the effectiveness of the insolvency process in the case, observing that if IRPs were working properly, homebuyers would not have had to approach the Supreme Court.

The company's bank accounts had earlier been frozen by the court.

WHAT THIS MEANS FOR PARSVNATH HOMEBUYERS

For homebuyers, the latest hearing means Parsvnath has been given another opportunity to put forward a solution, but the Supreme Court has made clear that a broad promise of possession within a year will not suffice.

The new proposal will have to address the claims of allottees and homebuyers across the group and its subsidiaries, including issues involving refunds, compensation for delayed possession and non-execution of RERA orders.

The court had already taken strong action on July 13, when it froze the bank accounts of Parsvnath and its directors and issued bailable warrants against the company's leadership after taking note of the 20-year struggle of senior citizens seeking possession.

The latest hearing takes that scrutiny further, with the court warning that it could step in directly through a High-Powered Committee if a comprehensive solution is not produced.

For homebuyers who have already spent years waiting, the message from the court is clear: another deadline will not by itself resolve the problem; the developer must come back with a plan that actually addresses the buyers' claims.

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