The Stalled Project Crisis: Why Adjudication Alone Cannot Complete Homes
By Parneet S Sachdev, Chairman RERA, Haryana
Sabeer Bhatia, founder of Hotmail, recently revealed on X, that an ultra-luxury apartment he booked in India in 2012 has been delayed, with builders now promising possession only in 2032. He called India a “zero trust transactional country”.
In many unfinished housing sites, the company office has disappeared, the contractor has withdrawn and the promised date of possession is a relic in an old brochure. Yet the homebuyer’s housing-loan instalment continues. Schooling, retirement and family plans remain suspended between a house already paid for and a home that does not exist.
The Expert Committee constituted by the Ministry of Housing and Urban Affairs under the chairmanship of Amitabh Kant recorded an Indian Banks’ Association estimate of 4.12 lakh stressed dwelling units involving approximately ₹4.08 lakh crore. About 2.40 lakh of these units were situated in the National Capital Region alone. The Committee identified lack of financial viability as the primary cause of stress and cautioned that insolvency proceedings (under IBC) should ordinarily be a measure of last resort rather than the first response to every distressed project.
When A Legal Victory Does Not Produce A Physical Result
The Real Estate (Regulation and Development) Act, 2016 gave homebuyers enforceable rights that were long overdue. An allottee may seek possession, refund, interest and compensation where the promoter fails to perform its obligations. Regulatory authorities can issue binding directions, impose penalties, revoke registration and act under Section 8 to facilitate the remaining development of a project after revocation.
These powers are indispensable. However, construction depends upon an entirely different combination of ingredients: cash flow, contractors, labour, statutory approvals, a credible management etc.
An authority may direct a promoter to hand over possession. It cannot, through the order, procure the ₹100 crore required to finish the project. It may award refunds with interest to several hundred allottees. But if the promoter has no unencumbered assets and the project account is empty, individual monetary awards may remain unexecuted. Worse, a succession of refund orders can drain the very cash flow required to complete homes for those allottees who still want possession.
This is the central paradox of the stalled-project crisis.
There is another aspect. One group wants an immediate refund. Another wants the project completed. A third lacks a conveyance deed. Those who paid early may have contributed almost the entire price; others may still owe substantial instalments. Unsold inventory may be valuable, but mortgaged units are an issue. Multiple proceedings may be pending before RERA, consumer commissions, civil courts etc.
A stalled project is therefore not merely a bundle of complaints. It is a distressed economic entity.
Amrapali: The Court Had To Become A Project-Rescue Institution
The Amrapali litigation of Uttar Pradesh illustrates the limits of ordinary adjudication. Approximately 42,000 flats had been proposed across the group’s projects. Homebuyers who booked apartments between 2010 and 2014 had paid between 40 and 100 per cent of the sale consideration, but the promised homes were not delivered. The Supreme Court found serious diversion of homebuyers’ funds, cancelled the registration of the Amrapali companies under RERA and appointed the National Buildings Construction Corporation to undertake completion. (API SCI)
The importance of the case lies in the remedy. The Court created a monitored completion architecture. It appointed a receiver, identified assets, restrained alienation, provided for construction through NBCC and repeatedly supervised funding, sales and execution.
Amrapali was an extraordinary case and received extraordinary judicial attention. However, a national solution cannot depend upon every stalled project reaching the Supreme Court.
The Financial Gap That Judgements Cannot Fill
Some stalled projects suffer diversion of funds or fraudulent conduct. Others become unviable because of cost escalation, prolonged litigation, delayed approvals, land disputes, excessive debt etc. In certain projects, only the last 10 or 20 per cent of construction remains, but there is no working capital to cross the final distance.
This is where last-mile finance becomes decisive.
The Special Window for Affordable and Mid-Income Housing, or SWAMIH Fund, was established to finance stressed but viable residential projects. By June 2026, official government information recorded that the fund, backed by a corpus of ₹15,531 crore, had delivered more than 63,000 homes and supported a portfolio exceeding one lakh housing units. The Government has also announced SWAMIH Fund 2, with a proposed commitment of up to ₹15,000 crore, aimed at completing another one lakh stressed units. (Press Information Bureau)
SWAMIH demonstrates a proposition that ought to guide regulatory policy: Many stalled projects contain trapped value, not merely unrecoverable loss. A nearly completed project may possess receivables from existing allottees, unsold apartments, unsold inventory value. With disciplined funding, ring-fenced cash flows and professional monitoring, these assets can finance completion.
Rescue finance must therefore be accompanied by rescue governance.
From Complaint Management To Project Triage – The Rise of AI
AI is a valuable tool for predictive assessment. RERA authorities already receive periodic disclosures relating to construction progress, project accounts. AI can easily use this info to enable an early-warning mechanism of distress.
Projects showing repeated extensions, declining construction progress, abnormal financial withdrawals etc can be automatically red-flagged.
The MoHUA Expert Committee recorded that stalled projects need classification according to financial, legal, structural and physical constraints, followed by customised resolution strategies.
A Statutory Project-Resolution Framework
After 10 years of RERA 1.0, RERA 2.0 needs to institutionalise project rehabilitation through a clear protocol. Every materially stalled project should undergo a time-bound forensic, technical and financial viability assessment.
Where revival is feasible, the RERA Authority needs to have a statutory mandate to direct and constitute a project-specific resolution committee comprising the promoter or substitute developer, representatives of allottees, lenders, the development authority and independent construction and finance professionals. The project account must be ring-fenced.
However, waiver cannot become a reward for deliberate default.
Replacement of the promoter must also become operationally easier. Section 15 of RERA Act regulates transfer of a real estate project to a third party, while Section 8 contemplates completion through the competent authority, the association of allottees or another appropriate mechanism after revocation. These provisions need greater teeth and should be supported by model procedures.
The insolvency framework must similarly become more sensitive to the project-based character of real estate. (IBBI)
Prevent And Enforceable Justice
The mandate for RERA as a regulator is to facilitate the development of Real Estate as well as post registration adjudication. While the departments of town planning have already thoroughly examined the plans and the technicalities of the project before issuing a licence to build the project, what remains largely unexamined is the financials. Whether the promoters etc have the economic capability to make this business viable? Is the projected cash flow NPV positive? Instead of a forensic audit after stress, an upfront viability analysis can prevent many projects from going under.
In many foreign jurisdictions, a 25% of project value is kept as a deposit with RERA/regulator to ensure that refunds etc, at any stage can be given seamlessly.
India may also experiment with such provisions.
The ultimate performance indicator of real estate regulation is therefore, not the number of complaints disposed of. It is the number of distressed homes completed, families rehabilitated and projects prevented from failing in the first place.
Disclaimer: Views expressed in this article are those of the author, and not necessarily of Realty&More.
