Real Estate Newsletter Aug 2026

Supreme Court opens a control-led pathway for industrial approvals in the Taj Trapezium Zone

Introduction

For nearly two years, setting up a new industrial unit or undertaking industrial expansion in the Taj Trapezium Zone (TTZ) required the leave of the Supreme Court. On 23.07.2026, this position changed when the Court modified the restriction imposed in October 2024, permitting the TTZ Authority to process approximately 400 pending applications for industrial projects in the region, subject to a prescribed scrutiny mechanism.

What the order says

The TTZ covers approximately 10,400 square kilometres around the Taj Mahal, including parts of Agra, Firozabad, Mathura, Hathras and Etah in Uttar Pradesh, and Bharatpur in Rajasthan. Since 1996, industrial development within the TTZ has been subject to strict regulation under the supervision of the Supreme Court. Consequently, obtaining approval for industrial projects and related activities in the region has been a lengthy and highly regulated process.

Under its 23 July 2026 order, the Supreme Court has permitted the TTZ Authority to process and take certain pending applications to their logical conclusion without seeking the Court’s prior approval in every case. This is subject to the concurrence of one expert nominated by the Central Empowered Committee (CEC) and one expert nominated by the National Environmental Engineering Research Institute (NEERI).

The Authority may approve proposals classified as “non-polluting” where both nominated experts and the Authority are in agreement. If either expert raises an objection to the proposal being treated as non-polluting, the matter cannot proceed without being placed before the Supreme Court for appropriate orders.

The order also provides for transparency and public participation in the process. Decisions and clearances are to be uploaded on the CEC’s website, enabling members of the public to submit objections and suggestions, which are required to be considered in accordance with the mechanism prescribed by the Court.

The Court has therefore relaxed the earlier restri-ction without removing its supervisory framework. The Amicus Curiae also retains the ability to bring matters before the Supreme Court where necessary.

What it means for real estate

For real estate developers, industrial landowners and clients with properties in the TTZ, this order has three important implications.

First is the increased onus on due diligence in relation to local and regulatory approvals. While the procedural route for eligible pending applications has been relaxed, a local clearance alone will not necessarily be sufficient. For applications being con-sidered under this mechanism, it will be important to verify whether the requisite scrutiny and concurr-ence of the nominated CEC and NEERI experts has been obtained and whether the application has been processed in accordance with the Supreme Court’s directions.

Second, while the revised mechanism may facilitate more efficient processing where the TTZ Authority and both experts are in agreement, the timeline for approvals will remain uncertain in cases of disag-reement. Where either expert objects to the proposal being treated as non-polluting, the matter will have to be placed before the Supreme Court, which may further prolong the approval process.

Third, while the order provides significant relief in respect of pending applications, it is important to recognise the limited nature of this relaxation. It is directed towards applications that can be classified as relating to “non-polluting” industries and does not constitute a blanket relaxation of the restrictions governing industrial activity within the TTZ. Existing restrictions applicable to coal- and coke-based industries, among other environmental safeguards, remain unaffected.

Overall, the order reads less like a policy shift and more like the Court managing a backlog while keeping its supervisory oversight intact. For a heritage-sensitive zone, the balance between economic activity and environmental precaution will remain a recurring theme rather than a one-time fix. Clients with pending applications should therefore treat this as an opening, rather than a carte blanche.

Homebuyers gain stronger protection as insolvency jurisprudence continues to evolve

The Insolvency and Bankruptcy Code, 2016 (IBC) has emerged as one of the most consequential legal interventions affecting India’s real estate industry over the past decade. Originally designed as a time-bound mechanism to resolve corporate insolvency, its application to real estate developers has produced a distinct jurisprudence that continues to evolve.

Homebuyers as Financial Creditors

The most transformative development came with the 2018 amendment, which classified home-buyers as “financial creditors” under Section 5(8)

(f) of the Code. This gave allottees in real estate projects the status of financial creditors and enabled them, subject to the statutory requir-ements, to initiate insolvency proceedings against defaulting developers and participate in the Committee of Creditors (CoC).

The Supreme Court upheld this classification in Pioneer Urban Land & Infrastructure Ltd. v. Union of India (2019), affirming that amounts raised from homebuyers under real estate projects fall within the scope of “financial debt” under the Code, given the commercial effect of the transaction and the time value of money involved.

Project-wise Resolution

A recurring challenge in real estate insolvencies is that developers often undertake multiple projects, sometimes across different cities, under a single corporate entity. Admitting the entire company into insolvency for a default relating to one project can adversely affect homebuyers in otherwise healthy and ongoing projects.

The National Company Law Appellate Tribunal (NCLAT), notably in Flat Buyers Association Winter Hills-77, Gurgaon v. Umang Realtech Pvt. Ltd., adopted what came to be described as a “reverse CIRP” approach, allowing the resolution process to be structured around the stressed project while seeking to protect the interests of stakeholders in other projects.

Subsequent judicial developments have continued to examine and refine the possibility of project-wise resolution in real estate insolvencies. The Supreme Court, in Indiabulls Asset Reconstruction Co. Ltd. v.

S.D. Awasthi and other decisions concerning the treatment of real estate projects under the IBC, has also contributed to the evolving jurisprudence on balancing creditor recovery with the completion and preservation of viable projects.

The broader objective has been to avoid a situation where insolvency proceedings against a developer in relation to one stressed project unnecessarily jeopardise otherwise viable projects and their homebuyers.

Moratorium and Possession Rights

Section 14 of the IBC imposes a moratorium upon admission of a corporate insolvency resolution process (CIRP), restricting the institution or continuation of certain suits and proceedings against the corporate debtor and taking specified enforcement actions against its assets. This has significant implications for real estate stakeholders.

Homebuyers seeking possession, refunds or other remedies may therefore face limitations on enforce-ment proceedings during the CIRP. However, the effect of the moratorium depends on the nature of the proceeding and the relief being sought.

The relationship between the IBC and remedies available under the Real Estate (Regulation and Development) Act, 2016 (RERA) has been the subject of considerable judicial scrutiny. While the IBC, as a central legislation dealing specifically with insolvency and resolution, can prevail where there is a conflict between the two statutory regimes, the commencement of CIRP does not necessarily extinguish every remedy available to a homebuyer under RERA. The Supreme Court has recognised that the two enactments operate in different fields, although the exercise of remedies under RERA may be affected once insolvency proceedings have com-menced, particularly where such proceedings wou-ld interfere with the insolvency resolution process.

Impact on Lenders and Developers

For lenders, the threat of IBC proceedings has strengthened recovery leverage against defaulting developers and, in some cases, has encouraged settlements or restructuring efforts before or during insolvency proceedings.

For developers, the risk of losing management control to a resolution professional, together with the possibility of a change in ownership or manag-ement through the resolution process, has created greater pressure for disciplined financial and project management. It has also contributed to consolidation in the sector, with financially stronger developers and investors acquiring stressed proj-ects or developer entities through insolvency resolution processes.

At the same time, real estate insolvencies have demonstrated that resolution of a developer’s finan-cial distress is often closely connected with the completion of the underlying projects. The interests of lenders, homebuyers, landowners, contractors and other stakeholders therefore have to be consi-dered within the resolution framework.

Practical Considerations for Stakeholders

For real estate developers, the IBC underscores the importance of maintaining clear project-wise financial records, robust construction-linked paym-ent structures, prudent cash-flow management and proactive engagement with creditors to reduce the risk of defaults escalating into insolvency proceedings.

For homebuyers, timely filing of claims and active participation in the CoC, where applicable, remain essential to safeguarding their interests. Given the complexity of real estate insolvencies, homebuyers should also closely monitor the resolution process and understand the implications of proposed resolution plans on possession, refunds and other contractual or statutory rights.

For lenders and investors, understanding project-wise resolution jurisprudence is critical when asses-sing recovery prospects in stressed real estate assets. The viability of the underlying project, the status of approvals and construction, the rights of homebuyers and the availability of project-level assets can all materially affect recovery and resolut-ion outcomes.

Conclusion

Real estate insolvencies continue to reach the NCLT and NCLAT, the interplay between the IBC, RERA and contract law will continue to evolve. The jurisprudence has increasingly sought to balance the objectives of insolvency resolution and creditor recovery with the need to preserve viable real estate projects and protect homebuyers.

Stakeholders including developers, homebuyers and financiers would therefore do well to stay abreast of these developments, given their direct bearing on transaction structuring, risk allocation, project completion and dispute resolution strategy in the real estate sector.

Registration extensions do not dilute developers' contractual possession obligations

Introduction

In a batch of 26 complaints decided together, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has once again drawn a firm line between a promoter’s project registration timeline and its contractual obligations to allottees. The order, passed on 20 July 2026, arose out of complaints filed by flat purchasers in “Mont Vert Belcreek”, a project developed by the respondent in Bhugaon, Mulshi, Pune.

Background

The complainants had booked flats in the said project between 2021 and 2023, with their respective agreements for sale uniformly fixing 31 May 2025 as the date of possession under Clause

12. That date passed without possession, and the project’s MahaRERA registration also expired on

the same day. The complainants accordingly approached MahaRERA seeking possession along with interest for delay under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA).

The Promoter’s Defence

The respondent resisted the claims primarily on the ground that it had subsequently obtained an extension of the project’s registration up to 31 December 2028 and argued that the complaints were therefore premature. It also cited financial difficulties, including SARFAESI proceedings initiat-ed by its lender, contractor-related disruptions and alleged payment defaults by certain allottees, as circumstances beyond its control.

MahaRERA’s Reasoning

The Authority rejected the “prematurity” argument. It held that the project completion date reflected on the MahaRERA portal is distinct from the possession date contractually promised to an allottee.

Since the agreements for sale were executed after RERA came into force, the promoter was bound by the possession timeline specified therein. The Authority held that obtaining an extension of the project registration, whether or not the allottees had consented to such extension, could not by itself modify the possession date contained in the regist-ered agreements for sale. As the agreements for sale are registered documents, any modification to the contractual possession date would require an appropriate registered deed of amendment.

On the financial difficulties pleaded by the respondent, MahaRERA acknowledged the difficult-ies faced by the promoter but did not accept them as a basis for defeating the allottees’ entitlement to interest for delayed possession under Section 18. The decision therefore reinforces the principle that a promoter’s regulatory registration period and its contractual obligation to hand over possession operate as distinct timelines.

Outcome

The complaints were partly allowed. The claims for compensation were declined, as the allottees had chosen to remain invested in the project. However, interest for delayed possession was granted at the applicable rate, computed from 1 June 2025 until the offer of possession with an occupancy certificate.

While the Authority directed that the actual disbursal of the interest be deferred until the date of the occupancy certificate, it also permitted the promoter to adjust any genuinely outstanding dues from the amounts payable at that stage.

Takeaway

The ruling serves as an important reminder that an extension of a real estate project’s MahaRERA registration does not, by itself, extend or modify the possession date contractually agreed with an allottee. The regulatory validity of a project and the promoter’s contractual commitment to deliver poss-ession are distinct matters.

For developers, the decision highlights the import-ance of aligning project timelines with contra-ctual commitments and carefully documenting any agreed modification to the terms of an agreement for sale. For allottees, it reinforces the significance of the possession date recorded in the registered agreement for sale when assessing entitlement to interest for delayed possession under Section 18 of RERA.

Refund of Sum Named in Contract Does Not Prevent Specific Performance: Supreme Court Considers Section 23

Introduction

In its judgment in Jaspal Singh v. Ashwani Kumar, dated 15 July 2026, the Supreme Court considered the effect of a clause commonly found in agreements to sell immovable property, providing for refund of the earnest money paid where the sale deed is not executed. A Bench comprising Justice K.V. Viswanathan and Justice Alok Aradhe held that the presence of such a clause does not, by itself, deprive a purchaser of the right to seek specific performance.

Background

The appellant had agreed to purchase the respond-ent’s half share in an immovable property. A substantial portion of the sale consideration was paid as earnest money, and the date for execution of the sale deed was subsequently extended twice by mutual consent. The appellant later appeared before the Sub-Registrar, but the respondent did not attend.

The appellant thereafter filed a suit seeking specific performance, with an alternative prayer for refund of the amount paid and damages. The respondent denied the transaction and alleged that the documents had instead been executed as collateral security in connection with a different arrangement.

The Trial Court found that the agreement and the subsequent extensions had been proved and that the appellant was ready and willing to perform his obligations. However, it declined to grant specific performance on the ground that the agreement contemplated refund of the earnest money in the event of non-execution of the sale deed.

The First Appellate Court reversed this finding and decreed specific performance. The High Court, in second appeal, restored the Trial Court’s decree directing refund.

Section 23 Consideration

Section 23 of the Specific Relief Act, 1963 addresses contracts containing a sum named as payable in the event of breach. The provision makes clear that the mere naming of such a sum does not automatically prevent a court from granting specific performance. The relevant question is whether the contract shows that the sum was intended to give the defaulting party an option of paying money instead of performing the contract, or whether it merely provides for the consequences of breach.

In the present case, the Supreme Court found nothing in the relevant clause indicating that either party had been given an option to treat payment or refund of the specified amount as a substitute for performance. The clause merely recorded the consequence of non-execution of the sale deed and did not confer a contractual right on either party to walk away from the transaction by paying or accept-ing the specified sum.

Relying on M.L. Devender Singh v. Syed Khaja, the Bench reiterated that the naming of a sum as compensation for breach does not, by itself, defeat a claim for specific performance. What is material is whether the contract demonstrates that the payment was intended to operate as a substitute for performance, rather than merely as a consequence or deterrent in the event of breach.

Findings on Genuineness and Second Appellate Scope

The Court also rejected the High Court’s reliance on the fact that the transaction concerned an undivided share and that the time for execution of the sale deed had been extended twice, as grounds for doubting the genuineness of the transaction.

The Court observed that a co-owner’s undivided share constitutes a legally transferable interest in the property. Similarly, extensions of time mutually agreed between the parties are not, by themselves, indicative of an absence of a genuine transaction and may instead demonstrate that the parties continued to treat the agreement as subsisting.

Reaffirming the limited scope of interference under Section 100 of the Code of Civil Procedure, 1908, the Bench held that a High Court exercising second appellate jurisdiction cannot ordinarily disturb concurrent findings of fact merely because it may have arrived at a different view on the same evidence. The Supreme Court accordingly found that the High Court had exceeded the permissible scope of interference in second appeal.

Conclusion

For practitioners, the ruling reiterates that refund-of-earnest-money clauses commonly incorporated in agreements to sell do not, without more, convert a purchaser’s remedy into a purely monetary one. The mere stipulation that earnest money may be refunded upon non-execution of the sale deed will not necessarily bar a claim for specific perform-ance.

Where parties intend a contractual sum to operate as an alternative to performance, the agreement must make that intention sufficiently clear. A clause merely prescribing the consequence of non-performance, without conferring an option to substitute payment for performance, may not be sufficient to prevent the court from granting specific performance.

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