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SC Issues Notice To RBI & Centre In Plea Seeking Relief Measures For Real Estate Sector Amid Covid-19 Pandemic Situation

Sanya Talwar
21 Jun 2020 11:29 AM GMT
SC Issues Notice To RBI & Centre In Plea Seeking Relief Measures For Real Estate Sector Amid Covid-19 Pandemic Situation
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The Supreme Court on Friday issued notice on a plea seeking a relief package for the ailing real estate sector in light of the pandemic situation.

A bench of Justices Ashok Bhushan & V. Subramanium issued notice to the Reserve Bank of India (RBI) as well as the Central Government in the Petition praying for reliefs including waiver of interest during moratorium period, restructuring and benefits of reduction in repurchases rates. 

Senior Advocate Kapil Sibal appeared for the petitioner, Credai MCHI, an association of over 1400 real estate developers in Mumbai and submitted that even though the real estate sector accounted for a large chunk of the GDP, the Government had not rolled up any relief of policy package for it.

Sibal: "The real estate industry is under a lot of distress. It requires a boost. There is no policy relief package even though the sector has a massive contribution to the GDP. Inadequate or no measures would result in a financial massacre for this sector"  

At this juncture, the bench stated that the case ought to be tagged with the other batch of pleas challenging the RBI circular declaring deferred repayment of loans during the 3 month lockdown period.

Sibal insisted that the prayer sought in the instant plea were more specific and hence a reply was required to be filed by the stakeholders.

According to the Petitioner-association, the sector has been discriminated against by the Government and was not allowed to operate even though others were allowed to function.

"that the lockdown orders-imposed prohibition in carrying on construction activities during the period of lockdown which infringed Article 19(1)(g) of the Constitution. However, Constitution allows imposing reasonable restrictions in the nature of prohibition, which is justified in the given circumstances, however if not accompanied by adequate attendant effective reliefs / relaxations, it makes it unreasonable and also discriminatory, since other sectors were allowed to operate during the lockdown.....Similarly, without adequate attendant effective reliefs / relaxations, the prohibition becomes discriminatory, as other sectors were allowed to operate during the lockdown...." - Plea In SC

Further to this, the petition highlights that in light of the pandemic situation and ongoing lockdown, the real estate industry was slumping due to the surging economic slowdown.

"INR 13,38,964 crores in deployed in housing sector and INR 22,7770 crores is deployed towards commercial real estate, which is at stake if real estate industry dies a pitiful death. Considering the economy where there are virtually no takers of a real estate project because of issues which the sector was already facing and ones which have emanated due to the Virus and lockdown the stressed assets market would collapse resulting in opportunists and hostile take overs. Inadequate or no measures to bailout the sector would result in the financial massacre".

Mr. Samit Shukla, Associate Partner; Mr. Manhar Singh Saini, Senior Associate and Ms. Saloni Shah, Associate of DSK Legal represented the petitioner.

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