Right To Secure & Timely Possession Of One’s Home Is Facet Of Fundamental Right To Shelter Under Article 21: Supreme Court

The Supreme Court held that the right to secure, peaceful, and timely possession of one’s home is a facet of the fundamental right to shelter enshrined under Article 21 of the Constitution.

The Court held thus in a batch of four Civil Appeals arising out of the final Judgment passed by the National Company Law Appellate Tribunal (NCLAT).

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan observed, “… it would be thoroughly erroneous to treat home-buying as a mere commercial transaction, or worse, to reduce housing to the status of speculative instruments such as stocks, debentures, futures, or options through creative contractual devices. Housing is neither a luxury nor a commodity for speculation – it is a fundamental human need. The right to secure, peaceful, and timely possession of one’s home is therefore a facet of the fundamental right to shelter enshrined under Article 21.”

The Bench reiterated that the right to social and economic justice as well as the right to shelter are fundamental rights encompassed within the ambit of the right to life.

Factual Background

In the lead case, the Appellant was a homebuyer/financial creditor. The NCLAT had reversed the admission of the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Appellant holding that she was a “speculative investor” and not a genuine homebuyer/financial creditor. Following this, the NCLAT set aside the admission of Section 7 application filed by the other Appellant, holding that she too fell within the category of “speculative buyer” who sought to profit from a lucrative agreement. The directors of the Corporate Debtor, in their cross-Appeals, further challenged the first impugned Order on the limited ground of non-applicability of the Ordinance/Amendment Act to the facts of the case.

Reasoning

The Supreme Court in view of the facts of the case, noted, “The residential real estate sector plays a systemic role in the Indian economy. It is closely interlinked with banking, steel, cement, and allied industries, and is among the largest employment generators. Despite robust demand, the sector has been plagued by delays, defaults, and lack of accountability, leaving countless families without possession of homes despite having invested their life savings. In this backdrop, this Court has consistently reiterated that the IBC is not a recovery mechanism or a bargaining chip for individual disputes. Rather, it is a collective mechanism intended to revive viable projects and safeguard the fundamental right to shelter of genuine homebuyers.”

The Court reiterated the following settled principles –

• RERA (Real Estate Regulatory Authority) remains the primary forum for redressal of homebuyers’ grievances;

• The IBC is a forum of last resort, intended to secure revival and completion of viable projects, not to serve as a debt recovery mechanism; and

• Consumer forums should confine themselves to adjudicating individual service deficiencies, thereby avoiding conflicting or overlapping orders across multiple fora.

The Court further said that strict adherence to IBC timelines and settled precedent is imperative to realise two complementary objectives –

(i) ensuring revival and completion of stalled projects for the benefit of genuine homebuyers; and

(ii) curbing speculative activity which has functioned as a “slow poison” for the residential real estate sector and, by extension, the Indian middle class.

Speculative Investors

The Court explained, “A “speculator” is “one who practices speculation in trade or business”. Two elements emerge: (i)expectation of unusually high profits; and (ii)activity in the nature of business or trade. These elements accord with the ratio of Pioneer Urban, which described speculative investors as those seeking refund or profit without an intention to occupy.”

The Court further said that where there is an actual chain of delivery ending with possession by a genuine buyer, the transaction is not speculative and conversely, in the present context, where there is no intention to take possession, the onus to find another buyer and effect resale is cast on the developer.

“Delivery in such cases is more in the nature of a lien or an option. For a genuine allottee, however, delivery and possession are a sine qua non. … Thus, the determination of whether an allottee is a speculative investor, must be holistic, having regard to the terms of the agreement, the allotment letter, the payment terms, and the overall conduct of the allottee”, it added.

The Court also clarified that the distinction between speculative investors and genuine homebuyers is relevant only at the stage of initiation of CIRP (Corporate Insolvency Resolution Process) and such allottees are not barred from filing claims for the principal amount invested, or from pursuing remedies before other fora in accordance with law.

“Accordingly, the findings of the NCLAT treating the appellants as speculative investors warrant no interference. Both impugned orders, setting aside admission of the Section 7 applications, stand affirmed. However, liberty is reserved to the appellants to pursue their remedies before appropriate fora in accordance with law. In such proceedings, the bar of limitation shall not apply, in line with settled jurisprudence of this Court”, it held.

Right to shelter as a fundamental right: Constitutional obligation of the State to protect homebuyers

The Court reiterated that the Right to Shelter is an integral part of the right to life under Article 21 of the Constitution and this recognition casts a corresponding duty on the State to ensure access to adequate housing, particularly for weaker sections.

“Indeed, various welfare schemes such as the Pradhan Mantri Awas Yojana (PMAY) have been initiated by the Government to provide affordable housing. … A home is not merely a roof over one’s head; it is a reflection of one’s hopes and dreams – a safe space for a family, a refuge from the worries of the world. With India rapidly industrialising and the rural-to-urban mobility proceeding at lightening pace, the demand for housing has risen sharply”, it remarked.

The Court added that yet, the plight of tax-paying middle-class citizens paints a disheartening picture and 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.

“In some cases, construction has not even commenced despite full or substantial payment. An average homebuyer may be a teacher, lawyer, doctor, IT professional, or a government employee, who has poured his or her hard-earned money into the pockets of a developer. For such individuals, a stable roof over their family’s head is all they desire. The anxiety of not having a home despite paying a fortune is bound to take a serious toll on health, productivity, and dignity”, it observed.

Furthermore, the Court noted that the life savings of a common person culminate in timely possession of their promised home and Article 21 would mandate nothing less.

“The State carries a constitutional obligation to create and strictly enforce a framework wherein no developer is permitted to defraud or exploit homebuyers. Ensuring timely project completion must be a cornerstone of India’s urban policy. Equally, the State must proactively address the menace of a parallel cash economy and speculative practices in the real estate market, which artificially inflate housing costs and enable “trigger-happy” investors seeking easy exits to jeopardize the interests of genuine end-users”, it emphasised.

The Court also remarked that it is imperative that RERA authorities are not reduced to toothless tigers and they must be equipped with adequate infrastructure, empowered tribunals, and effective enforcement mechanisms so that their orders are implemented swiftly, in letter and spirit; only then can the constitutional promise of the Right to Shelter under Article 21 be meaningfully realized for homebuyers.

Suggestions

The Court suggested the following ideas for the purpose of future reform –

(1) IBBI may consider introducing “Basel-like” early warning frameworks, drawing from comparative practices, such as, pre-bankruptcy mediation and preventive restructuring, requiring directors to initiate restructuring before defaults spiral out of control.

(2) The Union Government should undertake a consultative exercise to bring about uniformity in RERA Rules across States, to remove ambiguity and fill lacunae in what is otherwise a watershed legislation.

(3) Housing Boards, State-level Urban Development Authorities (e.g., DDA, GMADA, MHADA, CHB) and CPSUs should establish dedicated wings to revive and complete stalled projects under IBC mechanisms.

(4) It is a matter of grave concern that despite funding hundreds of crores into various government-run think tanks and management institutions such as IIMs and IITs, India still requires a robust homegrown consulting industry. Collaboration with Indian think tanks and academic institutions should be strengthened to build indigenous capacity for sectoral restructuring.

(5) The Union Government may also consider establishing a body corporate, on the lines of NARCL or otherwise, promoted by real estate/construction-focused PSUs or through Public-Private Partnerships, to identify, take over, and complete stalled projects under the IBC framework.

Conclusion

The Court said that the Government is constitutionally obliged to protect the interests of homebuyers and the economy at large and it is not merely about houses or apartments; the banking sector, allied industries, and employment for a large populace are also at stake.

“Before parting, we observe that the right to housing is not merely a contractual entitlement but a facet of the fundamental right to life under Article 21. Genuine homebuyers represent the backbone of India’s urban future, and their protection lies at the intersection of constitutional obligation and economic policy. Through these directions, this Court seeks to restore faith in the regulatory and insolvency framework, deter speculative misuse, and ensure that the “dream home” of India’s citizens does not turn into a lifelong nightmare”, it concluded.

Accordingly, the Apex Court disposed of the Appeals, affirmed the NCLAT’s findings, and directed the Registry to circulate a copy of the Judgment to the Cabinet Secretary to Government of India as well as to the Chief Secretaries of all States, who shall take necessary steps at the earliest.

Cause Title- Mansi Brar Fernandes v. Shubha Sharma and Anr. (Neutral Citation: 2025 INSC 1110)

Appearance:

Senior Advocate Saurabh Mishra, AORs Awanish Sinha, Anindita Mitra, Akhil Anand, Nupur Kumar, Kaustubh Shukla, Astha Sharma, Advocates Chandra Shekhar Yadav, Vineet Kumar, Harshita Gulati, Diksha Dadu, Pushpanjali Singh, Praveen Kumar Singh, Vishal Sinha, Mantika Haryani, and Bhanu Mishra.

Click here to read/download the Judgment