The Supreme Court has stayed all construction activities in states and Union Territories which do not have a solid waste management (SWM) policy under the Solid Waste Management Rules, 2016. States such as Maharashtra, Uttarakhand and Madhya Pradesh, and Union Territory of Chandigarh have come under the scanner. However, the court lifted the stay imposed on Maharashtra and Uttarakhand, after the two states submitted rules for SWM policies.
For a few in the builders’ fraternity, the judgement still remains clouded with ambiguity. According to them, the judgement will have a colossal impact on the real estate industry, particularly the ongoing projects.
"We need to look at the fine print in the recent Supreme Court order banning new construction in three states, including Maharashtra since the Maharashtra Chamber of Housing Industry (MCHI) was not party to this case,” said Mayur Shah, Managing Director, Marathon Group and Immediate Past President, MCHI. He adds: “Greater clarity in this matter is required since the apex court in March, 2018 had lifted the ban on new constructions in Mumbai and Mumbai Metropolitan Region, following the intervention by MCHI.”
“We wish to consult legal experts to ascertain whether building construction in Mumbai is also part of the new SC order or it affects the infrastructure projects alone,” said Shah.
The industry view
In the view of Rohit Gera, Managing Director, Gera Developments, “there will be no impact of this judgement in Maharashtra as the state government has already clarified that there is a policy that exists on solid waste management.”
The lawyer representing the Maharashtra government has categorically made a statement that the state has a policy for solid waste management and it will ask the apex court for some time to present the policy. “I think the court taking such a strong stand, indicates the level of frustration for the states not responding to their directions,” Gera conceded.
Getamber Anand, Chairman, CREDAI National said, "We understand the Supreme Court's predicament and concerns, however we, at CREDAI, feel that the court should not stay the construction activities as this will have a direct implication on the daily wage earners in the industry while the GDP of the nation could also suffer.” He believes solid waste management is still ‘a work in progress’ and while appropriate action could be taken by the concerned state authorities, the decision to stop the construction activities may not be a definitive solution to resolve the matter.
According to industry experts, the Supreme Court's decision is good in the long-term, but it will certainly have an impact on ongoing construction projects. It may lead to a number of job losses and cost overruns, along with delays in execution of projects. Such blanket bans in the new framework of RERA can be harmful for both developers as well as the buyers.
Amar Haware, Executive Director and CFO, Haware Properties believes, “With the imposition of strict penalties for delays, ongoing projects would suffer. It would have been better if the Supreme Court would have imposed this ban on new projects and allowed ongoing projects to continue.”
However, stakeholders from the real estate community were anticipating that the apex court would lift the ban on all construction activities, as the policy and rules on SWM were already in place in Maharashtra and Uttarakhand. This comes as a sign of relief for builders in these two states and they are hopeful that development work will resume shortly.
The Supreme Court order
As per the Supreme Court judgement, Rs 5 lakh penalty has been imposed on Andhra Pradesh, whereas Chandigarh, Madhya Pradesh, Maharashtra and Uttarakhand have been slapped with a fine of Rs 3 lakh for utilisation of juvenile justice issues.
“It is unfortunate that some states and Union Territories have not yet framed any Policy under the Solid Waste Management Rules, 2016,” the judgement read.
It further stated, “In case the states have the interest of the people in mind and cleanliness and sanitation, they should frame a Policy in terms of the Solid Waste Management Rules so that the states remain clean. The attitude of the states/Union Territories in not yet framing a Policy even after two years is pathetic, to say the least.”
The apex court has instructed to list the matter on October 9.