The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”) regulates securitisation of immovable property and reconstruction of financial assets and enforcement of security interest. The process of enforcement of security interests under the SARFAESI Act entails minimal intervention of the courts/tribunals, and the lender can take possession (actual, physical or symbolic possession) and sell the asset, including by way of an auction process. Alternatively, the lender can simply sell its debt to an asset reconstruction company, which would step into the shoes of such lender. In such a scenario, there is no judicial intervention and the lender and the asset reconstruction company are only required to comply with the statutory stipulations. The borrower has limited rights/limited grounds to approach the debts recovery tribunal, if the borrower is aggrieved by measures undertaken by the lender. It is relevant to point out that the SARFAESI Act is applicable only in cases of “secured creditors” as defined under the Act and does not apply to private individuals.

Other than under the SARFAESI Act, the lender/creditor can also initiate proceedings for commencement of the corporate insolvency resolution process against the tenant/debtor, where the debtor is a company or a limited liability partnership, the dues are in excess of INR10 million and there is no pre-existing dispute regarding such dues (see 1.5.2 Revocation of Guarantees).

If there is a pledge of shares, then, as per the provisions of the pledge agreement, the pledge can be invoked/enforced. Usually, there is no judicial intervention and the process simply entails issuance of a notice invoking the pledge. Additionally, since most securities are now maintained in electronic form, such notice can be given to the depository participant (who would also be apprised of the share pledge and the invocation of the pledge by the lender). While such process is not judicial, there are times when the property owner or pledgor may approach the court to stall or prevent invocation of the pledge. In such cases, the lender would have to defend the proceedings.

Under the SARFAESI Act, a secured creditor is required to give 60 days’ notice to the borrower before enforcing security interest against immovable property. However, there is no specified time period for foreclosure.

The borrower has a right to redeem upon payment of all dues together with all interest accrued, costs, charges and expenses incurred to the secured creditor, at any time before issuance of a sale notice.

Depending on the wording of the agreements/contract, typically, simultaneous proceedings for claims and foreclosure can be pursued by lenders, provided there is no excessive/unjust enrichment to the lender.

Judicial foreclosure does not necessarily come with a stipulated timeline. As mentioned in 2.2 Foreclosing on Pledged Equity, the process of foreclosure generally does not entail judicial intervention. However, there are instances where a borrower, pledger or property owner can approach the courts with the intention of stalling the process of foreclosure.

In the event of a deficiency in foreclosure, the lender has the remedy to file for recovery action before the appropriate court of law.

The most commonly used entities for facilitating joint ventures in real estate are companies (usually incorporated as a special purpose vehicle for a specific project) under the Companies Act, 2013 or a Limited Liability Partnership constituted under the Limited Liability Partnership Act, 2008. The choice depends on specific objectives, tax considerations and regulatory compliance.

Joint venture agreements and operating agreements in real estate transactions require co-operation between the partners to ensure the smooth execution and success of the project. These agreements typically include a shareholder agreement, which contains the contractual rights, duties and obligations of the parties, including how the parties will collaborate, allocate responsibilities, and share profits and liabilities.

Persons with ownership interests in real estate joint ventures have contractual and statutory obligations to:

• act in good faith;
• exercise care;
• disclose relevant information; and
• comply with legal obligations.

Non-compliance or breach of these duties can result in statutory consequences, which may entail:

• monetary penalties;
• civil and/or criminal proceedings;
• cancellation of licences; and/or
• disqualification from conducting business activities for a specified period (in cases of certain violations of statutory requirements).

If an owner breaches any of these duties, the affected party has various legal remedies, including contractual enforcement through legal proceedings; in case of breach of statutory duties, complaints can be made to the relevant/jurisdictional statutory authority, which may impose penalties and commence proceedings to procure compliance. Furthermore, there may be litigation proceedings, which may be commenced by any of the stakeholders to procure compliance. The nature of actions/remedies may depend on the nature of the violation.

If an organisation’s governing documents are silent, vague or result in a deadlock, resolution may be made through: (i) proceedings applicable to the entity (Companies Act, 2013, Limited Liability Partnership Act, 2008, Indian Partnership Act, 1932); or (ii) alternatively through dispute resolution processes.

Further, for joint ventures undertaken through regulated real estate investment entities, such as REITs, governance mechanisms, including for decision-making and for resolution of deadlock matters, may be prescribed in the governing regulations (such as the REIT Regulations).

Practical business solutions, such as buyouts, tie-breaker votes or auction methods, are also among other options, which are used to break such deadlocks.

Provisions allowing automatic entry of judgment upon an event occurring are rare in India. Courts apply the principles of natural justice, and any waiver/deprivation of the right to be heard is likely to be struck down as against public policy and natural justice. Usually such reliefs are granted as interim injunctions to preserve the subject matter of the dispute/proceedings until the other party has been heard.

Briefly, under Indian laws, courts consider factors such as prima facie case, irreparable harm, balance of convenience and good faith and equity, while granting interim reliefs such as temporary injunctions. Even in arbitration agreements, interim relief must be sought from a court or tribunal (as the case may be), and no contractual provision can mandate an automatic injunction.

Winding down a joint venture in India requires careful planning, compliance with legal and tax regulations, and settlement of financial and contractual obligations. A well-drafted Joint Venture Agreement with clear exit provisions can simplify this process. A structured approach ensures that liabilities are addressed, assets are distributed properly, and legal disputes are minimised. Winding up of a joint venture company or LLP can be made voluntarily under the Companies Act, 2013 or the LLP Act, 2008 as per the prescribed process with minimal judicial intervention. However, in cases where there are significant debts which the company or LLP is unable to meet, such entity may have to file for insolvency under the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal or the Debt Recovery Tribunal, as the case may be.

In Indian real estate transactions, various types of guarantees are commonly used, depending on:

• the nature of the project;
• financing structure; and
• contractual obligations, including indemnification obligations.

The most frequently encountered guarantees include, inter alia:

• personal and corporate guarantees;
• performance-related guarantees;
• bank and financial guarantees; and
• landowner and investor guarantees.

In Indian real estate financing, non-recourse loans are relatively uncommon, as lenders prefer full-recourse structures, with securitisation over all assets, immovable and movable properties, including any future cash flows and assets. Furthermore, corporate and personal guarantees of the promoters are also obtained to prevent any misuse or misappropriation of funds.

The wording of guarantees is important in case of enforcement. Typically, a guarantee should be unconditional and irrevocable for ease of enforcement and the obligations, triggers and remedies should be clear and unambiguous. Furthermore, while guarantees are binding, instances of egregious fraud or special equities, or where irretrievable injustice would ensue were invocation not to be injuncted, may limit enforcement of guarantees.

Waivers of defences are enforceable unless they violate statutory rights, public policy or fundamental contractual principles. The enforceability of waivers depends on the facts of each matter, applicable statute and precedents set by the courts of law.

India offers several expedited judicial mechanisms for enforcing guarantees, particularly in the financial and commercial sectors. These procedures help lenders, investors and financial institutions recover their dues efficiently. The key mechanisms include:

• Summary Suit under Order XXXVII, CPC (1908) – for faster money recovery (in a summary manner where the debt or liability is admitted);
• Commercial Courts Act, 2015 – for a speedier litigation process in case of “commercial disputes” as defined under the Commercial Courts Act, 2015;
• Insolvency and Bankruptcy Code, 2016 – in case of debt and default by a corporate person, ie, a company or an LLP (and individual promoters), where there is a financial or an admitted/undisputed operational debt of more than INR10 million and default/inability to pay; and
• Arbitration and Conciliation Act, 1996 – if the guarantee contains an arbitration clause.

Lenders may, in certain cases, exercise their statutory and contractual rights simultaneously to enforce a guarantee for recovering the underlying obligation. However, this is subject to certain statutory rules and judicial precedents that govern:

• double recovery/prevent unjust enrichment;
• election of remedies; and
• procedural limitations.

Arbitration clauses are quite prevalent in real estate transactions in India. Agreements, inter alia, including lease agreements and joint development agreements generally have arbitration clauses as the dispute resolution mechanism. This is also due to the fact that a civil suit would entail a higher incidence of court fees, which would have to be paid by the party instituting the suit/proceedings. Further, arbitration proceedings may be faster as compared to court proceedings since most courts in India have a large number of cases to be heard daily.

Apart from the incidence of court fees, which is ad valorem based on the amount claimed by the plaintiff, arbitration is a time-bound process; on the other hand, general litigation is a time-consuming process (where chances of prolongation are relatively higher due to the high number of cases being heard by courts). Further, arbitration is a more confidential process, and the documents/orders are only available to the parties/arbitral tribunal, while court orders (in litigation) are available on court websites, which are accessible to the public at large. In some instances, the overall cost of arbitration may be quite high; however, this is usually shared by the parties.

In arbitration, the arbitral award is binding, and the parties have little recourse to challenge the award (as the scope of challenge under the Arbitration Act is narrow/limited) and the challenge must be made within a specific time limit, failing which the award becomes final and binding. In appropriate cases, the court may set aside the whole award or part of the award (where it is severable). However, the question of whether a court hearing an appeal against an arbitral award can modify the arbitral award is pending before the Supreme Court of India. In litigation, the grounds for appeal are quite wide and there are more relaxations as to the grounds and production of evidence.

The Mediation Act, 2023 (the “Mediation Act”) has been promulgated with an objective to promote and facilitate mediation, especially institutional mediation, for resolution of disputes, commercial or otherwise, and to enforce mediated settlement agreements. It is pertinent to mention that only a few of the provisions of the Mediation Act have been notified so far. The Mediation Act applies to parties within India and/or where there is an international mediation (ie, where any party is a resident of/has their place of business outside India).

Settlement through mediation has always been promoted and endeavours in that regard have been made in India; however, the process has never been made mandatory (except under the Commercial Courts Act – for disputes of a commercial nature of specified value). Even in situations where the dispute resolution process has been agreed to include “mediation” before referring the same to arbitration or a court process, the courts have held that, in appropriate cases, the parties are not bound to mediate and can directly initiate arbitration or appropriate court proceedings.

Some statutory remedies under the Transfer of Property Act, 1882, the Indian Easements Act, 1882, as well as under the tenancy legislations, provide for provisional remedies. Furthermore, the affected party can also seek an interim or temporary injunction from the court for protection of rights or remedies pending proceedings. In cases where a property is mortgaged to a secured creditor, the secured creditor can initiate action under the SARFAESI Act for enforcing its rights on the security interest or mortgaged asset. In any event, the borrower is not permitted to sell or encumber a mortgaged asset. In so far as property which is not mortgaged is concerned, the creditor has various remedies, inter alia, including obtaining interim reliefs under civil or arbitration law. Separately, the creditor can also take steps to initiate insolvency proceedings against a borrower. Once insolvency proceedings commence, the borrower is debarred from dealing with, encumbering or alienating any of its properties (both movable and immovable).

The party seeking the provisional remedy must make out a prima facie case in its favour, based on the statutory provisions (where available), otherwise, equity, likelihood of irreparable harm, injustice and balance of convenience. Injunctive/prohibition orders can only be passed by a competent court of law or a tribunal (including an arbitral tribunal).

Interim orders that are obtained by a plaintiff by fraud, for ulterior purposes or misused by the plaintiff, can be vacated by the court/tribunal and, in addition to any damages or compensation that the plaintiff may be ordered to pay, the court/tribunal may also impose costs on the plaintiff.

Courts grant temporary/preliminary injunctions in relation to real estate matters; however, the same are dependent on the prima facie case, balance of convenience and the reasons for such injunction.

In a real estate scenario, the following may illustrate instances of irreparable harm being likely to be caused/suffered:

• dealing with, alienation or encumbering the property to the detriment of the party alleging breach;
• carrying out construction and creating third party rights; or
• demolishing an existing building in a manner that would make it challenging or impossible for the aggrieved party to obtain specific performance.

In India, the right of lien is recognised under the Indian Contract Act, 1872, wherein two types of lien are set out: (i) general lien; and (ii) particular lien.

In general lien, there is a right to retain the possession of a property for payment of the amount which is owed by the borrower and even in situations where the payment is not connected with the said property in possession. On the other hand, particular lien is in relation to the property and the person has the right to retain the possession of the property or goods until the charges in relation thereto are discharged/paid by the borrower.

Further, the SARFAESI Act excludes the lien as set out under the Indian Contract Act, 1872 or any other applicable law. However, the SARFAESI Act separately recognises right of secured lender/creditor on a secured asset (immovable property).

Lien (whether under the Indian Contract Act, 1872 or the SARFAESI Act) does not create ownership rights in favour of the lender/creditor in so far as the property is concerned. To enforce lien, the lender/creditor would be required to approach the court of law. For this purpose, the lender/creditor is required to prove in the court of law that the borrower/debtor has defaulted and enforcement of lien is pertinent to recover the dues.

The Real Estate (Regulation and Development) Act, 2016 is the central legislation governing the rights and liabilities of developers and landowners in the context of residential and commercial development transactions. Further, mutual rights and obligations of landowners and developers are also safeguarded under the dispute resolution mechanisms provided for under the said act. Under RERA, adjudicating authorities have been constituted which supervise and ensure that development is being undertaken in accordance with the provisions of the said act and rules/directions made thereunder, from time to time.

Further, some states have also enacted legislations applicable to apartment buildings for the purpose of sale of apartments, such as the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963.

In the context of specialised real estate investment vehicles such as REITs, such entities are additionally regulated by sector regulators such as SEBI, which safeguards the interests of all investors in public markets. Under the REIT Regulations, REITs are primarily required to invest in rent-generating assets, and are only permitted to hold a portion of their investments in under-construction projects.

The growing public interest in the real estate and construction sectors, particularly in areas such as transparency, sustainability, and regulatory compliance, has a significant impact on how firms approach their work. As stakeholders become increasingly aware of the environmental, social and governance (ESG) factors influencing development, firms are pushed to prioritise responsible practices and ethical decision-making. This heightened focus on public interest encourages alignment with best practices, ensuring that work not only meets regulatory standards but also contributes to long-term sustainability and trust within the sector. Recent updates to real estate laws in India, such as the growing emphasis on ESG standards, is positioning India as a global leader in sustainable construction and development.

The Securities and Exchange Board of India (SEBI) has also strengthened regulatory and governance requirements for Real Estate Investment Trusts (REITs) through the SEBI (Real Estate Investment Trusts) (Amendment) Regulations 2023. This has spurred increased interest from real estate developers and private equity funds, with more REITs expected to be launched soon.