- Posted by Arpit Marwah
- On December 4, 2019
- 0 Comments
- IBC Code, IBC FOR HOMEBUYERS, NCLAT, NCLT, Who are homebuyers?
Since last two months, the afore mentioned news is being circulated which has sent shock waves across the nation. It is being reported that the government is mulling over an idea wherein once over 100 similar homebuyers are together only then insolvency proceedings could be initiated against the developer under IBC, 2016 before the appropriate NCLT Bench. It is either this or consideration of the fact that they collectively account for at least 5% of the outstanding debt of the realtor. Further, the present default amount which is 1 lakh could be raised to at least Rs. 10 lakhs.
The reason for carrying out aforementioned proposed amendment is to ensure that the Insolvency & Bankruptcy Code 2016 (IBC) is not abused merely for recovery of money but also to make sure that the cases filed are just & fair against the builder.
The intention of the government behind this move may be right which is to ensure that the IBC is not abused by anyone, however the reasoning behind the move could not be more wrong than this.
Firstly, no buyer can misuse the law as only when there is a debt in his favor and that debt has been defaulted by the builder; can the CIRP be initiated against the Builder. If the builder does not commit any default towards its buyers such as if it delivers the project on time then no NCLT can initiate CIRP against the builder.
Secondly, shouldn’t the government bring same amendment for all the corporate debtors? After all, the law can be misused against any corporate debtor then why should the builders be given preferential treatment by the government?
Thirdly, the proposed amendment is not feasible since it is literally impossible to get 100 buyers in a single petition or get the 5% of the total debt outstanding against the builder in a single petition.
Fourthly, RERA Act (Real Estate Regulatory Authority) is a toothless remedy since the orders passed by the RERA Authority are not getting executed. Therefore, it is necessary to keep the option of IBC open for the homebuyers in order for them to get the justice.
Fifth, there are numerous builders who have not delivered the units promised by them to the homebuyers since almost 10 years. Then why should any government favor them? It is the innocent homebuyers who need help; who have invested their hard-earned money in these projects & yet are forced to run pillar to post for their units.
Sixthly, if the government wants to amend the IBC, 2016 then they should at least explain why did they include individual homebuyers through amendment carried out in 2018?
The Homebuyers have been fighting for their rights since decades and finally when they have the law on their side, the government is mulling over an idea which will essentially make them remedy less again and homebuyers will be again at the mercy of errant builders.
Further, it is the errant builders who are habitual to taking innocent homebuyers for a ride who are unable to digest the fact that they are finally made accountable for their actions are advocating the proposed changes in the IBC.
Now what is to be seen is that on whose side does the Government stand by in the present scenario, Builders or the Innocent Homebuyers.