The Supreme Court has given a big relief to the home buyers. The Supreme Court upheld the Bankruptcy and Debt Insolvency Law Amendment Act. If the company is declared insolvent, the home buyers will also be considered creditors. The Supreme Court held that home buyers are empowered as financial creditors under the IBC and RERA. Also, the court said that it is up to the developer to prove that he is an allottee defaulter. Home buyers have the right to initiate proceedings before the RERA Authority, NCLT and NCDRC as required against real estate companies.
The Supreme Court said that RERA should be read in harmony with IBC. Also, the Supreme Court has asked the Central Government to appoint an authority under RERA within 3 months. The court has also asked the Center to ensure that NCLT and NCLAT are working properly or not. The Supreme Court dismissed the companies’ plea, stating that the IBC allows for a ‘one-sided hearing’ before the NCLT.
Last year, Parliament passed the Insolvency and Debt Insolvency Act Amendment Act, in which home buyers and investors were also deemed to be the lenders of the company declared bankrupt. Some real state companies had challenged this amendment in the Supreme Court. Earlier, the central government gave big relief to investors in home buyers and companies in the real estate sector.
After passing the Insolvency and Debt Insolvency Law amendment bill, now the home buyers and investors will also be considered as lenders of the company declared bankrupt. This will also contribute to the amount received from the company. The bill also provides for increasing the deadline from 270 to 330 to complete the insolvency process of companies. It will replace the ordinance brought in February. Now, at the time of the application to start the insolvency process, there will be a deadline for its completion. Also the crisis of financial creditors will also be eradicated.
