whereas legislation like RERA provides for individual remedies against the Builder, the IBC Code gives collective control over the affairs and management of the Corporate Debtor to its financial creditors.
NCLT and RERA have different functioning and approach to tackle cases of homebuyers, often homebuyers are confused on which remedy to choose.
Forum for People’s Collective Efforts, has approached the parliamentary standing committee on finance with its objection to a proposed amendment to the Insolvency and Bankruptcy Code.
The home buyers have multiple forums to their rescue and it depends on them as to under what procures and act or code they wish to proceed.
Insolvency and bankruptcy Law 2016, has categorised the home buyers debt as financial debt to the real estate company/builder and therefore, homebuyers can claim their dues as bank claims its debt.
RCOM has decided to adopt the fast track insolvency process to get over this debt-laden battle and has filed insolvency petition voluntarily under section 10 of Insolvency and Bankruptcy Code, 2016 (IBC).
RERA has been specifically setup to regulate the real estate sector therefore one must approach RERA before approaching NCLT.
The homebuyers who wish to seek refund of their amount are legally entitled to approach National Company Law Tribunal (NCLT) under IBC.
Buyers say that RERA orders are not getting implemented and this is forcing them to approach NCLT and there is a need to check abuse and maximize the value of assets.
Different forums provide for different reliefs and one must be cautious enough before choosing an appropriate forum. Before choosing the appropriate forum, points to be analyzed are type of violation by the builder, what relief is prayed for, urgency, repetitive nature, financial condition of the builder, status of other projects, etc.
The Hon’ble Supreme Court in its latest judgement dated February, 11 2021 declared that the proceedings under Article 32 of the Constitution by a purchaser, seeking relief in respect to a real estate project cannot be entertained.
Any person aggrieved by the decision of NCLT, or is not satisfied with the decision or if there is any mistake or error on part of NCLT then such a person can appeal NCLAT u/s 61 of IBC for its corrections and proper disposal of judgement/order.
Hon’ble SC clarified the position of the homebuyers similar to that of a “financial creditor” under the IBC, after this the homebuyers were at a par with banks and financial institutions.
The NCLT and the National Company Law Appellate Tribunal (NCLAT) have to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and for when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor.
RCom burdened with over Rs 46,000 crore of debt after the failure of its asset monetisation plans with Reliance Jio in March 2019 is undergoing insolvency proceedings with its assets up for sale.
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