Status As on – 17/09/2022
Highlights-
- The National Company Law Tribunal (hereinafter referred to as NCLT) has become a popular choice among buyers today for claiming refunds with interest or possession with delayed interest from Builders/developers.
- Buyers say that RERA orders are not getting implemented and that’s why the buyers are approaching NCLT nowadays.
Background
Rising living standards influence purchasers to buy flats or units in high-rise societies. Buyers are investing their hard-earned money to fulfill their dreams of buying their own houses. However, the builders and developers are not gratifying their promises to give possession on time. After waiting for almost 5-6 years for the possession of their flats or units, the Buyers decide to approach the Real Estate Regulatory Authority (hereinafter referred to as RERA) to claim a delay penalty and compensation against the Builder/Developer.
Present scenario
The RERA passes the decree order / Recovery Certificate in favor of the Buyers. However, the Builder/Developer did not comply with the same. Getting the RERA orders implemented has become a challenge for buyers. Therefore, the Buyers have an option to approach NCLT for the resolution of the company.
Hundreds of homebuyers are moving NCLT for resolution, leading many real estate companies into the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”).
Amendments to Insolvency and Bankruptcy Code
Supreme Court upheld the constitutional validity of amendments made to the Insolvency and Bankruptcy Code (hereinafter referred to as “IBC”) which conferred the “financial creditors” status to homebuyers and entitled them to be a part of the Committee of Creditors (CoC) to safeguard their interests.
This will ensure that not a single homebuyer misuses the provisions for taking real estate developers to the NCLT. Homebuyers are treated as financial creditors under IBC.
Section 7 (1) of the IBC
Section 7 (1) of the IBC was amended by the government in March’ 2020 and a minimum threshold limit of 100 or 10% of homebuyers whichever is lower was introduced to initiate proceedings against a defaulting developer under IBC.
However, builders feel that RERA is there to tackle the real estate issues. Builders should be given time as per the new deadlines given to them to complete their projects.
Nowadays, Why NCLT has become a popular choice among Buyers?
For claiming refund with interest or possession with delayed interest from developers. However, developers believe that the priority should be to complete the stuck projects. 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.
Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at rera@centrik.in & ibc@centrik.in
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