Profit

Supreme Court Upholds Homebuyers' Rights As Financial Creditors Under Insolvency Laws

The top court said the move does not infringe the rights of property developers.

 Share
EMAIL
PRINT
COMMENTS
Supreme Court Upholds Homebuyers' Rights As Financial Creditors Under Insolvency Laws

The country's real estate sector is struggling with low consumer spending (representational image)

In a major setback for property developers, the Supreme Court on Friday upheld the amendments to the Insolvency and Bankruptcy Code, granting homebuyers the status of financial creditors. The top court said the move does not infringe the rights of property developers. The Supreme Court also said homebuyers enjoy the same rights as financial creditors. It also said the Real Estate Regulation Act (RERA) should be "read harmoniously" with the amendments to the Insolvency and Bankruptcy Code, and in case of any conflict the latter will prevail.
Here are 10 things to know:
  1. The Supreme Court order comes at a time thousands of homebuyers have moved the court for possession of undelivered flats.
  2. The top court rejected a plea by real estate companies, which had argued that lack of clarity on the definition of the term default in the RERA laws allows abuse of the IBC process by homebuyers.
  3. Amendments to the Insolvency and Bankruptcy Code last month had allowed homebuyers the tag of financial creditors, giving a stronger voice to the homebuyers in the bankruptcy resolution plans of developers not able to deliver projects.
  4. A three-judge bench headed by Justice Rohinton Fali Nariman disposed of a batch of over 180 petitions filed by several builders.
  5. The property developers, including Supertech, ATS Realty and Today Homes, had argued that draconian provisions in the current laws are a "deadly weapon in the hands of homebuyers" and will crush the real estate sector.
  6. The top court said that only genuine homebuyers can invoke insolvency proceedings against builders.
  7. It also asked the central government to file an affidavit taking corrective measures within three months.
  8. The Supreme Court said that homebuyers have the right to initiate proceedings before the RERA authority, the National Company Law Tribunal (NCLT) and the National Consumer Disputes Redressal Commission (NCDRC) as needed against builders.
  9. Meanwhile, the top court last month cancelled the RERA registration of real estate group Amrapali for siphoning off homebuyers' money.
  10. India's real estate sector is struggling with low consumer spending on the back of slow economic expansion and a credit crunch in the country's non-banking financial company sector, which has spooked the capital markets over the past few months and is stoking fears of a contagion effect.




Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.

NDTV Beeps - your daily newsletter

................................ Advertisement ................................

................................ Advertisement ................................

................................ Advertisement ................................

Top