Home buyers finally earn status of financial creditors; SC upholds amendments in Insolvency and Bankruptcy Code

New Delhi, August 09: In a very recent development, giving status of financial creditors to home buyers, the Supreme Court on Friday upheld the amendment in the Insolvency and Bankruptcy Code, dismissing the plea of real estate companies.

 

A more that 200 real estate companies had earlier pleaded that the IBC amendment was illegal and unconstitutional. However the bench headed by Justice R F Nariman said that the amendment provided homebuyers with an additional platform on which they could raise their grievances against real estate developers.

 

 

The bench further directed that the RERA act, which regulates the real estate sector, should now be read in harmony with the IBC amendments. “RERA is not in derogation of any act, and in case of conflict between RERA and IBC, IBC will prevail”, the court cleared.

 

“The consumers have the option of seeking remedy under any provision the Consumer Protection Act, IBC or RERA”, it said adding that only genuine homebuyers could invoke insolvency proceedings against a builder. It also asked the Centre to file an affidavit taking corrective measures.

 

The Apex Court meanwhile directed the Centre to fill up vacancies in the National Company Law Tribunal and Appellate Tribunal to handle the rising number of cases filed against companies under IBC.