Financial creditor status meant to protect homebuyers' interests: SC
While hearing a batch of around 150 petitions filed by real estate companies from across the country challenging validity of the amendment in IBC, a bench of Justices R F Nariman, Sanjiv Khanna and Surya Kant said the amended law provides an additional forum for home-buyers to raise their grievances and builders should not be afraid of it.
Allaying apprehensions of the companies that the law would be misused by home-buyers and rival firms to blackmail and initiate insolvency proceedings against them, the bench said there is a slim chance of homebuyers resorting to such action as most of them are interested in getting their homes or to get refund of their investment and not to bring the company down.
Senior advocate Shyam Divan, appearing for one of the companies, termed the amendment a draconian provision which has the potential to crush the entire real estate sector. He said it is a deadly weapon given to homebuyers and the provision is contrary to Real Estate (Regulation and Development ) Act under which "we are statutorily bound to complete and deliver possession of flats". He said his client had completed 27 towers and they ready to be delivered but only 19 home-buyers had initiated proceedings under IBC.
"If I have completed eight projects on time but one project gets delayed then can a homebuyer be allowed to bring the entire company crashing down by initiating insolvency proceedings. What will happen to my projects. It is a deadly weapon given to homebuyers hostile towards us. We will never be allowed to do business without fear," Divan contended.
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References
- ^ Insolvency and Bankruptcy Code (timesofindia.indiatimes.com)
- ^ homebuyers (timesofindia.indiatimes.com)
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