Pioneer Urban Land and Infrastructure and many similar writs were filed by builders like Supertech, Parsvnath, BPTP, Ansal Hi-Tech Townships, Today Homes Noida, Ireo, SARE Shelters Projects, Wave MegaCity Centre, CHD Developers, Spaze Towers, Orris Infrastructure, AVP Buildtech, Three C Shelters, Emaar Hills Township, TDI Infrastructure, ATS Realty, among others challenging the validity of section 5(8)(f) of the IBC2016, where homebuyers were given the right to be considered as financial creditors. The bench of justices Rohinton Fali Nariman, Sanjiv Khanna and Surya Kant took suo moto congizance and has directed the Additional Solicitor General (ASG) appearing for the government to provide a list of states where RERA authority, Appellate Tribunal and Adjudicating officer are not present. The Advocates on behalf of the builders pointed out that the RERA act has still not been adopted or proper implementation has not taken place in most of the states, also, home buyers must make their claim through RERA and consumer forums, and the amendment in IBC has only resulted in additional encumbrance upon them. They also say that the definition of 'default' occurring in such cases is not clear. The financial creditors can initiate the insolvency proceedings against a corporate debtor when it commits a 'default'. In case of delay of a project the definition of 'default' becomes vague. There have been cases where the delay has happened on the buyer's end paying the installments. They also dispute the ambiguity about treating home buyers as secured or unsecured creditors. In the previous hearing held on July 10, the ASG had said that there was no illegality in amendment brought by it in IBC. The centre had said that the law was amended to protect the interest of home buyers who had invested their money to purchase flats. The amendment helped in their representation in the Committee of Creditors under IBC. The court held that the case will be heard on July 23.
Courtesy/By: Sharren
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20 Jul 2019
