The representatives of home buyers association- Forum For People’s Collective Efforts (FPCE)- met the Standing Committee of Finance headed by Jayant Sinha, former minister of state for civil aviation on February 24th to put across their objections regarding the amendment of the Insolvency and Bankruptcy Code,2016 which requires a minimum threshold of 10% or minimum 100 homebuyers, whichever is less, of the project for approaching the National Company Law Tribunal (NCLT) against the defaulting developer.
The representatives of homebuyers are not allowed to divulge the details of the meeting, however, Abhay Upadhyay, President, FPCE said “They have put across their views before the standing committee and are hopeful that their concerns will be addressed.” Two other representatives of homebuyer associations- O P Bangur, director, FPCE and Tarun Jindal,member, FPCE attended the meeting along with Abhay Upadhyay.
Before meeting the standing committee the homebuyers had written a letter to the standing committee stating their objections to the amendment. This is the second letter written on 23rd February by FPCE to the standing committee. The first letter was written on 7th February.
The homebuyers have said the amendment is against the interest of homebuyers and is not reasonable as it is practically not possible to implement this amendment and therefore will effectively make it difficult for the homebuyers to approach NCLT against the defaulting developer. “How will home buyers know the contact details of the requisite number of buyers in the projects assuming for a moment that he needs100 such buyers to meet the threshold to initiate the proceedings under the code,” said homebuyers in their letter written on 7th February.
Prior to the amendment even a single homebuyer with claims of at least Rs1 lakh could move to NCLT against a developer.
Homebuyers also argued that it destroys the level playing field for homebuyers. “This is against the interest of the homebuyers as it puts unreasonable conditions on them, destroys level playing field which currently exists and makes the law lopsided in favour of real estate developers.” said homebuyers in their letter to the standing committee
In the second letter, homebuyers have argued against the reason for introducing the amendment. The Insolvency and Bankruptcy Code (Second Amendment), Bill 2019 states “ to prevent the potential abuse of the code by certain classes of financial creditor,” under the “statement of objects and reasons’ ‘ as one of the reasons for introducing the amendment after which at least 10% of 100 homebuyers of a project whichever is lower, are required to approach NCLT against the defaulting developer
Disagreeing with the same, the homebuyer’s body has written that “Initiating legal action to protect one’s interest cannot be termed as an abuse by any stretch of imagination. As per our rough estimates, around 1800 cases have been filed against real estate across the country,and in none of the cases it has been proved that the allegations levelled against the builders were false. Hence the right of the homebuyer to approach a court of law for succour cannot be termed as a “potential abuse”.
Source: Livemint , February 25 ,2020