SC likely to hear plea challenging status of financial creditors given to buyers

Photo: Samrat Roy
Posted: Jul 09, 2019

The Supreme Court is likely to hear plea of a group of real estate promoters challenging the status of financial creditors given to home buyers. Sources privy to the matter told City Spidey that the bench of Justice Fali Nariman on Tuesday directed the Centre to be present in the court on Wednesday.

A group of real estate developers from Delhi-NCR has challenged the status of financial creditors (home buyers), saying majority of home buyers are misusing the power which is making the issue more complicated. Sources said that more than 130 real estate developers have singed the petition.

Manoj Gaur, the Managing Director of Gaur Sons real estate was of the view that majority of home buyers are misusing the law. “Ever since the status of financial creditors were granted to the home buyers, situation have become more complicated. This must be changed to maintain the transparency in Insolvency and Bankruptcy Code, 2016.”

Anuj Chowdhary, Managing Director of Panchasheel Group real estate in Greater Noida has supported the move, saying many home buyers approaching National Company Law Tribunal (NCLT) under IBC code not only making the situation worse but tarnishing the image of projects.

“Suppose, the developer invests a lot of money and after six months, flat buyers approach NCLT demanding to get their money back, it makes situation complicated. I won’t say all flat buyers have same approach but many of them do it purposely. For instance, if one has booked a flat in project and after few months, another project comes and provides flats with some discount, flat buyers start demanding return of their money,” Chowdhary added.

After long standing demand of home buyers, the Parliament had on August 11, 2018, passed a Bill to amend the IBC 2016, allowing home buyers as financial creditors. However, ever since the home buyers were granted the status of financial creditors in the project, the issue has become a bone of contention between the builders and the home buyers.

Flat buyers, however, believe that treating them as a financial creditor under IBC 2016 has empowered them. “It provides significant relief to home buyers by recognising their status as financial creditors. After this amendment, home buyers are empowered to represent in the Committee of Creditors and make them an integral part of the decision making process,” said Mihir Kumar, advocate who is representing the home buyers in the Supreme Court.

TAGS: Insolvency and Bankruptcy Code 2016 / Home buyers as financial creditors / Financial creditors in IBC / CoC in IBC / Status of financial creditors challenged in SC / SC on financial creditors