Status as on 5/10/2019
The National Company Law Tribunal has been proactive in taking action against errant real estate developers in the past few months. This proactiveness has been further accelerated by the landmark judgment of the Hon’ble Supreme Court in the Pioneer case, where it upheld the status of homebuyers as financial creditors under section 7 of the Insolvency and Bankruptcy Code,2016.
As a subsequence, homebuyers who felt legally wrangled with the complications of fighting for relief before the RERA authority can now directly approach NCLT under section 7 for filing a petition of insolvency against an errant developer that has failed to deliver possession as per the stipulated clause of the Builder Buyer Agreement or is unwilling to refund the money paid by the allottee towards the total sale consideration of the unit.
KASATA BITES THE DUST
Kasata Hometech is the latest real estate developer against whom insolvency proceedings have been initiated by the Mumbai bench of NCLT. The court has appointed Jugraj Bedi as the resolution professional and has instructed him to start the insolvency process by making a public announcement of the CIRP to the stakeholders of the real estate developer and the public in general. Through the public announcement of the CIRP, he will also invite claims from the creditors that are owed money by the real estate company.
WHAT DOES THIS MEAN FOR HOME-BUYERS AND OTHER STAKEHOLDER?
- As a consequence of the appointment of the IRP, the real estate company’s management has now been suspended and the day to day affairs of the company will now be taken care of by the IRP.
- With the commencement of the CIRP, the period of moratorium has also begun simultaneously which means there will be a stay on all ongoing legal proceedings against the real estate company.
- Further, the company will also not be able to transfer or sell off any of its assets during this period.
POINTERS TO BE KEPT IN MIND
- It is important for the creditors who are going to be submitting their claim to the IRP to understand the complexities of the process and make sure that they submit their claim in the right format with all the requisite evidence to substantiate the claim. Without the requisite evidence, the IRP won’t accept their claim.
- Thus, taking the assistance of a professional who is familiar with the process of filing a claim is advisable. It will also increase the chances of their claim being accepted and getting their money back.
For long, the real estate players in this country have gone about their business of beguiling naïve homebuyers of their hard-earned money unabated, with no one to regulate them. This menace was addressed to a certain extent by the establishment of RERA authorities and tribunals across the country but because of the long-drawn legal process that entails a RERA case, it is wise to seek remedy from NCLT, where the legal process is much more simplified and grievances of a homebuyer are likely to be addressed in a fast track manner.
Disclaimer – The above article is based on the interpretation of related laws and judgments, which may differ from person to person. The readers are expected to take expert advice before placing reliance on it. For any clarification, please reach to our expert at firstname.lastname@example.org or call at 8383011629