Status as on- 15/09/2020
The Insolvency and Bankruptcy Code Amendment Act, 2020 (referred as IBC Amendment 2020) has been the far most challenging and intriguing amendment for the homebuyers of a real estate project. The amendment has put the aggrieved homebuyers in the back foot. Earlier where a single homebuyer was easily able to approach the Hon’ble National Company Law Tribunal [“NCLT”] against its grievances against the defaulting corporate debtor/builder, whereas now, there has been to be either 10% of allottees or 100 no. of allottees need to file joint application against the defaulted actions of the builder.
A Section 7 petition requires certain points, which have been laid down by the Hon’ble Supreme Court of India in the matter of Innovative Industries vs. ICICI Bank & Anr., for the admission of the Section 7 petition against a Corporate Debtor which have to be taken into consideration by the Hon’ble NCLT:
- Firstly, there has to be a financial debt which should be due on the Corporate Debtor. In other words, there should be an amount due towards the builder, which has been paid by the homebuyers against the purchase of the property.
- Secondly, the financial debt or the amount due should have been defaulted by the Corporate Debtor. That is to say that the corporate debtor should have defaulted the amount paid by the Financial Creditor in terms of delay in the possession of the units by the assures date as per the Builder Buyer Agreement.
But the case not rests here alone, there are certain more points which are to be taken into consideration whilst filing a petition for the homebuyers under the newly amended Section 7 of IBC. The points are being briefly discussed herein below:
- There have to be a total of 100 homebuyers or 10% of the homebuyers to file the petition.
- The homebuyers should be of one single project only that is being developed by the corporate debtor.
- The homebuyers have to have all the relevant documents pertaining to their projects that can build up their relation with the Builder i.e., Builder Buyer Agreement, Allotment letter and the payment receipts issued by the builder.
- The default in the case of every homebuyer filing the matter should have been occurred. In other words, the date of possession, as promised by the builder, should have been lapsed.
- The default for the total homebuyers should be more than Rs.1 Crore to fulfill the pecuniary jurisdiction of filing the petition before NCLT.
Although the newly amended law is a tedious process but once these small points are taken in consideration, the entire process becomes easier and the filing of the petition becomes less cumbersome. The joint petition also requires some legal and filing requirement as per the facts. IBC is to revive the project by putting a mechanism to get the maximization of assets valuations.
Disclaimer:– The above article is based on the personal interpretation and experience of the author which may differ from person to person. The readers are expected to take expert opinion before relying this article. The readers can be reached at firstname.lastname@example.org