Under Section 7 of the IBC, this amendment allowed the home buyer to initiate insolvency proceedings against defaulting Promoters. However, the Insolvency Amendment 2018 was challenged in the Supreme Court of India by approximately 200 realtors.
Hon’ble SC clarified the position of the homebuyers similar to that of a “financial creditor” under the IBC, after this the homebuyers were at a par with banks and financial institutions.
The appeal before the Apex Court was filed by the bunch of employee’s union against the impugned judgment of the Rajasthan High Court whereby, the High Court refused to transfer the winding up proceedings before the NCLT, and further set aside an order passed by the NCLT initiating the CIRP application by virtue of section 7 application filed by the Financial Creditor.
Homebuyers while filing the joint petition before NCLT under IBC laws, should chose the legal firm very carefully.
Cheque bouncing is also the default in making payment of debt, and petition under IBC laws may be admitted
The Ministry of Corporate Affairs had earlier limited initiation of fresh insolvency proceedings for a period of 6 months which now stands extended to 1 year.
The NCLAT held that CIRP against Real Estate Company shall be limited to Project concerned and will not affect other projects of the developers.
The IBBI has disclosed that work is in progress to amend the IBC to make it compliant with cross border insolvency processes.
The recovery rate has increased almost three times i.e. from 26.5% in 2018 to 71.6% in 2019 and the time taken for recovery improved from 4.3 years to 1.6 years within a short span of one year.
Since there are various difficulties in getting the order executed. At this point of time, the orders may be executed through RERA and also one can approach NCLT under IBC Law.