Recently, various Real Estate Developers had approached the Supreme Court challenging the constitutional validity of the amendment made in the Insolvency and Bankruptcy Code (IBC) which deems the status of allottees as ‘financial creditors’ under the Act. Very recently the Supreme Court upheld the said amendment in Insolvency and Bankruptcy Code (IBC) and rejected the plea of the real estate developers in the case of Pioneer Urban Land and infrastructure Limited & Anr. v. Union of India & Ors. and recognized the status of homebuyers at par with that of the financial creditors.
Availing the benefits of the Supreme Court judgement, a number of home buyers have approached the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against the defaulting developers. The NCLT has initiated insolvency proceedings against the developers – Umang Realtech Homes Pvt. Ltd. and Today Homes Noida Pvt. Ltd. after they failed to deliver the flats to the home buyers in the specified time.
It was after two home buyers moved to the tribunal stating that they had invested around Rs 1 crore for a Flat in the project ‘Winter Hills 77’ of the developer Umang Realtech Homes being developed in Gurugram, and that the developer defaulted in delivery of possession to the home buyers which was promised to be delivered by 2015.
In a similar case, a group of buyers approached the NCLT against the developer – Today Homes Noida Pvt. Ltd. after the builder failed to deliver flats to the home buyers by 2016 at the ‘Ridge Residency’ project in Sector 135, Noida.
An interim resolution professional (IRP) has been appointed by the NCLT to take over the management of the developer Today Homes Noida.
The developer contended before the tribunal that it has got four-year extension from the UP Real Estate Regulation Authority (RERA) to complete the project by 2021, which was rejected by NCLT stating that the provisions of IBC overrides the provisions of RERA.
Author – CA Ramesh Agrawal (FCA & LLB) Partner Agrawal Gupta & Sahu from Delhi and can be contacted at [email protected]