New Delhi, Dec 23 (IANS): Expressing displeasure over the recent amendments made to the Insolvency and Bankruptcy Code (IBC) that set a minimum benchmark on the number of home buyers taking a builder to the NCLT, the Forum for People's Collective Effort (FPCE) has said that the amendment makes the bankruptcy law practically redundant for the distressed home buyers.
Home buyers willing to take the developer to an insolvency court, will now have to ensure that a minimum of 100 home buyers or 10 per cent of the total home buyers file for bankruptcy against the developer, as per the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, tabled in the Lok Sabha on December 12.
Speaking to IANS, Abhay Upadhyay, President of the home buyer association, FPCE, said that the amendment strips the home buyers of their rights as financial creditors. Now, above that it would be "nearly impossible" for them to drag an errant builder to the the National Company Law Tribunal for bankruptcy.
"We have been opposing this amendment in IBC and we feel that because of this amendment, this platform (IBC) for all practical reasons will not be availble for the home buyers.
"Gathering so many people, 100 people or 10 per cent is very difficult, next to impossible," Upadhyay said.
He expressed surprise over the fact that a right accorded to home buyers just a year ago, has been diluted by the government.
In 2018, the government through an amendment had accorded the status of financial creditors to home buyers at par with banks, giving them a much stronger say in the insolvency process.
"Though you have made us the financial creditors, at one stroke you have taken away the right from me, for all practical reasons," Upadhyay told IANS.
He further said that as the government could not put the bill to vote, it may come up with an ordinance.
The bill said: "Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process shall be filed jointly by not less than 100 of such allottees under the same real estate project or not less than 10 per cent of the total number of such allottees under the same real estate project, whichever is less."
As per the bill, all the pending applications by home buyers against the developers, which have not been admitted will have to meet the new requirements within 30 days of the commencement of the Act, failing which the application shall be deemed to be withdrawn before its admission.
Upadhyay also expressed displeasure over the retrospective effect of the amendment.
In November, FPCE had written to the Prime Minister requesting the government not to go ahead with the proposed amendment as it would dilute the rights of the home buyers.
Among other changes, the latest amendment also provides for the protection of buyers from criminal proceedings against previous promoters of the bankrupt firm.