Big boost for homebuyers! SC upholds government decision of granting financial creditors status
The court has also upheld the IBC Amendment with certain safeguards. Homebuyers will have a say in Committee of Creditors, and they can also initiate insolvency proceedings.
The Supreme Court today gave big boost to homebuyers upholding their status as financial creditors as per the amendment in the Insolvency and Bankruptcy Code (IBC). With this judgement, the apex court has upheld the government decision to grant homebuyers the status of financial creditors.
The court has also upheld the IBC Amendment with certain safeguards. Homebuyers will have a say in Committee of Creditors, and they can also initiate insolvency proceedings. Notably, builders had moved the top court challenging the financial creditors status given to homebuyers.
Welcoming the apex court directive, Abhilash Pillai, Partner, Cyril Amarchand Mangaldas, said "The SC judgment re-affirms the rights of the home buyers as financial creditors under IBC. This is a landmark judgment so far as genuine home buyers are concerned. However, this may not be a happy news for the investor-home buyers who have initiated IBC against the developers for seeking exit from their investments on account of the current condition of the real estate market."
"The stay on NCLT proceedings are to continue till NCLT/ NCLAT decides each petition of home buyers in light of Section 65 IBC (malicious proceedings). This adjudication will bring in lot of clarity on the on-going litigations," Abhilash Pillai added.
Meanwhile, the Supreme Court has also asked the government to adequately man the Real Estate (Regulation and Development) Act, 2016 (RERA) and National Company Law Tribunal (NCLT), and should file affidavit within three months in connection with it.
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It further directed that the IBC provisions should be read harmoniously with RERA, adding that every application pending before NCLT will be decided on their own merit with respect to this apex court judgement.