Real estate developers hail Supreme Court for approving financial creditor's status to homebuyers
The Supreme Court of India has upheld the Indian Bankruptcy Code (IBC) giving a homebuyer a financial creditor's status putting them at par with the creditor bank.
Good news for homebuyers! The Supreme Court of India has upheld the Indian Bankruptcy Code (IBC) giving a homebuyer a financial creditor's status putting them at par with the creditor bank. The Supreme Court bench headed by Justice Rohinton Fali Nariman said that Real Estate Act or RERA has to be read “harmoniously with the Consumer Protection Act and IBC" and, in case of any conflict, IBC will prevail. After this judgment, now a homebuyer can look for relief under three laws — Consumer Protection Act, RERA and IBC.
Speaking on the Supreme Court verdict Dr. Niranjan Hiranandani, National President at National Real Estate Development Council (NAREDCO) said, "The Hon’ble Supreme Court’s decision is a positive decision and we welcome the same. While giving home buyers status of financial creditors, on par with creditor banks, the effect will be beneficial to both lenders and the consumer, as it will help the completion of delayed projects." Dr. Hiranandani said that in a scenario of liquidity crisis where NBFCs have been impacted, this judgment will set ground to find a remedy in all those projects which have been delayed and builders are unable to complete the construction. This decision will allow projects to get to the logical ending in terms of completion of the projects without getting foreclosed by banks.
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Commenting on the Supreme Court verdict Rakesh Yadav, CMD, Antriksh India Group said, "This Supreme Court verdict empowers homebuyers to initiate bankruptcy proceedings against a developer by expanding the scope of the IBC, treating them on at par with banks and institutional creditors, besides protecting their rights."
"The law of IBC is very progressive in nature and it has the potential to restructure the real estate industry," Dr. Hiranandani concluded.