As a homebuyer, you can exercise your rights to the timely possession and delivery of your home by enforcing the provisions under IBC. Get started by launching a homebuyer’s campaign on Ancoraa.
A homebuyer can file for an insolvency resolution under the Insolvency and Bankruptcy Code (IBC) against the developer in two cases:
If builders who promised assured returns to the buyer and stop payments midway and fails to honour the agreement.
In case builders take a lump-sum amount from them and fail to give possession or pay the money within a time frame. In this condition, A homebuyer claims against builders.
The total amount of default by the corporate debtor (developer) shall be more than Rs 1 crore.
The application has to be filed jointly by 100 home buyers or one-tenth of the total number of allottees in the same real estate project, whichever is less.
Launch a homebuyer claims against builders Campaign with Ancoraa and invite other homebuyers to join the same. With the threshold for claimants met, you can initiate the resolution process against the developer. Launch your campaign now.
The following options are available to the Home Buyers:
- Real Estate Regulation Act, 2016 (RERA)
- Consumer Protection Act 2019 (CPA)
- Competition Commission of India (CCI)
- Arbitration & Conciliation Act 1996 - Civil Remedy
- Criminal Remedy
- Insolvency & Bankruptcy Code 2016 (IBC)
Decision to resort to a particular remedy will depend on a case to case basis, as regards the status of construction, financial position of the Builder, status of other projects by the builder and so on.
It appears that the option for payment was Construction Linked Payment Plan.
If so, the Builder can raise demand on completion of an identified state of construction, attaching certificate from the Project Architect/Engineer and also a photo of the building.
In case the builder raised demand without supporting documents, such demand will not be binding and the Allottee may demand refund of the amount paid along with interest, raising demand by sending Notice by email and also by Registered Post Acknowledgement Due.
Thereafter, the Allottee may resort to any one of the remedies available. There may be many other Allottees, who can join together to form a group of 100 or 10% of the total number of Allottees in the project, whichever is lesser, and file application as Financial Creditor under section 7 of the Insolvency & Bankruptcy Code 2016.
The Developer may start a project after requisite approvals already in place or likely to be received shortly. The Project can be launched after identifying the land and getting right to develop it, building plans finalized and submitted for approval etc.
The Home Buyer would have satisfied itself about the constitution of the builder i. e. Limited Liability Company or Private Limited Company or Limited Liability Partnership and so on. The Location of the project and title of land would have also been seen before making the booking. In case, the booking was made without proper due diligence, the buyer runs the risk of loosing his money.
In such cases where the builder vanishes after taking money, the buyer has recourse to Criminal Remedy. The group of buyers not less than 10% of the allottees may move application under section 7 of the IBC
Homebuyers can file an petition under the amended Section 7 of IBC. The following points should be considered while filing the petition:
- There have to be a total of 100 homebuyers or 10% of the homebuyers to file the petition. If the numbers of home-buyers are less than that, NCLT will dismiss their application ipso facto.
- The homebuyers should be of one single project only that is being developed by the corporate debtor.
- The homebuyers are required to have all the relevant documents pertaining to their projects resulting in building up of their relationship with the Builder i.e., Builder Buyer Agreement, Allotment letter, and the payment receipts issued by the builder.
- The default in the case of every homebuyer filing the matter should have occurred. In other words, the date of possession, as promised by the builder, should have been lapsed.
- The default for the total homebuyers should be more than Rs.1 Crore to fulfill the pecuniary jurisdiction for filing the petition before NCLT.
Under the IBC amendment passed by the Parliament in March 2020, a single home-buyer is barred to approach the National Company Law Tribunal (NCLT) under Section 7 of the IBC. In simple words, home-buyers are now required to approach the NCLT with a joint application of at least 10% or 100 of the total home-buyers of a project. If the numbers of home buyers are less than that, NCLT will dismiss their application ipso facto.