Buyers say in Insolvency Proceedings Against Builders- Law Changes as Seasons Amrapali ( part -2 )

Exactly three years from the time IBC was legislated the Insolvency and Bankruptcy Code has made material progress in addressing a number of bottlenecks to speed up the recovery of stressed assets and in achieving quicker resolution plans. 

Supreme Court’s verdict in the recent Amrapali Group Case has brought in a new insight and the said verdict will serve as a deterrent to the defaulting builders across the country .

The verdict has come to the rescue of thousands of stranded homebuyers and has entrusted state-run NBCC, with the responsibility of completing the embattled developer’s stuck projects.

Below mentioned is the actionable arising out of the SC `s verdict:

• Registration under RERA of Amrapali Group stands cancelled . 
• Noida and Greater Noida Authorities have no right to sell flats of homebuyers or the land leased out for realisation of dues. 
• Lease Deeds granted in favour of the group Companies by Noida and Greater Noida Authorities for projects in question also cancelled and all Rights vests with Court Receiver. 
• NBCC has been appointed to complete the projects and hand over the possession to the buyers 
• Homebuyers have been instructed to deposit outstanding amounts within 3 months . The amount would be deposited as FD and would be disbursed on phase wise completion of the project work by NBCC. 
• Concerned Ministry of Central and State Government and the Secretary of Housing Urban Development are directed to ensure appropriate action is taken against lease holders concerning such similar projects in Noida and Greater Noida and are directed to complete the projects so that the buyers are not defrauded. 
• ICAI to take disciplinary action against the CA- proceeding to be completed within 6 months and report be submitted to the Court. 
• Companies / Directors in whose hands money of homebuyers is available as per Forensic Audit to deposit the same in the Court within a month. 
• Concerned Ministry of Central and State Government and the secretary of Housing Urban Development are directed to ensure appropriate action is taken against leaseholders concerning such similar projects at Noida and Greater Noida and directed to complete the project as per RERA so that homebuyers are not defrauded. 
• Court Receiver has been appointed to execute the tripartite agreement and issue Completion Certificate to homebuyers already residing in the projects concerned. 

While the said order was pronounced in the month of July, another set of amendments in Insolvency and Bankruptcy Code via Insolvency & Bankruptcy (Amendment) Bill , 2019 were introduced in both Houses of the Parliament which received the Presidents assent on 5th August ,2019 . 

The Amendment, Act 2019 has conferred Financial Creditors status to Homebuyers and has entitled them to be a part of the Committee of Creditors to safeguard their interest. As financial Creditors, Homebuyers will have a say in the resolution process of cash strapped realtors. This will involve larger role of the homebuyers in the resolution plan. In short, it can be said that the legislature is changing to provide a balance of power and amendments are introduced every now and then for clarity and for prevention of its misuse.