FPCE demands Prime Minister’s intervention to get errant developers to NCLT.

The Forum for People’s Collective Efforts (FPCE) lobby of homebuyers requested involvement by Prime Minister Narendra Modi to avoid any attempt to prevent homebuyers from moving the National Company Law Tribunal (NCLT) against errant builders.

Last year the Government implemented the Insolvency & Bankruptcy Code to consider homebuyers as financial creditors and authorize them, in compliance with Section 7 of the Code, to initiate a corporate insolvency resolution process against the defaulting promoters. This status was challenged by a group of developers in the Supreme Court. In August the Apex Court, however, dismissed the claim that the amendment was constitutionally valid.

“Real estate developers are trying to thwart whatever steps the government is taking to encourage home buyers and introduce reforms in the industry. They had challenged but failed to achieve the RERA’s constitutional validity,” said the FPCE in a letter to the Prime Minister.

This letter was also sent to Minister of Finance Nirmala Sitharaman, Injeti Srinivas, Secretary, Ministry of corporate affairs and M. S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI), the insolvency regulator.

“What worries the builders about the forums in which it could be used, as they would be able to present themselves and prove their innocence? Why insist only on RERA if both could co-exist in the Apex Court itself?” asked FPCE President Abhay Upadhyay. “Do not ignore the amendment itself was brought about by an order of the Supreme Court, by which homebuyers were included in Jaypee Infratech’s Creditors Committee.”

FPCE pointed out that last year’s amendment to the insolvency code was made in the wake of several cases in which builders such as Amrapali and Jaypee Infratech declared insolvency and affected thousands of homebuyers who were left without any recourse to insolvency proceedings under IBC.

Interestingly, homebuyers have already called for RERA authorities to keep track of their activities within the scope of the Central Vigilance Commission (CVC). They also proposed that all RERA orders be audited by the Comptroller Auditor General of India (CAG) in order to continue to track compliance with RERA provisions.

Tarun Jindal, Secretary of the Discovery Park Buyer’s Welfare Association, Faridabad, said, “It is certain, that construction companies have become more comfortable at RERA, while the fear of NCLT is visible and that they are pushing for its issues to be taken up by RERA and do not wish IBC to interfere in it. Hopefully, the government is not succumbing to the pressure from builders and continues empowering homebuyers as it has done both via IBC and RERA.

According to homebuyers, it is unreasonable to ask that the accused be not brought to court before his victim identifies other victims and calls out to become eligible to present a court. Moreover, real estate is not the only industry that has a regulator; other regulators, such as RBI, IRDAI, TRAI, SEBI etc., have not made such demands by corporations that fall under those regulators.

“Through IBC, a single creditor (operational/economic) whose debt is Rs 1 lakh or higher, may bring a company into NCLT, How can one house buyer whose financial stakes would outweigh this amount several times more, be barred?” the letter asked.