THE NATIONAL COMPANY LAW TRIBUNAL (NCLT) INITIATES INSOLVENCY PROCEEDINGS AGAINST BUILDER ON HOMEBUYER

INTRODUCTION:

The National Company Law Tribunal (NCLT) of Delhi had admitted a petition relating to insolvency which was filed by a group of ‘Homebuyers’ against the builder under Today Homes Noida India Ltd.

The allottees of the homebuyers had entered into a Flat Buyers Agreement for the allotment of the flats in a residential project in Noida, with the Today Homes during the year of 2011-2013 and had paid almost 90% of the purchase value. The agreement which was made to get the possession in the year of 2016, but then till date they had neither the received possessions and nor to be refunded with the amount paid for the allotment in despite with the repeated requests.

THE DEFAULT CODE:

The Homebuyers had submitted that since the delivery of such possession which did not take place on time, as it had the existence of the ‘Financial debt’ and a ‘Default’ under the code.

The firms of Today Homes real estate in its defense through an Advocate Vivek Sibal, had submitted that, after the registration of the project which was made under the RERA Act, 2016 and the last date of completion would be made extended to till June 30th 2021 and hence, it had not committed any default.

The Bench of NCLT which comprises of Justice M M Kumar and Deepti Mukesh, after listening to the parties which rejected the averments of Today Homes. The Bench also further declared that the extension for the project completion under RERA cannot absolve the real estate firm of its duty to the allottees, as per the provisions of IBC which would override the Act and secondly, the Homebuyer cannot be made a party to the transaction.

CONCLUSION:

Finally, the Tribunal at Delhi proceeded to initiate  the corporate insolvency resolution process against the Today Homes and also appointed Mr.Rabindra Kumar Mintri as the Interim Resolution Professional. As the constitutional validity of the amendment to the Insolvency and Bankruptcy Code,2016 (IBC) where the treating of Home Buyers with the financial creditors was under the challenge in the Supreme Court, NCLT in stay with the pronouncement of the order.

In discussion with the matter of Pioneer Urban Land and Infrastructure Limited v. Union of India, the Supreme Court upheld that the validity of the amended section 5(8)(f) of the IBC, after which the Tribunal proceeded to hear the homebuyers pleas. 

-Vijayalakshmi Raju

Student Reporter, INBA.