According to a 2018 amendment to the IBC, a minimum of 100 homebuyers or 10% of the total purchasers, whichever is less, are needed for initiating the insolvency process. The Forum for People’s Collective Efforts (FPCE), which had campaigned for the enactment of the real estate law (RERA), had submitted to the Parliamentary Standing Committee on Finance how this provision is impractical and puts homebuyers in a disadvantageous position compared to builders.
The panel, which studied the “pitfalls” in the implementation of IBC, said in its report that homebuyers are facing practical difficulties in gathering the required number of purchasers to initiate insolvency proceedings against the real estate owner.
“The committee therefore recommend that once a single homebuyer decides to initiate insolvency proceedings in NCLT, the real estate owner should be obliged in the Rules and Guidelines to provide details of other homebuyers of the project to the homebuyer concerned so that the required 10% or 100 homebuyers can be mobilised, which will thus ensure that the interest of homebuyers,” the panel said in the report, which was tabled in Parliament last week.
National convener of FPCE and member of Central Advisory Council, RERA, Abhay Upadhyay said they expect the government to find a solution to the problem. “If they can reduce the ceiling to 10 homebuyers it will help people whose savings are stuck in real estate projects for no fault of theirs,” he said.