New Delhi: Homebuyers across the country, under the aegis of Forum for People’s Collective Efforts (FPCE) has written to a government panel objecting to the recent changes in the Insolvency and Bankruptcy Code (IBC), 2016 which has made mandatory a certain minimum number of buyers of a project coming together to file insolvency case against the builder.
In December last year, the government had come out with an ordinance to change the code according to which minimum of 100 homebuyers or 10 percent of total homebuyers in a project, whichever is less, is necessary to file insolvency case against the real estate company.
A second amendment to the bill was introduced in the Lok Sabha recently. The amendment requires a minimum number of buyers to come together for them to start proceedings under the IBC 2016.
The homebuyers have written to the Jayant Sinha-led parliamentary standing committee on finance alleging that the changes are being brought to the IBC 2016 under the influence of builders.
“The amendment being brought under influence of builders is not only illogical, illegal but also regressive to say the least,” the FPCE’s letter said.
The letter further stated that the proposed changes to the IBC 2016 are against the interest of homebuyers and they put unreasonable conditions on them and destroy the level playing field that is in existence today and make the law lopsided in favour of the builders.
In its letter, the FPCE also said that the homebuyers have not been given any opportunity for hearing in the matter and present their views.
The FPCE has alleged that the builders are influencing the government to bring such a law because builders are not interested to mend their ways and want to continue with their unethical, wrong and illegal practices to cheat the buyers. Thus, they are making an all-out effort to frustrate the rights of homebuyers which were made available by the government by amending the IBC and subsequently seconded by the Supreme Court,” said FPCE President Abhay Upadhyay.
The amendments have been brought in due to the efforts builders’ body National Real Estate Development Council which has even taken credit publicly for the insertions in the IBC, said FPE in the letter.
The minimum threshold requirement of fraught with “difficulties and is unimplementable”. “Sale is a continuous process. How will a homebuyer know how many units have been sold to determine the 10 percent of total number of units sold in real estate project specially in a situation when 10 percent is less than 100?” the letter said.
The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 was referred to the Jayant Sinha-led committee after it was introduced in Lok Sabha in December 2019. The Lok Sabha referred this bill to the committee on December 23. The committee was likely to submit its observations and report before the Lok Sabha in three months time.
FPCE has urged the committee to look at its reasoning for the objection and ensure that such changes are removed from the amendment bill before it is passed by Parliament.
The FPCE has also sought an appointment from the committee for its delegation to meet and present their views.