NEW DELHI: The Supreme Court on Friday upheld amendments to the Insolvency and Bankruptcy Code (IBC) on Friday, giving homebuyers the status of financial creditors, while dismissing the plea moved by over 180 real estate companies against the IBC amendments.
The realtors had argued remedies to homebuyers were available under the RERA Act and the amendments to IBC were not needed.
However, their plea was rejected by an SC bench headed by Justice R F Nariman, stating consumers should have the option of seeking remedy under any provision — the Consumer Protection Act, IBC or RERA.
It added that the RERA Act, which regulates the real estate sector, should be read harmoniously with the amendments made in the IBC and in case of conflict, the Code would prevail.
It also recognised the rights of homebuyers who contribute equally in the financing of any real estate projects.
The bench also clarified that only genuine homebuyers can invoke insolvency proceedings against a builder.
This means if a real estate company goes for insolvency, homebuyers will be treated at par with banks and other institutional creditors and will be given priority in recovering dues from the insolvent company.
This also will ensure buyers a seat at the Committee of Creditors’ table, enabling them to be a party in the resolution process for a real estate firm which goes bankrupt.