LUCKNOW: Noticing the repeated claims of insolvency and bankruptcy by private builders, the UP government will be setting up a high-level committee soon to find out the reasons for it. UP CM Yogi Adityanath has ordered the Industrial Development Department to set up the committee with the mandate to look into the conditions which are compelling private builders to file for bankruptcy leaving thousands of flat buyers in the lurch.
In fact, since the Yogi cabinet 2.0 assumed charge, two prominent builders -- Supertech Limited and Logix City -- have filed for bankruptcy voluntarily before NCLT. Prior to them, Wave real estate group had filed for bankruptcy voluntarily in March 2021.
Prior to this, several big names of the real estate industry such as Amrapali, Jaypee Group, Three C Homes, Unitech and Sahara have faced insolvency proceedings in the past.
Significantly, a number of well-known firms have declared themselves bankrupt urging the National Company Law Tribunal (NCLT) to liquidate their assets so that they could arrange funds and deliver the incomplete projects. Buyers have been a harried lot due to non-deliverance of their units despite having paid the money. The sources claimed that NCLT has issued orders to declare at least a dozen small and big real estate firm owners bankrupt.
In the National Capital Region (NCR), especially Noida and Greater Noida, scores of homebuyers have no clarity as to when will they get possession of their flats booked under various projects of these builders even after making the payments to the developers.
“Things are not streamlined. Uncertainty looms large even after the establishment of the Real Estate Regulatory Authority (RERA). Why the developers are declaring themselves bankrupt needs to be probed,” said an officer. RERA came into force from May 1, 2017.
In Noida and Greater Noida, the status of the majority of projects, which were launched between 2009-2014, is incomplete. The system under RERA became effective three years after that. According to official sources, after extracting money for
the promised units from the buyers and banks, developers have made hay.
“It is convenient to exit from the project instead of fulfilling the obligations. Insolvency proceedings and liquidation is a complex process and takes a lot of time. Before taking any adverse action against the developers, the authorities need to ensure protection of the buyers’ interest,” said a senior official.