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Homebuyers object to Insolvency code amendment, approach parliamentary committee

This locality is close to the employment hubs of Dombivli, Bhiwandi, Ulhas Nagar, Ghansoli, Mahape, etc. Kalyan also has a good mix of social infrastructure including schools, hospitals, banks, cinema halls, and so on.In December 2019, the government had passed an ordinance to amend the code, with the result that a threshold of minimum 100 homebuyers or 10% of total homebuyers in a project, whichever is less, is required to take the builder to an insolvency court.

MUMBAI: The Forum for People’s Collective Efforts (FPCE), a national lobby of homebuyers, has approached the Jayant Sinha-headed parliamentary standing committee on finance with its objection to a proposed amendment to the Insolvency and Bankruptcy Code (IBC), 2016. The second amendment to the bill was presented in the Lok Sabha in the winter session.

The proposed amendment requires a minimum threshold of homebuyers to come together in order to initiate proceedings under the IBC against an errant builder. In December 2019, the government had passed an ordinance to amend the code, with the result that a threshold of minimum 100 homebuyers or 10% of total homebuyers in a project, whichever is less, is required to take the builder to an insolvency court.

“This is against the interest of homebuyers as it puts unreasonable conditions on them, destroys level playing field which currently exists and makes the law lopsided in favour of real estate developers. The amendment being brought under influence of builders is not only illogical, illegal but also regressive to say the least,” said FPCE’s letter to the standing committee chairman.

The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, which proposes to amend the code, was referred to the standing committee on Finance after it was introduced in Parliament in December. The Lok Sabha referred the second amendment bill to the standing committee on December 23 and the committee is expected to submit its report before the Lok Sabha within three months.

In in its letter, the FPCE also highlighted that the corporate affairs ministry had also proposed these amendments without giving an opportunity of hearing to homebuyers who are important stakeholders and are directly impacted by the proposed amendments. ET has seen a copy of the letter.

The FPCE highlighted that through an earlier amendment the government provided homebuyers the status of financial creditors in order to empower them to be part of the Committee of Creditors (CoC). However, builders had challenged the constitutional validity of that amendment before the Supreme Court. The court held the government’s stance to be constitutional and rejected the developers’ plea.


Comments Section

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