ANY observation by the courts underscoring protection of homebuyers lends itself to great expectations, but is also accompanied by a marked disquiet on whether the end result would be something concrete. Pointing to loopholes in the law in case an unfinished real estate project goes into liquidation, petitions in the Supreme Court want the Centre to address the apprehension that only the lending banks would stand to benefit, not the buyers. The apex court, while seized of the matter, has asked the government to look at something even more important: a ‘uniform proposal’ outside the Insolvency and Bankruptcy Code (IBC) for the lakhs of people who have not got possession of flats despite having paid for these.
Investors in housing projects by Jaypee Infratech Limited have petitioned that the IBC does not guarantee their interests in case liquidation is the only solution. Their prime concern: though the IBC provisions give them a say in the insolvency proceedings, it does not define them as secured creditors. And hence, will they be considered as parties when the money recovered from the asset sales is divided up? The Centre’s strong affirmation — in reply to another petition by ‘aggrieved’ real estate companies — that buyers need not worry on this count, since they are classified as financial creditors under an amendment to the IBC code, is welcome, but for those who have paid their lifetime’s savings for structures that never materialised, words alone won't do.
The real estate sector has been struggling for years now and any immediate relief looks unlikely. This desperation is at the core of the developers’ plea against buyers participating in IBC proceedings and instead asking them to rely on consumer courts and the authority under the Real Estate (Regulation and Development) Act. It’s the Centre’s counter that gives hopes: the allottees are financial creditors and the law is aimed at developers who default. Given the strong building lobby and the complexities involved, a uniform policy to protect homebuyers is a tough ask, but every step forward is worth a cheer.