Let this home truth be disclosed

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The Insolvency Bankruptcy Code is one of the most significant financial reforms carried out in the past several years but it did not really serve the interest of the harassed home buyers in the country. If an aggrieved homebuyer wants to initiate bankruptcy proceedings against delinquent developers, he/she would be up against terrible odds since it would be impossible for him/her to obtain the contacts and details of other homebuyers who might be in similar distress. The builders and developers take advantage of the information asymmetry that would prevent the aggrieved customer from rallying the required number of purchasers to move the National Company Law Tribunal to initiate bankruptcy proceedings. As a result, numerous buyers continue to face endless harassment after trusting a developer with a large part of their life savings to buy a dwelling unit.

To end this predicament a Parliamentary panel has recommended modifications to the Insolvency Bankrupt Code to the advantage of home buyers. It has recommended that even if one homebuyer wants to file for bankruptcy before the National Company Law Tribunal, the developer has to provide the details of other buyers in the project.

While this step will not address the central problem of the aggrieved buyer in getting the flat, or his money back, immediately, it would at least equip him/her with all the information to file for bankruptcy that should be a right for every buyer. It might have another salutary effect. Errant builders cannot take advantage of the information gap with the consumer and continue to harass him. The fear of facing bankruptcy proceedings can also help to infuse some discipline into this sector where might is often right.

The suggestion of the panel might be opposed by the real estate lobby that is powerful and influential. But it is a consumer-centric positive step that the government must not ignore.