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A parliamentary panel has asked the government to introduce a provision in the Insolvency Bankruptcy Code (IBC). The recommendation suggests it is mandatory for builders to present all the prospects of the project if the homebuyers decide to file for the builder’s bankruptcy resolution in the NCLT.

The 2018 modification to the IBC had made it mandatory that for initiating the insolvency process at least 100 homebuyers or 10% of the full purchasers are required. The Forum for People’s Collective Efforts (FPCE), had submitted a report to parliament standing committee on finance. The report mentioned how this provision is impractical and places homebuyers in a disadvantageous place in contrast to builders. FPCE is the organisation that had also campaigned for the enactment of e actual property legislation (RERA).

As per the report, the panel has observed certain loopholes in the implementation of IBC.  The buyers are facing challenges in gathering the required quantity of purchases to initiate insolvency proceedings against the property owner.

“The committee, therefore, recommends that once a single homebuyer decides to initiate insolvency proceedings in NCLT, the real estate owner should be obliged in the rules and guidelines to provide details of other homebuyers of the project to the homebuyer concerned so that the required 10% or 100 homebuyers can be mobilised, which will thus ensure that the interest of homebuyers,” according to panel’s report.

Abhay Upadhyay, the national convener of FPCE and member of Central Advisory Council, RERA, mentioned they expect the federal government will come with a solution to the issue.

“If they can reduce the ceiling to 10 homebuyers it will help people whose savings are stuck in real estate projects for no fault of theirs,” Upadhyay mentioned.