Discuss insolvency law - MUMBAI: Member of Parliament and Chairman of Standing Committee on Finance Jayant Sinha met representatives of homebuyers to discuss their objections to amendment to the Insolvency & Bankruptcy Code, 2016. The proposed amendment requires a minimum threshold of homebuyers to come together in order to initiate proceedings under the code against an errant builder. Sinha had invited the Forum for People’s Collective Efforts (FPCE) for a meeting on Monday. FPCE had reached out to the committee with its objection on this nearly 3 weeks ago.
The meeting was attended by FPCE’s Abhay Upadhyay, Tarun Jindal and OP Bangur. In a separate and revised letter to the standing committee on finance on Saturday, FPCE said the right of a homebuyer to approach a court of law for help cannot be termed as potential abuse. Also, it cannot be construed that only facts can be considered as genuine when either 10% or 100 people say it together. In December, the government passed an ordinance to amend the code to state a threshold of minimum 100 homebuyers or 10% of total homebuyers in a project, whichever is less, are required to take the builder to an insolvency court. Also, law is primarily to deter to ensure that illegal acts are prevented.
Hence, by putting such conditions, lawmakers will only further encourage wrong doing by real estate developers, due to which the sector is already grappling with loss of credibility the FPCE letter said, requesting removal of the condition of minimum threshold to initiate insolvency proceedings. Homebuyers hold that developers are propagating the narrative that speculative investors are dragging developers to NCLT only to get refund. Developers are using this as an escape route as no such categorization is done at the time of booking and seeking refund on account of unreasonable delay in possession cannot be a crime for any category of customers, FPCE added.
The Insolvency & Bankruptcy Code (second amendment) Bill, 2019 that proposes to amend the code has been referred to the Standing Committee on Finance after it was introduced in the Parliament in December. The Lok Sabha referred the second amendment bill to the standing committee on 23 December and the committee is expected to submit its report before the Lok Sabha within three months.
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