In a landmark judgement, the Supreme Court of India on Friday upheld the constitutional validity of Section 5(8) (f) of the Insolvency & Bankruptcy Code.
The Section 5(8) (f) of the IBC Code gives right to the homebuyers to approach the National Company Law Tribunal (NCLT). It gives home buyers the right to be considered as ‘financial creditors’.
The amendment made to IBC was challenged by as many as 136 builders through writ petitions which were attached to the original case filed by Pioneer Urban Land and Infrastructure against Union of India and home buyers.
“This will be a remedy against all those projects which have been delayed and builders who do not intend to return the money to the buyers or complete the construction. Further, this law will endeavour to resuscitate the companies who have abandoned the projects after collecting huge amount of money from the innocent homebuyers or companies who cannot deliver on their promises,” said advocates Aditya Parolia and Piyush Singh of PSP Legal, Advocates and Solicitors, who were representing around 400 home buyers in the matter.
The apex court said that the Section 5 (8)(f) does not infringe Article 14 & 19 (1) (g) of Real Estate Regulatory Act (RERA) and is not in derogation of any act. In case of any conflict between RERA & IBC, later prevails, SC said.