IBC-Rera conflict is apparent: Assocham

New Delhi, April 22: The Insolvency and Bankruptcy Code and the Real Estate (Regulation and Development) Act seem to be pitted against each other when it comes to resolving interest of bankers and homebuyers, a report observed.

The conflict between IBC and RERA came to the fore in quite a few bankruptcy proceeding in the recent times .... In a way, IBC and Rera have areas where there are possibilities of conflict in operation. While IBC allows companies to file for bankruptcy to provide relief to debtors or creditors, Rera looks at providing relief to homebuyers and seeks to hold developers or builders responsible if the project is delayed, said an Assocham—Thought Arbitrage paper.

As per provisions of the IBC, homebuyers are unsecured creditors and as a result their priority to be compensated comes after those institutional or other creditors who have provided loans to the developer. Scope for confusion prevails as for both Rera and IBC, the law states that it will prevail over other laws, it said.

“The two laws enacted in 2016 may have the best of intentions, but the Insolvency and Bankruptcy Code (Code) and the Real Estate (Regulation and Development) Act appear to be pitted against each other when it comes to resolving interest of bankers and homebuyers,” the paper said.

In the latest case related to an Amrapali project, the Supreme Court held that financial creditors cannot take over homes belonging to the homebuyers. In other words, the Supreme Court upheld the rights of homebuyers ahead of the creditors, it said.

This amply demonstrates the fundamental contradiction between IBC and RERA while one tries to give primacy to the creditors the other tries to put consumers before creditors.