Rera Act to supersede IBC in matters of home-buyer rights
CHANDIGARH: The amended Insolvency and Bankruptcy Code (IBC) has brought home buyers within the ambit of financial creditors. Accordingly, any amount raised from an allottee in a real estate project will be now deemed to be a borrowing. Allottees will be deemed as financial creditors. Under the IBC, their claims can be pressed at par with other financial creditors.
Maintaining that rights guaranteed by the Real Estate (Regulatory and Development) Act, 2016 (RERA) for protection of allottees are wide, the Haryana RERA (Panchkula) has put allottee rights superior to financial lenders.
When an allottee books an apartment or plot, she is deemed to have acquired a stake in part of the project land, the authority held. Further, when she pays full or substantial part to the developer, she has to be considered a deemed owner of the piece of land.
Abhay Upadhyay, national convener of Fight For Rera, a home-buyer association, said, “This clarifies supremacy of home buyers against assets of a project over financial institutions.” The authority contended that financial institutions have the requisite expertise to carry out due diligence about promoter and project, while the allottee is generally a middle-class person lacking expertise. Lending institutions are also responsible for monitoring project progress, the authority held, “If the money lent by them is diverted, they must also share burden for the same. If the lenders fail to monitor the project and if loan is not repaid in time, they must share the blame. The allottee, however, must not suffer on behalf of promoter or financial institution.”
PROJECT TAKEOVER: DIVERGENT VIEWS
The authority also held that the director, Haryana Town and Country Planning department (TCP), is bound to protect interest of allottees and ensure that the project on the licenced land is completed as per sanctioned plans. “Director shall take steps to take over the project and get it completed,” it said.
The authority contended that allottees purchased apartments on the basis of the sovereign assurances held out to them by the TCP and in case of builder default, it is the responsibility of TCP to safeguard allottee interests.
The two Rera authorities in the state, Panchkula and Gurugram, have taken divergent stand on similar situations. “While the HRERA (Gurugram) in Greenopolis case took over an incomplete project itself, the HRERA (Panchkula) deemed it fit to transfer responsibility of completion of a Faridabad project to the TCP,” said Himanshu Raj, a Chandigarh-based advocate.
The practicability of the HRERA-Panchkula directions to TCP Haryana director to ensure completion of the project has also been questioned. “It is not clear whether financial status of the builder and other projects has been taken into consideration while shifting onus of project completion on TCP,” said Upadhyay. Stating that need is to give home buyers relief by refunding money, Raj said, “Promoters are liable for any act of violation and contravention.”