There is a significant breakthrough for thousands of people who are at the mercy of large builders after having paid for property, when they run into financial trouble. Media reports indicate that in two cases, Jaypee Infratech and the Aamrapali group, the insolvency regulator has brought in a special provision to protect the home-buyers. It has said that the claims of property-buyers would be treated on par with those of other creditors, such as banks. This gives investors a fighting chance of protecting their investment in the under-construction homes in buildings projects that are left incomplete by beleaguered realty companies.
The Insolvency and Bankruptcy Board of India (IBBI), in charge of implementing the Insolvency and Bankruptcy Code (IBC), has said in a formal notification that it has introduced Form F which has to be filed by property-buyers to submit their claims it. According to media reports, this still does not allow property owners to approach the National Company Law Tribunal (NCLT) directly; but their claims would not be pushed to the bottom of the heap. It is not clear how this change would work in practice, since most beleaguered builders have gone on to raise funds against the security of buildings, for which they have already collected funds from individuals against the sale of flats. It is only when the NCLT, finally, disposes the cases of Jaypee Infratech (which has over 32,000 affected property-buyers) and the Aamrapali group (30,000 affected persons), will we really know whether property-buyers’ rights are fully protected. For now, they have a fighting chance of safeguarding their investments in these companies.