Recently, the Hon’ble Supreme Court in an interim order, while dealing with appeals against the Corporate Insolvency Resolution Process of the giant corporation SUPERTECH Ltd., gave green flag to ‘Project-wise Resolution’ which was adopted as a test by the National Company Law Appellate Tribunal (NCLT) last year.
Credits: Moneycontrol
For context – Project-wise Resolution is where Corporate Insolvency Resolution Process (CIRP) is initiated only against single/selected projects of a builder.
The move was made so that only the projects under default must go under CIRP. Rest of the projects were termed as ‘ongoing projects’ under the supervision of the Insolvency Resolution Professional.
This decision might be right for the project that is under CIRP but it has left the homebuyers of the other projects unprotected and helpless.
The reason being that although CIRP is initiated only in one project and they might get a resolution plan but the homebuyers of ongoing projects cannot approach any court, tribunal (RERA) due to imposition of moratorium on Supertech Ltd. under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The homebuyers are left with no other option than to wait for moratorium to end and in the mean time are given the assurance that there in project is under construction but what the Hon’ble Court’s have failed to take into consideration is that there are homebuyers who want to opt out of their project because of the uncertainty that runs around the builder and its projects. There are projects where construction of certain buildings have not even begun and looks impossible that they would be completed within two years.
The homebuyers are already burdened with the debt/EMIs that they owe to the banks for the flats they booked. There are homebuyers who want to opt-out of the project and are already defaulting in paying their EMIs. There are homebuyers who are paying EMIs but want to exit as they are not certain about the project anymore because the agreement period is already breached.
PLEASE NOTE – It has been more than a YEAR since moratorium was imposed.
*How is this relief when the homebuyers cannot even seek reliefs while they are getting not being included in the CIRP and not even getting an option of refund out of the CIRP?
* WHAT about the homebuyers who demand refund, on the ground that the builder was unable to deliver the flat in the stipulated time (as per the agreement signed between them) or the fact that they are not anymore capable of paying their EMIs and would not take a risk of paying for a unit that they are not assured of?,
*WHAT about the homebuyers who seek delay compensation charges (Section 18 of the RERA, 2016) as the builder is already under default as per their agreement.
*Supposedly moratorium ends and then the homebuyers are allowed to approach RERA for reliefs, would the time period during moratorium be included while calculating compensation? If not, does not this moratorium period is a pass for the builder? Aren’t the homebuyers who want out being stalled for nothing?
*DOES the present ‘Project-wise Resolution‘ not defeat the purpose of RERA?
I believe it is time for change as to how moratorium works in case of builders having multiple projects. For the present case, the Hon’ble Supreme Court is the only hope for the homebuyers.
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