The Supreme Court on Monday told the Centre to respond to petitions that challenges amendments to the Insolvency and Bankruptcy Code, or IBC, that requires a minimum of 100 home buyers to come together to sue the defaulting developer at the National Company Law Tribunal.
The petition was filed by home buyers who contested the amendment to the insolvency code that introduced the concept of a threshold on the minimum number of home buyers that have to file a case at the law tribunal for liquidation proceedings.
The code, which was amended last year, said the case could be filed only if 100 or 10 percent of the home buyers of the project concerned come together.
Earlier a single financial creditor including a home buyer could approach the tribunal against the developer with claims of at least Rs 1 lakh .
Home buyers have argued that this threshold for acting against the developer is discriminatory and arbitrary since there is no similar requirement for other financial or operational creditors.
One petition was filed on behalf of 11 homebuyers from Noida and Gurgaon. The second was filed on behalf of five homebuyers and a third, by Karvy Group Investors.
Home buyers have pointed to the verdict of a three-judge bench of Supreme Court in August that had put home buyers at par with other financial creditors. It has been pointed out that the amendment to the code was an attempt to circumvent the judgment and recalled that builders did seek a threshold for the homebuyers during the hearings also.
It was also pointed out that it was practically impossible to bring home buyers together, particularly since most such cases are filed in cases where the project was still under construction.
Under the amendment, home buyers who had already applied to NCLT would also have to comply with the changes if the tribunal hadn’t accepted their application when the code was amended.