An all-India homebuyers' pressure group, Fight For RERA, has knocked on Prime Minister Narendra Modi’s door seeking an amendment to the Insolvency & Bankruptcy Code 2016 to give priority to homebuyers' interest in insolvency proceedings.
The pressure group has requested the government to provide powers to realty regulators through the Real Estate (Regulation and Development) Act, 2016, to attach assets of all the companies under the same promoter group, including their personal wealth, to arrange funds for completion of unfinished projects. It has also suggested initiating an exercise to collect data of all incomplete projects across India and track the number of homebuyers who are stuck in such projects.
In its letter to the Prime Minster, Fight For RERA has reiterated its earlier demand of forming a high-level empowered committee comprising all stakeholders to protect the interest of homebuyers in such high-risk category projects.
It has suggested that all banks which have given loans to homebuyers, who are stuck in delayed projects, should stop collecting EMIs from them to provide relief from the double burden of paying both EMI and rent.
“For projects that are delayed by more than five years, banks should be ready to take a haircut and foreclose all loans without collecting any further EMIs since it will be wrong for banks to take a haircut from loans given to billionaire industrialists, while burdening middle class homebuyers with EMI,“ said Abhay Upadhyay , national convener, Fight For RERA.
The pressure group has drawn a parallel between banks and homebuyers to argue that homebuyers' rights need greater priority than banks in terms of recovering dues, either in the form of completion of project or refund with reasonable interest without any haircut from liquidated assets.
It has supported its hypothesis with logic that banks have made good money at least in the initial stages when the company was in good health, but homebuyers had no such opportunity and they have lent money against collaterals providing a layer of security. Further, banks are privy to the financial health of a company since they are provided with monthly and quarterly data with regards to sale, stock, debtors, etc., by the company whereas no such information is passed on to homebuyers.
Thousands of home buyers have been protesting following the National Company Law Tribunal admission of IDBI Bank's application to initiate insolvency proceedings against Jaypee Infratech for defaulting on loans worth Rs 526 cr. On Monday, the Supreme Court stayed the insolvency resolution proceedings against Jaypee Infratech on home buyers' plea, while asking attorney general KK Venugopal to assist in the matter.
“Banks had all the opportunity to make good its loans by acting against the company on time since it’s only because of inefficiency and corruption that banks allowed situation to go out of control. On the contrary, homebuyers have been actively demanding completion of project and doing whatever they could but they never had any support of Authorities who were hand in glove with promoters nor they had any such privileges like banks to make good their life savings stuck with developers,” the letter added.
Fight For RERA has also demanded that a comprehensive investigation be carried out with regard to funds diversion at several such projects that are stalled due to shortage of funds. It argues that developers should not be allowed to take shelter under Insolvency and Bankruptcy code 2016 leaving millions of homebuyers stranded.