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People’s forum FPCE has written to a Parliamentary panel on finance, opposing an amendment to the insolvency law that seeks to mandate a minimum number of flat owners to approach the National Company Law Tribunal (NCLT) against defaulting builders.
An ordinance in this regard was promulgated in December. It introduced a minimum threshold of 100 or 10 per cent of total allottees in a real estate project, whichever is less, for moving a joint plea seeking initiation of insolvency process against a realtor.
Forum for People’s Collective Efforts (FPCE) has written to Jayant Sinha, who is the chairperson of the panel on the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, introduced in the last session of Parliament. The Bill has now been referred to the Standing Committee on Finance.
“We vehemently oppose the proposed amendments/insertions specified in Clause 3 of the proposed Bill which seeks to amend Section 7 of IBC, 2016,” FPCE President Abhay Upadhyay said.
“The said amendment/insertions require a minimum threshold for homebuyers to come together in order to initiate proceedings under the code against any real estate developer/companies. This is against the interest of homebuyers as it puts unreasonable conditions on them, destroys level playing field which currently exists, and makes the law lopsided in favour of real estate developers,” he added.
The FPCE termed the amendment as “illogical, illegal and regressive”. It said the amendment to insert a minimum threshold for homebuyers to approach the NCLT is ridden with practical difficulties and listed out various problems.
“Sale is a continuous process. How will a homebuyer know how many units have been sold to determine the 10 per cent of total number of units sold in a real estate project specially in a situation when 10 per cent is less than 100?” it asked.
The FPCE said it would be difficult for a buyer to find the contact details of the requisite number of buyers in the project to start bankruptcy proceedings against the builder.
“We, also would like to request you to kindly give us an appointment for our delegation from pan India to depose before the Committee and present our case,” said Upadhyay, who is also member of Central Advisory Council, RERA, Ministry of Housing.
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