IBC – Home Buyers – Innovation of Reverse CIRP

IBC – Home Buyers – Innovation of Reverse CIRP

Real estate was earlier unregulated and unaccountable, whereas, the home buyers were left at the mercy of builders / developers.  In 2016 RERA was enacted to regulate the real estate sector and to protect the interests of home buyers.  However, the RERA mechanism, to a large extent, was not fruitful or successful for non-implementation or inordinate delay in implementation of orders under RERA.   As a result, the home buyers have resorted to the Consumer Protection Act for redressal of their grievances.

In 2016, IBC was enacted mainly for revival of companies from insolvency.

However, with the judicial activism the home buyers were treated as financial creditors under IBC and thereafter, by 2018 amendment the home buyers were brought under IBC which was also upheld by the Supreme Court.

However, in 2020 amendment it was provided at least 100 home buyers or 10% of total home buyers from the same real estate project should support initiation of CIRP.

Reverse CIRP – the judicial experiment was started by the NCLAT to protect the interests of home buyers and also completion of projects.

The analysis and pros & cons of Reverse CIRP are aptly described and analysed in the exhaustive and salutary article of Mr.Souvik Ganguly and his associates of Acuity Law. Evolving jurisprudence of homebuyers under the Insolvency and Bankruptcy Code, 2016 – Lexology

Let us hope that Reverse CIRP will take roots in IBC scheme and bring cheers to the home buyers in their dream of timely completion of projects and timely possession of their flats.