Consumer complaints must go to RERA before NCLT, builders say
New Delhi, November 3 () Even when individual home buyers take builders to bankruptcy court, Delhi-NCR real estate developers are demanding that all consumer complaints be heard first by the RERA regulator before that insolvency proceedings be initiated.
According to the main agency of real estate agents CREDAI, around 450 real estate companies/projects across the country face insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) due to non-compliance in the delivery of projects to homebuyers , as well as the repayment of bank loans.
About 80-85 percent of these 450 cases admitted so far by the National Court of Corporate Law (NCLT) refer to builders in the region of the national capital that have largely failed to deliver flats to buyers of households.
Even a single homebuyer approaches the NCLT with grievances against real estate developers. In many cases their pleas are admitted. This is becoming an epidemic, said CREDAI-NCR spokesman Rohit Raj Modi in an interview.
Most of these cases are being submitted by investors and speculators, jeopardizing the interest of real home buyers who wish to take possession of their apartments, he said.
The government's intention was not this when it declared homebuyers as financial creditors to protect their interests, Modi said.
The insolvency law is being implemented incorrectly, he said.
CREDAI-NCR treasurer, Prashant Solomon, said that real estate regulators established under the RERA real estate law should be defined as the first point of attention for homebuyer complaints.
When RERA exists, consumer complaints must first go to RERA, which can then refer it to the NCLT after obtaining the consent of two-thirds of homebuyers, he added.
The association's demand comes amid reports that the government plans to amend the IBC and set a threshold for homebuyers to approach the NCLT.
The amendments must be submitted quickly. Even the ordinance route should be considered, said Modi of CREDAI.
In September, the association had written to the Prime Minister demanding that the consent of 2/3 of the winners of a real estate project be required to trigger IBC proceedings against a developer.
Modi said that most of the projects in Delhi-NCR have a positive net value but are stagnant due to the great shortage of liquidity and low sales.
A significant delay in the delivery of apartments to homebuyers is one of the main reasons for the slowdown in demand in the housing segment.
Lakhs of homebuyers are trapped in residential projects launched by developers such as Jaypee Group, Amrapali and Unitech.
The promoters of many NCR-based real estate firms are in jail due to failure to give ownership to homebuyers.
The president of the Forum for the Collective Efforts of the Peoples (FPCE), Abhay Upadhyay, said that around 5 lakh customers are trapped across the country due to delayed projects.
According to a recent report by real estate consultant JLL India, real estate developers have not yet completed almost 2.2 lakh housing units worth Rs 1.56 lakh crore, launched in 2011 and before in seven major cities.
According to JLL data, the real estate companies of Delhi-NCR (National Capital Region) are the main delinquents, since their contribution in delayed housing units represents 71% in volume and 56% in terms of value. In April of this year, the real estate consultant Anarock published a report that said that around 5.6 lakh housing units (worth Rs 4.5 lakh crore) that were launched in 2013 and before in seven major cities ran behind of delivery times. MJH ABM ABM