SC upholds the status of homebuyers as financial creditors under the IBC amendment

In a major boost to homebuyers, the apex court on Friday affirmed the status of homebuyers as financial creditors as per the recent modification in the Insolvency and Bankruptcy Code (IBC).

A bench headed by Justice R F Nariman said that Real Estate (Regulation and Development) Act (RERA) which regulates the real estate sector should be read harmoniously with the amendments made in the IBC and asked the government to file an affidavit within three months in connection with it.

The bench gave the order on a batch of pleas filed by builders challenging the financial creditors status given to homebuyers saying that when RERA already grants financial creditor status to homebuyers there was no need to grant financial creditor status in IBC.

The court also said that homebuyers can approach National Company Law Tribunal (NCLT) if they have been denied the status of financial creditors.

—India Legal Bureau