No fresh insolvency Relief May Hit Homebuyers
In a bid to grant relief to companies defaulting on loans due to the COVID-19 stress, Finance Minister Nirmala Sitharaman said that no fresh insolvency would be initiated for one year under the Insolvency and Bankruptcy Code (IBC) and that coronavirus-related debt would be excluded from definition of default. While these measures seek to offer a breathing space to real estate companies to recover, they may curtail remedies available to homebuyers, say experts.
Real estate experts say that this measure only provides temporary reprieve to the real estate sector as it does little to boost demand or induce homebuyers to invest in homes. This relief to developers also does not seem to safeguard the interests of homebuyers, say legal experts.
There will not be any remedies available to homebuyers for at least a year. Contractors and banks too will not be able to take the builders to task. Even relief before the National Consumer Disputes Redressal Commission (NCDRC) has been stunted due to huge delays and pendency before the consumer courts and the state commissioners, despite them having the mandate to decide disputes within six months.