BackIBC amendment applicable if homebuyers' applications were not admitted in NCLT
The Bill was tabled in Lok Sabha on December 12 but was not passed as the opposition had raised objectionsAs the amendments are prospective, applications filed by single homebuyers that were admitted in the NCLT would continue
PremiumThe amendments proposed to the Insolvency and Bankruptcy Code (IBC) can make life tougher even for those homebuyers who have approached the National Company Law Tribunal (NCLT) to initiate bankruptcy proceedings against the defaulting developer, but their cases have not been admitted yet.
During the Finance Minister Nirmala Sitharaman’s December 13 press conference Corporate Affairs Secretary Injeti Srinivas clarified that the regulations are not retrospective. He, however, said that all those cases which have been filed but not yet admitted; they will have 30 days to cure it. “It means, if a single homebuyer has filed an application to bring a company to the resolution process, the individual will have 30 days bring in the remaining 99 homebuyers," said Srinivas.
As the amendments are prospective, applications filed by single homebuyers that were admitted in the NCLT would continue.
On December 11, the Union Cabinet approved the amendments to the Insolvency and Bankruptcy Code Bill. The proposed Bill stipulates that in case of homebuyers approaching the NCLT against a developer, the insolvency proceeding can only be initiated if 10 per cent or 100 homebuyers (whichever is lower) agree to it.
The government made amendments to the IBC because increasingly single homebuyers were approaching the NCLT invoking provisions of IBC against developers. Many law firms have said that the amendment will ensure that single homebuyers do not misuse IBC provisions to arm-twist developers. As there is now a cap on the minimum number of allottees, only genuine cases would be admitted to NCLT.
The Bill was tabled in Lok Sabha on December 12 but was not passed as the opposition had raised objections.
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