Legal opinion for homebuyers in distress

S. Basis RERA Consumer Forum NCLT (IBC)

No.
1. Time RERA has been formed It takes about 5-6 It takes about 6 Months
recently and it takes on Years for Redressal for adjudication of
an average couple of of Grievance or Insolvency Application
years for Redressal of adjudication of and to admit the same
Grievances. dispute by Consumer by Adjudicating
Forum. Authority.
2. Who can file A Consumer i.e. a Since by recent
A Purchaser/Home
person who satisfies amendment in August
Buyer or prospective
purchaser / Home Buyer
the requirement 2018, the Allottee of
offered flat can file under Section 2(d) of Project is considered a
Complaint irrespective of CPA can file Financial Creditor, any
the fact that such person complaint. Thereby person whether an
is Corporate Entity or only a person, Individual or Corporate
Individual.
typically Individual Entity can file an
who enters into Insolvency Application
agreement for under Section 7 of IBC.
purchase of Flat can Also, allottee who is
file complaint when competent to file
he purchases the Application in my view
same for his can be both purchaser
individual use and under Redevelopment or
residence. existing tenant / owner/
occupant of Flat /
Apartment.
3. Application/Complaint Complaint is to be filed Complaint is to be Insolvency Application
to be filed before before Real Estate filed before is to be filed before
whom Regulatory Authority Consumer Forum Adjudicating Authority
established in each state having territorial i.e.
by respective State pecuniary a) National Company
 govt. where the project Jurisdiction to hear Law Tribunal having
is situated. Complaint. territorial jurisdiction
over the place where
registered office of
Corporate entity is
situated in case of
Corporate Entities;

b) Debt Recovery
Tribunal in the territorial
jurisdiction of which
individual resides,
carries on business or
personally works for
gain.
4. Appellate Structure A. Real Estate A) State Forum; A. National Company
under the Act. Regulatory Authority; Law Tribunal;
B) National Forum;
B. Real Estate B. National Company
C) Supreme Court.
Appellate Tribunal; Law Appellate Tribunal;
*A writ petition
C. High Court; C. Supreme Court.
under Article 226 &
D. Supreme Court. 227 can be preferred *A writ petition under
in exceptional Article 226 & 227 can
circumstances be preferred in
against the decisions exceptional
of the Forums. circumstances against
the decisions of the
Company Law
Tribunals.
5. Accessibility There are typically as of A. State Commission NCLT is typically
now, one or two Real presides in capital of constituted for each state
Estate Regulatory each state and and presides at one
Authority offices in sometimes has place in the state or one
each state which has benches in other NCLT is commonly
 constituted the parts of the State. empowered and is
Authority under the having jurisdiction over
B. National
Act. two states.
Commission
In the present case, the presides at Delhi and
appropriate Forum shall has circuit benches
be UP RERA. in various parts of
the Country which
are rotating.
6. Execution/Reliefs Real Estate Regulatory The Consumer Once, NCLT admits the
provided Authority typically Forum has the power Insolvency Application,
exercise its power by to execute its own IRP comes into the
way of an order to orders. This makes picture to manage the
impose fine, deregister execution of orders affairs of the Company
the project, include the also an expeditious and in case of failure of
promoter in list of affair in comparison Corporate Insolvency
defaulters, direct to regular suits or Resolution Process
completion of project in execution of orders ("CIRP") (In case of
manner provided in passed by various Developer being a
consultation with State Courts/Quasi- Corporate Entity),
Government and pass Judicial Forums. Liquidation would be
appropriate orders Also, since scope of commenced. NCLT
incidental thereto. Consumer Act is monitors the entire
limited, the relief process and time to
*Since Home Buyers
and consequently is time, various reports are
are particularly
interested in completion execution is required to be filed with
comparatively an NCLT. In other cases
and handing over
possession of their flats, expeditious affair. liquidation would be
commenced by DRT.
RERA Authority
provides for stages wise
utilisation of moneys
paid by them and a
separate account to be
maintained for the
 purpose. In case of
default to complete
project or other non-
compliances, RERA
provides for various
measures to complete
the project and
empowers the authority
for the same for that
home buyers are not
kept in lurch. Also, it
tries to penalise
builders by aforesaid
measures so that they
are prevented and
discouraged from
undertaking further
projects when they do
not have requisite
resources.
 After the Insolvency and Bankruptcy Code, 2018 (Amendment) passed in August
2018, Homebuyers are considered at par with financial creditors during liquidation
proceedings of a company. This change was introduced recently to curb exploitation
of rights of homebuyers and providing them with a machinery to redress their
grievances in case of insolvency or liquidation proceedings. One can approach the
Authority i.e. NCLT (National Company Law Tribunal) having jurisdiction over the
dispute under section 7 of Insolvency and Bankruptcy Code for the purpose of
declaring the said company insolvent. Homebuyers are considered as unsecured
financial creditors as per new regulations and judgments of Supreme Court.
 Apart from approaching NCLT (The Authority) homebuyers also have an option of
approaching any consumer forum or RERA for the redressal of their grievances.
 RERA (Real Estate Regulatory Authority), was introduced in 2016 for curbing the
menace of exploitation of consumers by fraud builders and constructors and other
 builders. RERA provides efficacious remedy to the consumers/homebuyers not being
delivered their rightful possession within stipulated time. Almost every state has their
state regulatory authority for RERA.
 Regarding Consumer Forums, homebuyers can also approach State Consumer Forums
and appeals thereafter. The jurisdiction of State Commission applies only if the
amount in dispute exceeds Rs. 20,00,000/- but does not exceed Rs. 1,00,00,000/-. A
formal complaint under section 17 of Consumer Protection Act, 1986.