Unequals Or Equals: Analysis Of The Status Of ‘Homebuyers’ As Financial Creditors Under The IBC, 2016 In Light Of The Pioneer Case
Vaneeta Patnaik, Assistant Professor, West Bengal National University of Juridical Sciences, Kolkata, & Ramya Chandrashekhar, Teaching Associate, School of Legal Studies, CMR University, Bangalore
ABSTRACT
The situation of purchasers of plots of buildings or apartments is very distinct in the discussion of insolvency laws. When the Insolvency and Bankruptcy Code, 2016 was drafted, the Code did not envisage the nature of issues that such purchasers or “homebuyers” face in their transactions with the real estate project developer. In initial glimpse, the plight of a homebuyer seems very different from a Financial or Operational Creditor under the Code.
However, by way of a path-breaking amendment in the IBC Code, 2016, the homebuyers were accorded the status of a Financial Creditor. This was later also affirmed by the Supreme Court of India, by a landmark judgment in insolvency laws. This led to a wide-spread debate all over India with a few academicians supporting the modification in the law, and a few others describing the same as “treatment of unequals as equals”.
Why was such an amendment introduced, on what considerations did the Apex Court of India uphold such introduction, what were the consequences of the decision of the Supreme Court, what practical issues arise out of such a construction, and how does the principle of equality, reconcile with the situation of the homebuyers in India.
This article aims to secure answers to such questions and explore the plight of ‘’Homebuyers’ in the wake of the Plioneer Case.
Keywords: Homebuyers, Financial Creditor, Threshold, Real Estate Project, Allottee, Revival
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