September 1, 2023: The insolvency and bankruptcy code (IBC) should be used as the last resort to resolve cases pertaining to struck housing projects, a government panel has recommended.
The committee, which was constituted under the chairmanship of Amitabh Kant, to recommend ways to complete the legacy stalled real estate projects, also suggested that state governments/ builders/ bankers/ buyers/land authorities should avoid further litigation in cases where judgments of the Supreme Court have been received.
The panel also said that even though the real estate law mandates project registration, this provision needed to be strictly enforced to ensure accountability and transparency. This, the panel suggested could be done by way of “waiving pre-requisites and penalty/fines”.
Other key suggestion of the panel
Execution of registration/sub-lease deeds for all occupied units: The committee recommended an immediate registration or execution of sub-leases in favour of homebuyers who have occupied the property. This should not be linked to the recovery of dues from the builders. It would benefit approximately about one lakh homebuyers. The panel also recommended that strict action should be initiated simultaneously to recover the outstanding dues from defaulting builders. In cases where the homebuyers are expected to remit outstanding dues to the builders, the committee suggests that the RERA should directly collect these payments from homebuyers.
Occupancy/possession of all completed projects: The panel recommended that regulatory authorities should identify such projects for resolution where construction is substantially completed but the possession remains undelivered for want of no-objection certificates or completion certificates. The committee further recommends that the clearance process, including the occupation and completion certificates for these projects, should be expedited, irrespective of whether developers have paid their dues to the authorities.
Proposal for state government’s rehabilitation package: The committee recommended that states may announce a rehabilitation package for stalled projects to make these projects financially viable.
Framework for RERA and administrator-led revival of projects: The committee recommended that in cases where the developer did not take responsibility for completing the project under the package or failed to do so, those may be dealt with by a RERA-led revival framework. In case homebuyers propose to complete the project themselves, they should be accorded preference. Under this framework, the committee suggests equitable haircuts among all stakeholders and the entire process from administrator appointment to bid awarding to be completed within not more than six months.
Financing of stalled projects: The panel recommended that financing for completing the projects may be treated as priority financing and SWAMIH fund should proactively provide finance for completing these stalled projects.
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An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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