The following options are available to the Home Buyers:
- Real Estate Regulation Act, 2016 (RERA)
- Consumer Protection Act 2019 (CPA)
- Competition Commission of India (CCI)
- Arbitration & Conciliation Act 1996
- Civil Remedy
- Criminal Remedy
- Insolvency & Bankruptcy Code 2016 (IBC)
Decision to resort to a particular remedy will depend on a case to case basis, as regards the status of construction, financial position of the Builder, status of other projects by the builder and so on.
It appears that the option for payment was Construction Linked Payment Plan. If so, the Builder can raise demand on completion of an identified state of construction, attaching certificate from the Project Architect/Engineer and also a photo of the building. In case the builder raised demand without supporting documents, such demand will not be binding and the Allottee may demand refund of the amount paid along with interest, raising demand by sending Notice by email and also by Registered Post Acknowledgement Due. Thereafter, the Allottee may resort to any one of the remedies available. There may be many other Allottees, who can join together to form a group of 100 or 10% of the total number of Allottees in the project, whichever is lesser, and file application as Financial Creditor under section 7 of the Insolvency & Bankruptcy Code 2016.
The Allottee has a right to be satisfied about the contents of the Flat Buyer Agreement. If not satisfied, he can very well demand refund of the amount paid, by making an application under Consumer Protection Act, or under RERA.
The Builder is under an obligation to get its lending banks NOC before executing Conveyance Deed. The Home Buyer will generally presume that the Builder has all requisite permissions in hand, before handing over possession and executing the Conveyance Deed. The amount would have been paid by cheque or online transfer for credit to the account of the builder. Bank should be estopped from claiming charge on the flat already handed over by the Builder, after having received sale proceeds in the Builder’s account maintained with it or any other consortium bank. However, the position may vary from case to case, depending upon the underlying circumstances.
The Developer may start a project after requisite approvals already in place or likely to be received shortly. The Project can be launched after identifying the land and getting right to develop it, building plans finalized and submitted for approval etc. The Home Buyer would have satisfied itself about the constitution of the builder i. e. Limited Liability Company or Private Limited Company or Limited Liability Partnership and so on. The Location of the project and title of land would have also been seen before making the booking. In case, the booking was made without proper due diligence, the buyer runs the risk of loosing his money. In such cases where the builder vanishes after taking money, the buyer has recourse to Criminal Remedy. The group of buyers not less than 10% of the allottees may move application under section 7 of the IBC.
The Home Buyer needs to satisfy itself about the genuineness of the project. The projects are approved by various banks for granting Housing Loans and these approvals are demonstrated prominently by the Builders for attracting potential Home Buyers. In case, the project was having any such approval, there may be some other issues, which needs to be ascertained. Otherwise, the Home Buyer has legal remedies available under RERA, Consumer Protection Act, Criminal Remedy etc. He may use any one of them for recovering the amount paid to the Builder.
Group of Home Buyers may also submit Resolution Plan for their project. For the purpose, they need to formalize the constitution of the group by registering it as a society with specific purpose for completing the project, which may also operate as Residents Welfare Association. However, it depends the size of the Corporate Debtor, number of projects taken up by the CD and their status. If other projects are without any problem, the Resolution Plan by Home Buyers may be supported by the CD and also other financial creditors. In such cases, the Adjudicating Authority may consider such Resolution Plan for approval.
Resolution Plan would have been prepared containing all such details. The Resolution Professional would have examined it and the Committee of Creditors would have satisfied itself before recommending it to the NCLT for approval. The NCLT would have also satisfied itself about Resolution Plan being compliant of the provisions of the IBC. Taking up the project Tower by Tower is the practical aspect, in accordance with the collective wisdom of the Home Buyers. Application for Occupation Certificate may be submitted for each Tower separately and application for final completion after completing all towers later on.
Resolution Plan is for a Corporate Debtor and only one Resolution Plan is considered. by the NCLT for approval. In case of multiple projects and no common Resolution Plan, the process will lead to liquidation of the CD, where the amount due to Home Buyers may not be sufficient enough to have a significant voting share in the Committee of Creditors.