Shri Hardeep Singh Puri, Housing Minister, recently said in one of the seminar in New Delhi that after taking charge of the ministry in September 2017, one of the first steps taken was to write to the Corporate Affairs Ministry to confer the status of ‘financial creditors’ on home buyers. The dialogue with that Ministry has finally resulted in another path breaking amendment to the Insolvency and Bankruptcy Code (IBC), he added. Shri Puri explained that the amendment provides the home buyer the status of a ‘financial creditor’, a move that will allow him to initiate Insolvency proceedings on par with of the financial institutions. He said, by empowering the home buyer through a legislative mechanism, this Government has once again demonstrated through action that it has the best interests of the consumer and places it on the highest pedestal.
One of the biggest victory for home buyers in India was when ministry of Corporate Affairs accepted Home buyers as “Financial Creditors”. Earlier home buyers were running pillar to post to get their refunds if the company goes into the liquidation proceedings. The amount was to be kept as “Advances from Customers” and were not having any charges whatsoever on Liquidating company or its assets or its receivables.
Builders in India, especially in Jaypee Group case, kept the home buyers looping dark even after the company was financially broken. Thousand s of home buyers were fighting their battle in Supreme Court.
After the Home Buyer are treated as “Financial Creditors” their right on property becomes first charge in the process of liquidation.