As of June this year, 421 realtors were under the corporate insolvency resolution process (CIRP), of which 164 cases have been closed while 257 are continuing.
The first national meet of officials of the Real Estate Regulatory Authority (RERA) is likely to brainstorm among others issues the scenario emerging out of the August 9 order of the Supreme Court, where it upheld the validity of the IBC, which conferred the ‘financial creditor’ status on homebuyers.
Besides RERA officials from the states, the one-day conclave to be held in Lucknow on Monday will be attended by Uttar Pradesh chief minister Yogi Adityanath, MoHUA minister Hardeep Singh Puri and MoHUA secretary DS Mishra. The event will also see participation from bankers and private equity players.
FE spoke to 3 RERA officials from different states. Two of the officials pointed out that the Supreme Court judgment would weaken RERA’s position, which is the sector regulator. They said one of the main issues to be discussed at the meet is RERA’s role vis-a-vis the Insolvency and Bankruptcy Code (IBC). They said clarity should be sought from the Centre – the Ministry of Housing and Urban Affairs (MoHUA).
“There are two major issues in the judgment on which we need clarity. One is that under Section 7 of the IBC, a homebuyer (who is now a financial creditor) can trigger insolvency proceedings against the developer. Around two dozen cases, which were being heard at UP RERA, got delayed as one of the homebuyers moved the NCLT, impacting the proceedings. This happened after the SC judgment. If people feel the NCLT is a specialised agency for insolvency and for bringing in co-developer to complete construction, then let them go for it. But, a single homebuyer should not sabotage the ongoing proceedings in RERA. A minimum of 10% homebuyers should be allowed to approach the NCLT,” said one of the sources.
There are around 190 projects in Noida, Greater Noida and Ghaziabad that have gone to the NCLT and where IRP has been appointed. Of these, some are also being heard at the UP RERA, he added.
Another source said the Supreme Court in the same judgment said the Real Estate (Regulation and Development) Act, 2016 is to be “read harmoniously” with the IBC and in case there is a conflict, the IBC will prevail.
“Many officials across states have expressed concerns over the status and position of RERA going ahead. There is a need for clarity and through the forum we would seek the MoHUA views on this and ask for clarify on RERA’s role as it seems that the institution could lose its purpose,” the source said.
The Confederation of Real Estate Developers Association of India (Credai) said RERA being the sector regulator should be the first court of call. “To save projects and time as well as to ensure the best interest of homebuyers, RERA should be the first legal avenue. This will also ensure speedy reconciliation of projects,” said Credai national chairman Jaxay Shah.
As of June this year, 421 realtors were under the corporate insolvency resolution process (CIRP), of which 164 cases have been closed while 257 are continuing. There were 209 realtors under CIRP on September 2018, which rose to 235 in December 2018 and 359 in March 2019.
According to a report by Anarock Property Consultants, which will be unveiled at the national RERA meet, around 220 projects with 1.74 lakh houses, which were launched in 2013 or earlier across top seven cities, were stalled due to funding issue or litigation. The total value of these projects is around `1.77 lakh crore. Almost 66% of these projects, worth around Rs 1.11 lakh crore, have been sold.