New Delhi - The government, the National Company Law Tribunal and the Insolvency and Bankruptcy Board should treat home buyers at par with banks in view of a situation where thousands of buyers have been unable to get possession owing to stalled projects, industry body Assocham said.
"We request the government to mull over issuing a Presidential Ordinance and amend the Insolvency and Bankruptcy Code (IBC) to protect the rights and interest of home buyers in log-jammed projects at all costs," Assocham said in a statement, citing the case of Jaypee Infratech's housing projects whose 32,000 customers have not got possession of their flats.
"All out efforts should be made to revive the Jaypee Infratech project which has 32,000 buyers or at least one lakh family members, most of whom are middle and lower middle class salary earners," said Associated Chambers of Commerce and Industry of India (Assocham) Secretary General D.S. Rawat.
"The government, National Company Law Tribunal (NCLT) and the Insolvency and Bankruptcy Board should treat home buyers in real estate projects at par, if not above banks in the pecking order, by providing a separate carve-out for those stuck in the incomplete construction.
"It cannot a case of only protecting the lenders (secured creditors), going by the book. If a real estate project fails, the secured banker may have protected its interest, but the banks which have extended home loans to thousands of buyers also face risk of EMI default," it said.
Earlier this month, the NCLT admitted the insolvency petition filed by IDBI Bank against Jaypee Infratech, while the Bank of Baroda has approached the NCLT against the Amrapali group for default on loan repayment.
Noting that the trust of home buyers in real estate firms are at an all time low, Assocham urged that definition of non-performing assets (NPAs) be widened to include not only the NPAs of the banks but also of the home buyers.
"The realty sector has been worst hit by a high-level corporate debt and has been a victim of the worst kind of unethical practices at the state and local levels," the industry chamber said.
"The business to consumer companies with wide base of stakeholders involve a very large public interest which, if not handled well, can have cascading effect on the entire business and market sentiment," it added.
Meanwhile, hundreds of home buyers of Amrapali Group held a candlelight march in Noida on Saturday demanding action against the builder who has failed to deliver their homes years after the promised deadline.
Shouting slogans against the realty firm, the protesters held a march from Apeejay School in Sector 16-A to Sector 18. The protesters included buyers of Amrapali projects, including Dream Valley, Verona Heights and Centurion Park.
A large number of home buyers of Jaypee, Amrapali and some other projects have been holding hunger strike protests in Noida outside the corporate offices of the builders.
The buyers have not got possession of their flats, payment for which was made by them in 2010.