With even individual homebuyers taking builders to bankruptcy court, rattled real-estate developers from Delhi-NCR are demanding that all consumer complaints first be heard by regulator RERA before insolvency proceedings are initiated.
According to the realtors' apex body CREDAI, about 450 real estate companies/projects across the country are facing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) because of default in the delivery of projects to homebuyers as well as repayment of bank loans.
About 80-85 per cent of these 450 cases admitted so far by the National Company Law Tribunal (NCLT) pertain to builders of the national capital region who have defaulted big time in handing over flats to homebuyers.
"Even a single home buyer is approaching the NCLT with grievances against real estate developers. Their pleas are being admitted in many cases. This is becoming an epidemic," CREDAI-NCR spokesperson Rohit Raj Modi told PTI in an interview.
Most of these cases are being filed by investors and speculators, jeopardising the interest of actual homebuyers who want to take possession of their flats, he alleged.
"The government's intention was not this when it declared homebuyers as financial creditors to protect their interests," Modi said.
The insolvency law is being implemented in a wrong way, he said.
"When there is RERA, consumers grievances should first come to RERA, which can then refer it to the NCLT after taking consent of two-thirds of homebuyers," he added.
The association's demand comes amid reports that the government is planning to amend the IBC and put in some threshold for homebuyers to approach the NCLT.
"Amendments should be brought in quickly. Even ordinance route should be considered," CREDAI's Modi said.
In September, the association had written to the Prime Minister demanding that the consent of 2/3rd of allottees of a real estate project should be required to trigger IBC proceedings against a promoter.
Modi said most of the projects in Delhi-NCR are net worth positive but they are stuck because of huge liquidity crunch and poor sales.
A significant delay in giving possession of apartments to homebuyers is one of the major reasons for demand slowdown in the housing segment.
Lakhs of homebuyers are stuck in residential projects launched by developers such as Jaypee group, Amrapali and Unitech.
Promoters of many NCR-based realty firms are in jail due to default in giving possession to homebuyers.
Homebuyers body Forum for Peoples' Collective Efforts (FPCE) President Abhay Upadhyay recently said that around 5 lakh customers are stuck across the country due to delayed projects.
According to a recent report from property consultant JLL India, nearly 2.2 lakh housing units worth Rs 1.56 lakh crore, launched in 2011 and before across seven major cities, are yet to be completed by real estate developers.
As per the JLL data, the real estate companies of Delhi-NCR (National Capital Region) are the biggest defaulters as their contribution in delayed housing units accounts for 71 per cent in volume and 56 per cent in value terms.
In April this year, property consultant Anarock came out with a report which said that around 5.6 lakh housing units (worth Rs 4.5 lakh crore) which were launched in 2013 and before across seven major cities were running behind the delivery timelines.