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Supreme Court upheld amendments made to IBC which deem allottees of real estate projects to be financial creditors

August 12, 2019[2019] 108 147 (SC)

IBC: Amendments made to IBC, 2016 which deem allottees of real estate projects to be financial creditors so that they may trigger Code, under section 7 thereof, against real estate developer, is valid; in addition, being financial creditors, they are entitled to be represented in Committee of Creditors by authorised representatives

•The Amendment Act to the Code does not infringe Articles 14, 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India.

•The RERA is to be read harmoniously with the Code, as amended by the Amendment Act. It is only in the event of conflict that the Code will prevail over the RERA. Remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.

•Section 5(8)(f) as it originally appeared in the Code being a residuary provision, always subsumed within it allottees of flats/apartments. The explanation together with the deeming fiction added by the Amendment Act is only clarificatory of this position in law.

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