SAFEGUARDING HOME BUYERS’ RIGHTS: A COMPREHENSIVE ANALYSIS OF LEGAL FRAMEWORK IN REAL ESTATE INSOLVENCY

Abstract

The Insolvency and Bankruptcy Code was introduced as a groundbreaking law to revitalize financially troubled corporations from the situations of bankruptcy and insolvency. The legislation, with its time-constrained methodology and the goal of reviving the debtor, initiates a process of Corporate Resolution in India. The Code has undergone significant changes due to the changing requirements of the economy. One such sector of the economy is real estate, which is the driving force of the economy but is currently in shambles and the homebuyers are the worst sufferers. Initially, in the Code, the rights of homebuyers were overlooked and not acknowledged. They encountered a challenging struggle to obtain recognition for their rights and finally were granted the designation as Financial Creditors. Nevertheless, there were unresolved uncertainties over the implementation of their demands and entitlements. To successfully address their concern, the court introduced innovative concepts of the Reverse CIRP and Project-Wise Insolvency to tackle the challenges at hand. The processes have been hotly contested and found to be against Section 29A of the Code while standing upon the stilts of economic experimentation. Along with that, analyzing the nations with good ecosystems and their insolvency mechanisms provides key insights into insolvency governance and introduces the practices prevailing in the world. This piece seeks to explore the rights of homebuyers while analyzing the innovative approach of the courts in addressing their requirements. It also examines the practices in different countries to offer answers tailored to the Indian context and suggests possible paths ahead in the real estate sector’s insolvency.