There could be no better day than this for the homebuyers as the honourable Supreme Court held treating buyers (homeowners) as financial creditors in one of its orders. With the increase in the number of realtors facing bankruptcy cases, comes in the conflict of The Real Estate (Regulation and Development) Act, 2016 (RERA) versus National Company Law Tribunal (NCLT).

Supreme Court in its order held, “RERA has to be read harmoniously with Consumer Protection Act (CPA) and Insolvency and Bankruptcy Code (IBC) and, in case of any conflict, IBC will prevail”.

RERA versus NCLT
RERA versus NCLT

Effects of the order

  • Homebuyers can now initiate bankruptcy proceedings against the builder.
  • They will be treated at par with banks and institutional creditors.
  • Homebuyers can seek relief under IBC, CPA as well as RERA.

Unfolding of the case

A bunch of real estate firms filed 180 batch petitions before the honourable Supreme Court challenging this recent amendment in IBC. They claimed that homebuyers already have enough protection under CPA and RERA, and hence the recent amendment that allows them to be a part of the IBC proceedings is not necessary. However, the Supreme Court decided to uphold the amendment.


Insolvency and Bankruptcy Code (Amendment) Bill, 2019 was passed by the Rajya Sabha on 29 July, 2019, and by the Lok Sabha on 1 August, 2019; hence, replacing the June 6 ordinance. The amendment was inserted as an explanation clause under section 5(8)(f) for the purpose of ‘abundant clarity’.

You must consult RERA and NCLT lawyer for your case in case of confusion between the two. Dial 7888356908 for more information.