SC directs Centre to make appointments in NCLT

SC directs Centre to make appointments in NCLT

The Supreme court. DH file photo

The Supreme Court on Friday directed the Union government to do the needful for making appointments in statutory bodies of the National Company Law Tribunal (NCLT) and its appellate body within three months, to deal with litigation which may arise in the future.

A bench of Justices R F Nariman, Sanjiv Khanna and Surya Kant, while upholding validity of amendment into the Insolvency and Bankruptcy Code that classified home buyers as financial creditors, also directed “recalcitrant” states and Union Territories to fill vacancies in the Real Estate Regulatory Authority (RERA) within the same period to deal with the complaints of flat purchasers against errant developers.

The Real Estate (Development and Regulation) Act came into effect since May 1, 2017, for speedy redressal of disputes.

The bench said, “It is absolutely necessary that the NCLT and the NCLAT are manned with sufficient members to deal with litigation that may arise under the Code generally, and from the real estate sector in particular.”

The court directed the Union government to file an affidavit in this regard within three months informing about the steps taken for this purpose.

The court passed its direction while rejecting a plea made by about 180 real estate companies and others who claimed the provisions of IBC were "draconian" and those will crush the sector, besides proving to be "deadly weapon in the hands of home buyers".

In the face of remedies already available to buyers under the RERA, and the Consumer Protection, the IBC amendments only allowed duplication, they said.

The court, however, said the provisions of the RERA, Consumer Protection Act and IBC have to be read harmoniously to recognise the rights of home buyers.

“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,” the bench said.