NEW DELHI: Hundreds of homebuyers Tuesday petitioned India's top court to challenge the country's insolvency law, their lawyer said, amid fears that bad loan problems are spilling over to hurt ordinary people.
The group included more than 500 people who invested in a massive housing project outside Delhi, which has since collapsed.
None of the investors have received their homes at the Silicon Valley township project -- more than four years after the original delivery date.
But a bank that lent the developer Amrapali 510 million rupees ($7.7 million), has moved to initiate bankruptcy proceedings against it after the company defaulted on its loan repayments.
The petitioners claim the bankruptcy law introduced last year gives banks that lend to property developers unfair priority, and fails to safeguard homebuyers, their lawyer Ashwarya Sinha told AFP.
Once a company declares itself bankrupt, buyers are unlikely to get either their promised apartments or have investments returned.
"The law is flawed and it should treat homebuyers at par with secured creditors," Sinha said.
"Under the bankruptcy law consumers are not recognised as creditors.
"At most they will be granted the status of an unsecured creditor, but in that case not even the principal amount is secured, forget the interest payments the buyers have made."
Unsecured creditors are among the lowest on the totem pole of claims.
The petitioners are among millions of middle-class Indians eager to own their own homes, and who, from the mid-2000s onwards, poured cash into new building projects on the outskirts of major cities as a property boom took hold.
But many major residential property projects in India have been held up as real estate companies put the cash invested by homebuyers to uses other than completing existing projects, leaving consumers who poured in their money stranded.
Meanwhile, with India's real estate sector now riddled with debt and delays, the nation's banks -- which have some of the highest levels of bad debts in emerging markets -- have stepped up efforts to clean up soured loans.
Amrapali is the second real estate company to face bankruptcy proceedings after Jaypee Infratech, where more than 30,000 people are still waiting for the homes they paid for.
Experts worry as Indian banks step up much-needed efforts to clean up their balance sheets, there could be more such cases.
Followings are another complaints on Era Landmarks India Ltd:
- Regarding possession in amp dreamvally highrise
- Amrapali Dream Valley II Builder Amrapali has cheated the buyers
- Delay in possession
- I have booked a flat in Amrpali Dream Valley project as no EMI till Possession. Builder is not giving EMI to bankar since last six months bank is issuing messages for paying EMI what can I do
- Amrapali Dream Valley fraud
- Greater Noida homebuyers demand action against Amrapali Group
- Amrapali Dream Valley home buyers demand completion road-map
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