For Home buyers: RERA vs IBC

As the fastest growing economy of the world, India is witnessing heavy development in the form of setting up of new industries, new residential development.

Rural population is heavily migrating around the metropolitan cities because of which heavy construction is going around the main cities of India like Mumbai, Kolkatta, Banglore, Delhi even many others. Mushrooming of builders with residential projects has been registered with heavy numbers but sadfully, the volume with which projects have been setup, out of which lots of builders had defaulted the money of innocent home buyers.

Cheated with their hard earn money, home buyers are finding several ways to recover their money like Civil litigations, Consumer forums, new law of Real estate Regulation Act(RERA), new law of Insolvency and Bankruptcy Code(IBC).

Let’s see the basic differences between the two new laws- RERA or IBC:       

Basis of difference RERA IBC
Adjudicating Authorities Adjudicating authority of Real estate Regulatory Authority(RERA) is regulated under the real estate regulation act Adjudicating authority of IBC is national company law tribunal(NCLT).
Court fees Fees for applying case in RERA is flat Rs.1000 or Rs.2000/- depending on state to state Authorities The fees for filling complaint under IBC is Rs.25,000/- irrespective the amount of default
Pecuniary Limits for fling complaint Under RERA, there is no pecuniary limits are prescribed for filling complaint Under IBC, presently  minimum amount of default should be Rs.1,00,000/- for filling complaint {Central government has the power to raise this pecuniary limit upto Rs.1crore}
Prescribed time limits for disposing case Under RERA total time prescribed for disposing complaint is 6months Under IBC, the provision of straight penalties on the defaulters are not really well placed
Who can Approach and Against whom complaint can be made Under RERA, any one who is aggrieved can file complaint against any person who has made default under IBC any one can file complaint but only against the corporate debtor, which means presently complaints under IBC can be made only against corporate defaulters which do not covers individuals and unlimited partnerships.
Penalty clause Penalty clause under RERA is very high against defaulters as high as 10% of total project cost Under IBC, the provision of straight penalties on the defaulters are not really well placed
Ease of litigations Litigations under RERA is relatively more easy than IBC Litigations under IBC are not as simple incase of RERA since involves many technical stages like formation of committee of creditors, application of resolution plan etc.

For home buyers Which Way is more better to recover your:- RERA or IBC?

This is the most debated question but as my legal opinion RERA is much appropriate law wherein home buyers should go and file complaints since its less expensive, easy to litigate. But in certain situations IBC is better option, it depends on case to case.

Under some cases, RERA do not grants the relief where complainant is seeking Refunds, if RERA feels that the refund of money would affect the interests of other home buyers, in terms of increased financial incapability of builder to complete project if refund granted to any buyer, such cases can be legally assessed to go under IBC.

Strongest Good and strongest bad  Point under IBC:-

Since IBC is straight law which goes for the insolvency/liquidation of debtor for recovery of money towards the creditor, therefore it becomes high chances that the debtor may turned up paying back the payment of creditor I the very nascent stage of proceedings.

But on other hand, there is also news, if under IBC once the corporate Insolvency resolution process (CIRP) begins and Committee of creditors (COC) is formedthen the others creditors also do comes up in the picture, collectively taking the crucial decisions about the management of the corporate debtor which automatically creates the good chance of adversely affecting the interest of the creditor who have filled the complaint of CIRP.

Disclaimer: – This article is for the general information and awareness of its readers,  In-case of any legal matter in relation with readers, they are expected to have legal opinion before placing reliance on it. Further it contains completely author’s views on the subject and completely unbiased based on authors own experience, study and understanding.

AUTHOR:- Rajul Jain (CA, MCOM, LLB, MBA, CNPO, CPFA, and NCFM) is Chartered Accountant and Legal Consultant, academically he is highly qualified and have gone through various certifications. He extensively speaks and writes on finance, taxation and legal matters. The author can be reached at

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