Updated: Jul 16, 2020

The real estate sector which is one of the biggest sector in the Indian market has seen a major slowdown since the year 2008. Liquidity crunch, sluggish consumer demand, increase in inventory backlog, overpricing are some of the major factors that affected the real estate sector drastically. The two major parties involved in this sector are : Builders/Developers and Home-buyers/Investors.

It is a known fact that investing in an under-construction project/property/flat is cheaper than investing in already constructed ready to move in flats in most of the cases. However, under- construction flats brings with it more issues that home-buyers face in general.

Generally, in a contract between a builder and a home-buyer, builder owns the responsibility of completing the project within the time stipulated and the home-buyer needs to ensure the timely payment of installments for the project/property as agreed in the contract. However, one of the major issues being faced in such a contract is delay in completion of project or diversion of funds towards establishing new projects rather than completing the ongoing ones by the builder. This leads to a decline in consumer trust and major portion of their hard earned money being blocked in an uncompleted apartment for a long time.

In light of the problems faced by the aggrieved home-buyers, various accessible forums can be approached under the given identified legislations for redressing their grievances:

Consumer Protection Act, 1986 : The consumer forum has the power to execute its own orders. It can make the execution of orders expeditious in comparison to regular suits.

Real Estate (Regulation and Development) Act, 2016 (RERA) : Under RERA, remedies can be imposed by way of fine, de registration of the project, including the promoter in list of defaulters, direct completion of project in manner provided in consultation with State Government and pass appropriate orders incidental thereto. Generally, Home buyers are interested in completion of their flats and acquiring possession of their flats. Keeping this mind, RERA provides for stage wise utilisation of the amount paid by the home buyers to builders and thereby required the builders to maintain separate escrow account for the same purpose (This is to ensure transparency and credibility). In case the builder commits a default to complete the project or other non compliances, RERA provides for various measures to complete the project so as to ensure that home buyers are not kept in lurch.

Insolvency and Bankruptcy Code, 2016 (IBC) : Remedies available under IBC can be availed when NCLT admits the Insolvency Application. It gives an optional remedy which is feasible only if the company does not have sound financial position and it is deterioting. It is a fruitful remedy only when the Applicant seeks to recover money invested along with interest predominantly.


If an individual is consumer as per the definition given under the Consumer Protection Act, 1986 and seeks performance of statutory obligation or compensation thereof and the builder has the financial ability to pay, then Consumer forum is a preferable option. Simultaneously, to backlist the builder a complaint may also be filed with RERA.

When a person irrespective of being a consumer or not, seeks return of his invested money in the property when the financial position of the Developer is deteriorating, then the appropriate forum would be NCLT. Insolvency application may be filed as per the provisions of IBC and the Developer won’t be able to complete the project.

In terms of execution, when the developer may not be in a position to return the money invested by the buyer then in such a case invoking IBC is a lucrative remedy as it involves the process to liquidate the assets of developer.

It is to be noted that as per the landmark judgment of Pioneer Urban Land and Infrastructure Limited v. Union of India AIR 2019 SC 4055 both NCLT and RERA can be approached simultaneously and incase of any conflicts between the legislations IBC would prevail over the other. The Supreme Court further clarified that both RERA and the Code are concurrent remedies.


Introduction of different forums have made it easier for home buyers to approach and get their grievances addressed in a timely manner. Not ignoring the fact that home buyers can simultaneously approach both RERA and IBC, the challenge remains for home buyers to identify the appropriate forum that can grant them relief .