A recent High Court order has stressed the need for including promoters and directors of real estate companies in legal proceedings after homebuyers faced difficulties recovering losses from delayed projects. The ruling highlights a tactic where developers declare bankruptcy while promoters evade accountability, often by starting new companies. This decision aims to ensure greater accountability and recovery chances for affected buyers. Homebuyers are advised to include promoters and directors in complaints and conduct thorough due diligence before investing. The Karnataka Home Buyers Forum supports the ruling, urging buyers to follow these guidelines to protect their interests.
A growing number of homebuyers are facing significant challenges in recovering losses due to delays or defaults by real estate developers. To address this issue, a recent High Court order has emphasised the importance of including promoters and directors of real estate companies as parties in legal proceedings.
The order stems from a case where homebuyers were unable to recover losses due to a delayed project. The court found that without naming the promoters and directors as respondents, the legal process was hindered. This highlights a common tactic employed by some developers: declaring bankruptcy for the company while the promoters remain unaffected. In some cases, these promoters establish new companies under different names, evading accountability.
The High Court ruling underscores the need for homebuyers to be vigilant when dealing with real estate developers. Including the names of promoters and directors in complaints filed with RERA or consumer courts is crucial to ensure accountability and maximise the chances of recovering losses.
To protect their interests, homebuyers are advised to conduct thorough due diligence before investing in a property. This includes verifying the credentials of the developer, the project's legal status, and the financial health of the company. Obtaining information about the promoters and directors involved in the project is essential.
The Karnataka Home Buyers Forum has welcomed the High Court's order and urged homebuyers to follow the court's guidelines. The forum emphasises the importance of including the names of promoters and directors in legal complaints to safeguard the interests of homebuyers.
This development marks a significant step towards protecting the rights of homebuyers and ensuring greater transparency in the real estate sector. As the number of real estate projects continues to rise, it is imperative for buyers to be aware of the potential risks and take necessary precautions to protect their investments.
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