The government had amended the Bankruptcy and Insolvency Code making homebuyers part of the committee of creditors deciding the fate of a company but had not been given precedence in payment of dues in case of liquidation. This means that homebuyers were at risk of not being compensated in the likelihood of such an event.
The problem arises when both the creditor bank and homebuyer file lawsuits against the defaulting developer and the first preference is given to the bank rather than the homebuyer. The Supreme Court ruling will now provide relief to lakhs of homebuyers waiting to take delivery.
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