The Supreme Court on September 9 held that homebuyers stuck in housing projects facing insolvency shall be entitled to possession if their claim has been verified and admitted by the resolution professional in the list of financial creditors.
The top court passed the order while dealing with a case from Chandigarh where two persons had booked a flat in Mohali’s Ireo Rise (Gardenia) project in the year 2010, had even paid almost the entire sale consideration of ₹60 lakh, but failed to get possession even as insolvency proceedings were initiated against the builder – Puma Realtors Private Limited, in 2018.
The court looked at the larger perspective as such reading of the IBC Code would serve injustice to homebuyers awaiting possession despite honouring their part of the agreement. The bench of justices Sanjay Kumar and Satish Chandra Sharma said, “The facts of the present case highlight the plight of individual homebuyers, who invest their life savings in the hope of securing a roof over their heads. The appellants had paid nearly the entire sale consideration as far back as 2011. To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”
The court, while setting aside the national company law tribunal (NCLT) and national company law appellate tribunal (NCLAT) orders,said, “We are unable to countenance the approach of the NCLAT in brushing aside this admitted position, and in treating the appellants as if they had not filed any claim at all.”
It further held, “The respondent(s) shall execute the Conveyance Deed and hand over possession of Apartment No. GBD-00-001, Block D, IREO Rise (Gardenia), Mohali to the appellants within a period of two months from today.”
The court said that even as per the resolution professional on behalf of the company, the appellants had resubmitted their claim on February 7, 2020 and their name was incorporated in the published list of creditors issued on April 30, 2020. “Once such verification and incorporation occurred, the claim acquired full legal recognition within the CIRP process,” the bench held.
After filing their claim before the national company law tribunal (NCLT), both homebuyers were told that they will only be entitled to 50% refund as their claims were received beyond the date when the corporate resolution plan came to be approved by the committee of creditors in August 2019. Aggrieved by the concurrent orders passed by the NCLT in 2023 and the NCLAT in January 2025 dismissing their plea for possession, the petitioners approached the top court seeking justice.
The bench said, “This is not a case of entertaining a fresh claim beyond the Resolution Plan. It concerns an allottee whose claim was verified and admitted by the Resolution Professional and reflected in the list of financial creditors well before approval of the Plan by the Adjudicating Authority. To disregard such an admitted claim and confine the Appellants to the limited benefit under Clause 18.4(xi) (of the Insolvency and Bankruptcy Code) is not to preserve the binding effect of the plan but to misapply it.”
The court observed that the NCLT and NCLAT wrongly categorised the petitioners under Clause 18.4(xi) which deals with homebuyers who failed to submit claims or delayed claims or claims unverified by the corporate debtor (builder). This clause makes a clear distinction between verified claims and belated or unverified claims as Clause 18.4(vi)(a) governs cases of allottees whose claims stand verified and admitted and become entitled to delivery of possession of the apartment or an equivalent alternative unit.
“To obliterate that distinction would render the scheme otiose. Relegating bona fide allottees, who have paid substantial consideration years in advance, to the status of mere refund claimants runs contrary to the very object of the legislative framework,” said justice Sharma, writing for the bench.
The appellants had signed the agreement with the builder on May 27, 2011 and had paid a sum of Rs. 57,56,684/-, constituting almost the entirety of the sale consideration of a little over ₹60 lakh.
The NCLAT judgment held that the claim of the appellants was belated as it was received after the date when the Resolution Plan had already been approved by the Committee of Creditors on August 23, 2019. The petitioners had approached the court challenging this finding.
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