In a recent legal development, the National Company Law Appellate Tribunal (NCLAT) in the case of Dheeraj Raikhy v. Raheja Developers Ltd. reaffirmed
the significance of the status of real estate allottees under the Insolvency and Bankruptcy Code (IBC). The bench, comprising Justice Ashok Bhushan and Barun Mitra, dismissed an application under Section 7 of the IBC, emphasizing that the unique position of allottees remains intact, drawing on precedents such as Vishal Chelani vs. Debashis Nanda.
The journey of real estate allottees within the IBC framework traces back to the Jaypee Infratech case, where the absence of provisions protecting homebuyers led to significant legal reforms.
The 2018 amendment recognized allottees as financial creditors, ensuring their participation in the Committee of Creditors (COC) meetings.
This transformative change was later upheld constitutionally in the Pioneer Urban Land case, emphasizing the paramount importance of safeguarding homebuyers’ rights.
The 2020 amendment introduced a minimum threshold for filing an application under Section 7, requiring initiation by not less than 100 allottees or 10% of allottees under the same project. The Courts, as seen in the Manish Kumar vs Union of India case, upheld this amendment, aiming to shield financially viable real estate companies from unwarranted resolutions.
A crucial aspect highlighted in the recent judgment is the classification of real estate allottees as decree holders. Building on Vishal Chelani’s principles, the court emphasized that the status of a real estate allottee remains unchanged as a decree holder. It addressed an exception provided in the Sushil Ansal case, asserting that homebuyers, even as decree holders under the Real Estate (Regulation and Development) Act, fall under the category of financial creditors. The court denounced artificial distinctions, emphasizing the inequity in treating allottees differently based on their choice for a refund. While the Insolvency and Bankruptcy Code lacks a specific definition of a decree holder, legal interpretations from the Code of Civil Procedure and relevant judgments emphasize the unique status of homebuyers. The Court further clarified that recognizing homebuyers as a separate class of creditors aligns with the code’s beneficial intent for corporate debtor revival.
