Case Note & Summary
The appellants, home buyers, challenged a decision by the National Company Law Appellate Tribunal (NCLAT) regarding their classification as financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC). They had opted for allotment in a real estate project by Bulland Buildtech Pvt. Ltd. and sought remedies from the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) due to delays in project completion. UPRERA ordered refunds with interest, but during insolvency proceedings, a resolution plan differentiated between home buyers based on whether they approached RERA. The appellants argued that this distinction violated their rights as financial creditors under the amended IBC. The court analyzed the definitions of financial creditors and financial debt, concluding that the amendment included home buyers as financial creditors without distinction. The court rejected the Resolution Professional's argument that home buyers who sought remedies under RERA should be treated differently, emphasizing that such treatment was inequitable and violated Article 14 of the Constitution. The court set aside the NCLAT's order, declaring the appellants as financial creditors entitled to equal treatment in the resolution plan. The appeal was allowed, and all pending applications were disposed of.
Headnote
A) Insolvency Law - Classification of Creditors - Home Buyers as Financial Creditors - Insolvency and Bankruptcy Code, 2016, Section 5(8)(f) - The court held that home buyers who obtained a decree from RERA are to be treated as financial creditors under the IBC, as the amendment in 2018 included them in the definition of financial creditors. The distinction made by the Resolution Professional was found to be inequitable and contrary to the provisions of the IBC (Paras 6-9).
Issue of Consideration
Whether home buyers who have obtained a decree from RERA can be classified as financial creditors under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Supreme Court set aside the NCLAT's order, declaring the appellants as financial creditors under Section 5(8)(f) of the IBC and entitled to equal treatment in the resolution plan.
Law Points
- financial creditors
- financial debt
- real estate
- RERA
- insolvency
- discrimination
- home buyers
