Vishal Bodha
Advocate | LL.M. | Company Secretary
Background
The Indian real estate sector has witnessed significant turmoil, with several developers facing insolvency, leaving homebuyers in limbo. Recognizing the need to protect allottees, the Insolvency and Bankruptcy Code, 2016 (IBC) was amended to classify homebuyers as financial creditors, granting them a voice in the resolution process. However, real estate insolvencies present unique challenges—such as incomplete projects, conflicting rights of financial institutions and allottees, and difficulties in valuation—which require careful legal scrutiny. This article explores key statutory provisions and judicial precedents shaping the resolution of real estate insolvencies under the IBC.
The insolvency framework under the Insolvency and Bankruptcy Code, 2016 (IBC) provides a structured mechanism for resolving financial distress in the real estate sector. Recognizing the unique complexities involved in real estate insolvencies—such as the interests of multiple stakeholders, incomplete projects, and the rights of allottees—the Code and its associated regulations lay down specific provisions to govern the resolution and liquidation of real estate entities. Below is an overview of the key legal provisions applicable to real estate insolvencies under the IBC.
Statutory Framework: Key Provisions Governing Real Estate Insolvency
Section/ Regulation | Provisions |
S. 5(8)(f) | (8) “financial debt” means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes– (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; Explanation. -For the purposes of this sub-clause, – (i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, “allottee” and “real estate project” shall have the meanings respectively assigned to them in clauses (d)[1] and (zn)[2] of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); |
S. 7 | nitiation of corporate insolvency resolution process by financial creditor. ……. Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less: |
S. 21 | (6A) Where a financial debt— (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors; (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorized representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.
(6B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6A) shall be as specified which shall be form part of the insolvency resolution process costs. (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified. (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process. |
S. 25A | Rights and duties of authorised representative of financial creditors. – (1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means. (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents. (3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions: Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share: Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote: Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in accordance with the provisions of sub-section (3). (4) The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be.
Explanation.- For the purposes of this section, the “electronic means” shall be such as may be specified. |
CIRP R. 2(1)(aa) | “class of creditors” means a class with at least ten financial creditors under clause (b) of sub section 6A of section 21 and the expression, “creditors in a class” shall be construed accordingly. |
CIRP R. 4A | Choice of authorised representative (1) On an examination of books of account and other relevant records of the corporate debtor, the interim resolution professional shall ascertain class(s) of creditors, if any. (2) For representation of creditors in a class ascertained under sub regulation (1) in the committee, the interim resolution professional shall identify three insolvency professionals who are- (a) not his relatives or related parties; (aa) having their addresses, as registered with the Board, in the State or Union Territory, as the case may be, which has the highest number of creditors in the class as per their addresses in the records of the corporate debtor: Provided that where such State or Union Territory does not have adequate number of insolvency professionals, the insolvency professionals having addresses in a nearby State or Union Territory, as the case may be, shall be considered; (b) eligible to be resolution professional under regulation 3; and (c) willing to act as authorised representative of creditors in the class. (3) The interim resolution professional shall obtain the consent of each insolvency professional identified under sub regulation (2) to act as the authorised representative of creditors in the class in Form AB of the Schedule-I. |
CIRP R. 4D | Operating separate bank account for each real estate project. Where the corporate debtor has any real estate project, the interim resolution professional or the resolution professional, as the case may be, shall operate a separate bank account for each real estate project. |
CIRP R. 4E | Handing over the possession. After obtaining the approval of the committee with not less than sixty-six percent of total votes, the resolution professional shall hand over the possession of the plot, apartment, or building or any instruments agreed to be transferred under the real estate project and facilitate registration, where the allottee has requested for the same and has performed his part under the agreement. |
CIRP R. 8A | Claims by creditors in a class. (1) A person claiming to be a creditor in a class shall submit claim with proof to the interim resolution professional in electronic form in Form CA of the Schedule-I. (2) The existence of debt due to a creditor in a class may be proved on the basis of- (a) the records available with an information utility, if any; or (b) other relevant documents, including any- (i) agreement for sale; (ii) letter of allotment; (iii) receipt of payment made; or (iv) such other document, evidencing existence of debt. (3) A creditor in a class may indicate its choice of an insolvency professional, from amongst the three choices provided by the interim resolution professional in the public announcement, to act as its authorised representative. |
CIRP R. 16A | Authorised representative (1) The interim resolution professional shall select the insolvency professional, who is the choice of the highest number of financial creditors in the class in Form CA received under sub regulation (1) of regulation 12, to act as the authorised representative of the creditors of the respective class: Provided that the choice for an insolvency professional to act as authorised representative in Form CA received under sub regulation (2) of regulation 12 shall not be considered. (2) The interim resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representatives selected under sub regulation (1) within two days of the verification of claims received under sub regulation (1) of regulation 12. (3) Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by the committee. (3A) The financial creditors in the class, representing not less than ten per cent. voting share may seek replacement of the authorised representative with an insolvency professional of their choice by making a request to the interim resolution professional or resolution professional who shall circulate such request to the creditors in that class and announce a voting window open for at least twenty-four hours. (3B) Subject to clauses (a) and (b) of sub-regulation (2) of regulation 4A, the interim resolution professional or resolution professional, as the case may be, shall offer choice of at least three insolvency professionals to the financial creditors in the class including such insolvency professional(s) proposed under sub-regulation (3A) along with the existing authorised representative. (3C) The resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representative who receives the highest percentage of voting share of financial creditors in that class. (4) The interim resolution professional shall provide the list of creditors in each class to the respective authorised representative appointed by the Adjudicating Authority. (5) The interim resolution professional or the resolution professional, as the case may be, shall provide an updated list of creditors in each class to the respective authorised representative as and when the list is updated. Clarification: The authorised representative shall have no role in receipt or verification of claims of creditors of the class he represents. (6) The interim resolution professional or the resolution professional, as the case may be, shall provide electronic means of communication between the authorised representative and the creditors in the class. (7) The voting share of a creditor in a class shall be in proportion to the financial debt which includes an interest at the rate of eight per cent per annum unless a different rate has been agreed to between the parties. [(8) (a) The authorised representative of creditors in a class shall be entitled to receive fee for every meeting of the committee attended by him in the following manner, namely: – Number of creditors in the class | Fee per meeting of the committee (Rs.) | 10-100 | 30,000 | 101-1000 | 40,000 | More than 1000 | 50,000 |
(b) The authorised representative shall be entitled to receive fee for every meeting of the class of creditors convened by him in the following manner, namely: – Number of creditors in the class | Fee per meeting of creditors in class with authorised representative (Rs.) | 10-100 | 10,000 | 101-1000 | 12,000 | More than 1000 | 15,000 |
(c) The payment of fee to authorised representative shall be part of insolvency resolution process cost in respect of two meeting with the creditors he represents corresponding to a meeting of the committee of creditors. (d) The fee for any additional meeting beyond two meetings corresponding to a meeting of the committee of creditors shall be part of insolvency resolution process cost subject to approval of committee of creditors. (9) The authorised representative shall circulate the agenda to creditors in a class, and may seek their preliminary views on any item in the agenda to enable him to effectively participate in the meeting of the committee: Provided that creditors shall have a time window of at least twelve hours to submit their preliminary views, and the said window opens at least twenty-four hours after the authorised representative seeks preliminary views: Provided further that such preliminary views shall not be considered as voting instructions by the creditors. (10) The authorised representative shall: – (a) assist the creditors in a class he represents in understanding the discussions and considerations of the committee meetings and facilitate informed decision-making; (b) review the contents of minutes prepared by the resolution professional and provide his comments to the resolution professional, if any; (c) help the creditors in a class he represents during the consultations made by the resolution professional to prepare a strategy for marketing of the assets of the corporate debtor in terms of sub-regulation (1) of regulation 36C; (d) work in collaboration with the creditors in a class he represents to enhance the marketability of the assets of the corporate debtor in terms of sub-regulation (3) of regulation 36C; (e) assist the creditors in a class he represents in evaluating the resolution plans submitted by resolution applicants; (f) ensure that the creditors in a class he represents have access to any information or documents required to form an opinion on issues discussed in the committee meetings; (g) update regularly the creditors in a class he represents on the progress of the corporate insolvency resolution process; (h) make suggestions for modifications of the resolution plan as may be required by the creditors in class he represents; (i) record proceedings and prepare the minutes of the meeting with the creditors in a class he represents; and (j) act as a representative for the creditors in a class he represents in representations before the Adjudicating Authority, National Company Law Appellate Tribunal, and other regulatory authorities. (11) The provisions regarding minutes of meetings in this regulation shall apply mutatis mutandis for clause (i) of sub-regulation (10). (12) The creditors in a class may propose any additional responsibility upon the authorised representative in relation to the representation of their interest in the committee. |
CIRP R. 16B | Committee with only creditors in a class. Where the corporate debtor has only creditors in a class and no other financial creditor eligible to join the committee, the committee shall consist of only the authorised representative(s). |
CIRP R. 16C | Appointment of facilitators. (1) Where the number of creditors in a class exceeds one thousand, the committee may, direct the interim resolution professional or resolution professional, as the case may be, to appoint an insolvency professional other than the interim resolution professional, resolution professional and authorised representative, or any other person, as facilitator for a sub-class within the creditors in a class, subject to the following conditions :- (a) the appointment of facilitator shall be considered only if, after the first meeting of the committee, a sub-class comprising of at least one hundred creditors out of the total number of creditors in a class, request for the inclusion of an agenda for such appointment along with the name of the proposed facilitator; (b) the total number of facilitators shall not exceed five; and (c) the fee for facilitator for each sub-class shall be twenty per cent. of the fees specified for the authorised representative and such fee shall be part of the insolvency resolution process cost. (2) The committee may replace the facilitator on the recommendation of a majority of the members of the sub-class. |
CIRP R. 18 | Meetings of the committee. XXXXX (4) Where the corporate debtor has any real estate project, the committee may direct the resolution professional to invite the ‘competent authority’ as defined in clause (p) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) related to such project to attend such meeting(s) of the committee, as the committee may decide, without voting rights, for providing inputs on matters associated with the development of such project. |
CIRP R. 25 | (6) The authorised representative shall circulate the minutes of the meeting received under sub-regulation (5) to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelve hours. |
CIRP R. 25A | Voting by Authorised Representative The authorised representative shall cast his vote in respect of each financial creditor or on behalf of all financial creditors he represents in accordance with the provisions of sub-section (3) or sub-section (3A) of section 25A, as the case may be. |
CIRP R. 30C | Report on the status of development rights and permissions of real estate projects. Where the corporate debtor has any real estate project, the resolution professional shall: (a) prepare a report detailing the status of development rights and permissions required for development of such project; (b) submit the report to the committee for its comments; and (c) submit to the Adjudicating Authority, the report referred to in clause (a) along with the comments of the committee referred to in clause (b), on or before the sixtieth day from the insolvency commencement date. |
CIRP R. 31 | Insolvency resolution process costs. Insolvency resolution process costs” under Section 5(13)(e) shall mean-,…… (ac) fee payable to facilitator under clause (c) of sub-regulation (1) of regulation 16C. |
CIRP R. 31A | Regulatory Fee A regulatory fee calculated at the rate of 0.25 per cent of the realisable value to creditors under the resolution plan approved under section 31,…… Explanation: For removal of doubts, it is hereby clarified that the regulatory fee under this sub-regulation, shall not be payable in cases where the approved resolution plan in respect of insolvency resolution of a real estate project is from an association or group of allottees in such real estate project. |
CIRP R. 36A | Invitation for expression of interest. (1) The resolution professional shall publish brief particulars of the invitation for expression of interest in Form G of the [Schedule-I] at the earliest, [not later than sixtieth day] from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans. Clarification: The resolution professional after the approval of the committee may invite a resolution plan for each real estate project or group of projects of the corporate debtor. …. (4) The detailed invitation referred to in sub-regulation (3) shall- …. Provided that where the corporate debtor has any real estate project, the committee, for an association or group of allottees in such real estate project, representing not less than ten per cent. or one hundred creditors out of the total number of creditors in a class, whichever is lower, may relax the following: (a) eligibility criteria for submission of expression of interest provided in clause (a) above; and (b) conditions regarding the refundable deposit. (c) …. (d) … Provided that where the corporate debtor has any real estate project, the committee, for an association or group of allottees in such real estate project, representing not less than ten per cent. or one hundred creditors out of the total number of creditors in a class, whichever is lower, may relax the following: (a) eligibility criteria for submission of expression of interest provided in clause (a) above; and (b) conditions regarding the refundable deposit. |
CIRP R. 36B | Request for resolution plans (4A) The request for resolution plans shall require the resolution applicant, in case its resolution plan is approved under sub-section (4) of section 30, to provide a performance security within the time specified therein and such performance security shall stand forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its 132[implementation schedule: Provided that where the corporate debtor has any real estate project, the committee may relax the requirement to provide for performance security for an association or group of allottees in such real estate project, representing not less than ten per cent. or one hundred creditors out of the total number of creditors in a class, whichever is lower. |
Liquidation Process Regs. R. 46A | Exclusion of certain assets from the liquidation estate. For the purposes of clause (e) of sub-section (4) of section 36, wherever the corporate debtor has given possession to an allottee in a real estate project, such asset shall not form a part of the liquidation estate of the corporate debtor. |
Important Case Laws
While the statutory framework lays the foundation for addressing insolvency in the real estate sector, judicial interpretations have played a crucial role in shaping its application. Courts and tribunals have repeatedly clarified critical issues, including the treatment of homebuyer claims, the obligations of resolution professionals, and the rights of lenders and developers. The following are some of the most significant judicial pronouncements that have influenced real estate insolvency proceedings under the IBC.
1). NCLT, Chennai in K. Amutha v. RP of Ambojini Property Developers Pvt. Ltd. (2024) ibclaw.in 359 NCLT
Summary;- The Applicant paid Rs.2,50,000/- through cheque and remaining Rs.17,50,000/- in cash as booking advance. The applicant had submitted claim with the IRP for a sum of Rs.35,20,000/-, however, RP admitted only to the extent of Rs.3,77,178/- and RP stated that there is no entry in the books of the Corporate Debtor that it has received cash payment from the Applicant for the purchase of residential units from the Project.
If the Resolution Professional verifies the claims only based on the books of the Corporate Debtor and if the Corporate Debtor does not manage its books and records properly, it would be detrimental to the creditors like the Applicant.
Due to improper maintenance of the records of the Corporate Debtor, the Applicant/homebuyer cannot be made to suffer. The Resolution Professional must verify the authenticity of the supporting documents that have been filed by the claimant in support of their claim by other means within the boundaries of law.(p18).
The copy of the receipts and the cheques produced by the Applicant are bona fide. The Corporate Debtor had Received Rs.20,00,000/- from the Applicant as a booking advance. Accordingly, the Resolution Professional is directed to admit the claim of the Applicant with the applicable interest rate and include her in the respective class of creditors.(p19)
2). NCLT, Delhi Bench in Mr. Satish Kumar and Ors. v. Mr. Vikram Bajaj, RP (2024) ibclaw.in 176 NCLT
Summary;- In this case, IAs filed by Homebuyers to allow access to units purchased, to commence commercial activity from their units, to obtain electrical connections and carry out necessary alterations in the units etc. Hon’ble NCLT New Delhi Bench holds that: (i) After initiation of the CIRP, it is the duty of the Resolution Professional to protect, preserve and maintain the status quo of the value of the assets of the Corporate Debtor in toto. (ii) The Conduct of Resolution Professional to not allow free Ingress and Egress to the Applicants/Homebuyers is not good in law. (iii) Directs the Resolution Professional to restore the right to visit the Project Site to the Applicants/Homebuyers. (iv) Once the Resolution Plan has been approved by the CoC, the Adjudicating Authority can’t go back to look into the nittygritty’s involved in the CIRP of the Corporate Debtor.
3). NCLT, Principal Bench in Girish Luthra and Ors. v. Cosmos Infra Engineering (India) Pvt. Ltd. (2024) ibclaw.in 110 NCLT
Summary;- In this case, the Home Buyers are aggrieved by the Corporate Debtor’s conduct in not completing the project in time; and therefore creditors in a class filed Section 7 Petition. NCLT appointed an Advocate Commissioner vide order dated 23.05.2023. The Home Buyers giving their assent to Plan-A proposed by the Corporate Debtor, the details of the proposal was agreed by the Corporate Debtor. Hon’ble NCLT Principal Bench, New Delhi disposes of the petition holding that since the parties have come to certain terms for resolving the issue we deem it fit to record the same stating that it will be binding on the parties for implementation. We do so keeping in mind the decision of the Hon’ble Supreme Court in the similar proceedings in the case of Amit Katyal vs. Meera Ahuja & Ors. reported in (2022) ibclaw.in 14 SC as well as in the matter of Anand Murti vs. Soni Infratech Pvt. Ltd. & Anr. reported in (2022) ibclaw.in 27 SC.
4). NCLAT in Sabari Realty Pvt. Ltd. v. Sivana Realty Pvt. Ltd. and Ors. (2023) ibclaw.in 775 NCLAT
Summary;- In this landmark judgment, Hon’ble NCLAT held that:
Appellant, who is a dissatisfied minority, a single homebuyer has to sail alongwith the view of the majority in terms of the scheme of IBC.
Appellant as a class of homebuyers cannot be allowed to challenge the Resolution Plan which has received approval of class of homebuyers on the basis of majority of votes of homebuyers.
In a real estate project when the project spread into several units and several projects which are at different stages of construction the CoC in its commercial wisdom can take appropriate decision to satisfy the claim of class of creditors in a reasonable and fair manner.
Different treatment of two sets of homebuyers in view of the allotment to the homebuyer with/without NOC of the Mortgagee has rational for separate treatment
Commercial wisdom of the Committee of Creditors, which has approved the Resolution Plan under which different treatment has been given to ‘Affected Homebuyers’ and ‘Unaffected Homebuyers’, cannot be faulted.
5). NCLAT in Alok Sharma- AR of home buyers Vs. M/s. I P construction Pvt. Ltd (2022) ibclaw.in 459 NCLAT
Summary;- [Registration of sale deed by the RP during the CIRP process]
Allottees in possession of the property paid the full amount prior to the insolvency commencement date, the registration of the said flats was not done by the CD.
The court directed that the RP has to execute the registration of the sale deed in favour of home buyers after collecting `Dues and Costs’, if any, remaining unpaid, including the `Costs of Registration’, `Penalty’ and `other incidental Costs’, till date
The registration of sale deed is not in violation of moratorium under Section 14(1)(b) of the Code. The prohibition is on transferring of any asset of the CD, whereas in a real estate company, sale of flats tantamount to revenue from operations of the CD (impacts profit and loss account of the company), the flats constructed are not assets for a real estate company. The Registration of all these houses is a ‘procedural requirements’, in case of ‘Real Estate Company.
6). NCLAT in Axis Bank Vs. Value Infracon India Private Limited Company Appeal (AT) (Insolvency) No. 582 of 2020 Dt. 20/12/2021. (2021) ibclaw.in 611 NCLAT
Summary;- [Bank advanced loan to the home buyer, not a creditor to the CD]
Axis bank had advanced home loans to the allottees on tri-partite agreement between the CD, Home buyer and the Bank. The CD provided the permission to mortgage the flat in favour of the bank.
As per the tri-partite agreement – if the Borrower fails to honour the commitment, the developer/Builder shall inform the bank and the bank shall have the right to pay the Sale consideration and get it registered either in Banks name or its nominee.
Tri-partite Agreement is only by way of security that the developer would withhold the allotment in the event of default by the allottee.
The bank is not a creditor of the CD as the amount was advanced to the home buyers.
7). NCLAT in Greater Noida Industrial Development Authority (GNIDA) Vs. Roma Unicon Designex Consortium [Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 Dt. 30/01/2023. (2023) ibclaw.in 90 NCLAT]
Summary;- GNIDA leased certain land to Earth Towne Infrastructures Pvt. Ltd. Earth Infrastructures Limited was the holding company of Earth Towne Infrastructures Pvt. Ltd. Development rights were given to the holding company.
The CIRP process was initiated against Earth Infrastructures Limited. GNIDA filed claims for Rs. 148.37 Crs towards lease rentals from Earth Towne Infrastructures Pvt. Ltd, the subsidiary company. Since the said company was not under CIRP, claims of GNIDA was not considered by the RP.
Resolution plans were approved for Earth Infrastructures Limited without any claim submitted by GNIDA. The SRA sought the transfer of lease hold rights over the land in its favour.
NCLAT held that:
The assets of the subsidiary company cannot be treated as the assets of the holding company (i.e. the company under CIRP)
The resolution plan cannot deal with the assets of the subsidiary company i.e. cannot deal with the leasehold rights without the permission of GNIDA.
GNIDA was to be made a party and heard before approval of any resolution plan dealing with the Project land?
The RP to issue fresh form G with a condition that resolution plans shall be presented before the COC for consideration only when dues of GNIDA are paid and permission of GNIDA is obtained for transfer of lease land.
Conclusion
The legal framework governing real estate insolvencies has evolved significantly through legislative amendments and judicial pronouncements. Courts have reinforced the rights of homebuyers, ensured transparency in claim verification, and upheld the commercial wisdom of CoCs in complex resolution scenarios. However, challenges remain—such as delays in resolution, conflicts between lenders and allottees, and the treatment of developer subsidiaries in insolvency proceedings. Future legal developments and regulatory refinements will be crucial in striking a balance between expeditious resolution and equitable treatment of all stakeholders in the real estate sector.
References:
[1] Allottee Meaning [Section 2(d) of RERA, 2016]
The following component parts yields on breakdown Section 2(d) of RERA, 2016:
An allottee may be an allottee of a plot or an apartment or a building. A real estate project may relate to plots or apartments or buildings; or plots/buildings or plots/apartments.
An allottee, in the case of an apartment, which expression includes flats, among other structures, would include the following categories of persons. It would include a person to whom the apartment is allotted. It would also include a person to whom the apartment is sold, whether as freehold or leasehold.
Thirdly, it would include a person to whom the promoter has transferred the apartment, otherwise than by way of a sale;
Lastly, it would include persons who have acquired the allotment through sale, transfer or otherwise, with the caveat that it will not include a person to whom the apartment is given on rent.
Whatever it is mentioned about apartments, is equally true qua allotment of plots or buildings.
[2] Real Estate Project Meaning [Section 2(zn) of RERA, 2016]
Section 2(zn) of RERA defines as meaning the various activities. A real estate project, in other words, as defined, is the development of a building or apartments or the development of land into plots or apartments. It consists of the following:
Development of the building
A building which consists of apartments
Converting an existing building or a part thereof into apartment
The development of land into plots or apartments as the case may be.
The development is contemplated as being towards selling apartments, plots or buildings. It would also necessarily include common areas.
The expression apartment, as defined in RERA, is a very comprehensive one. It takes in, blocks, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suite, tenement, unit or by any other name and which is a separate and self-contained part of any immovable property. It includes any one or more rooms or enclosed spaces located on one or more floors or any part thereof, in a building or on a plot of land. It may be used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession, trade or any other type of use, which his ancillary.
The expansive definition of the word apartment and flats are comprehended within the definition of the word apartment.
Building has been defined as including any structure or erection or part of any structure and intended to be used for residential or commercial purposes, inter alia.
Thus, an allotment under RERA can be in relation to a plot, an apartment or a building. In other words, a project, would be in relation to plots, apartments or buildings. It could also be for a composite one for plots and apartments or for plots and buildings.
As to what would constitute the real estate project, it must depend on the terms & conditions and scope of a particular real estate project in which allottees are a part of. These are factual matters to be considered in the facts of each case.
[3] Insolvency and Bankruptcy Code, 2016
[4] Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
[5] Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016
[6] https://ibclaw.in/
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