Issue for consideration
The decision of the National Company Law Appellate Tribunal that the home buyer as beneficiary of a decree by the Uttar Pradesh Real Estate Regulatory Authority, the order of the Resolution Professional proposing that they be treated differently from other home buyers allottees, does not call for interference, is under challenge. Insolvency and Bankruptcy Code, 2016 – s.5(8)(f) explanation – Financial Creditor – Home buyers allottees in real estate project who secured the decree from the Real Estate Regulatory Authority for a refund of their investment, if could be treated as financial creditor: Held: Under explanation to s.5(8)(f) home buyers and allottees of real estate projects were included in the class of “financial creditors”, because financial debt is owed to them – No distinction is per se made out between different classes of financial creditors for drawing a resolution plan – Resolution Professional’s view that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer, cannot be accepted – Distinction made by the Resolution Professional is artificial and fails afoul of Art.14 – To treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable – Underlying claim of an aggrieved party is crystallized in the form of a Court order or decree, that does not alter or disturb the status of the allottees as financial creditors – Furthermore, s. 238 IBC contains a non obstante clause which gives overriding effect to its provisions, thus, its provisions acquire primacy, and cannot be read as subordinate to the RERA Act – Thus, the impugned order is set aside – Home buyers are declared as financial creditors within the meaning of s. 5(8)(f) explanation and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan – Real Estate (Regulation And Development) Act, 2016 – s. 18. [Para 6, 8,9]
As published in the Supreme Court Reports, Supreme Court of India.
Text from the Indian Supreme Court Judgments open data set (Dattam Labs),
CC BY 4.0.
