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Spenta Enclave Resolution Plan Cannot Be Forced to Include Homebuyer Refund Rights: NCLT Mumbai
The , has ruled that a resolution plan for the insolvent developer cannot be compelled to incorporate individual homebuyers' refund rights under the , holding that the prevails over RERA in case of any inconsistency.
A bench comprising Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan dismissed an application filed by homebuyers Vivek Talwar, Aditi Talwar, Vishal Joshi, and Anjana Joshi, who had sought either reconsideration of the -approved resolution plan or directions to include an .
Background: Homebuyers Left in the Lurch
Spenta Enclave was admitted into the on . The applicants had booked flats in the company's ‘Altavista’ project and paid substantial amounts—approximately ₹89.23 lakh and ₹86.71 lakh respectively—between 2017 and 2021. When possession was not delivered by the revised deadline of , they sought refunds and had even initiated proceedings before the in , before the CIRP began.
During the CIRP, their claims were admitted by the Resolution Professional (RP), . However, the RP later asked them to pay the balance consideration, which they refused. The CoC eventually approved a resolution plan submitted by a consortium of successful resolution applicants (SRA), which explicitly stated that “no cancellation of the Units by the Homebuyers will be entertained by the Resolution Applicant.”
Arguments: Contractual Rights vs. Collective Process
The applicants argued that the resolution plan violated , which entitles homebuyers to a refund with interest if the promoter fails to deliver possession on time. They contended that the SRA, by stepping into the promoter's shoes, was bound by the terms of the Agreements for Sale, which included a termination clause with a refund option.
The RP and the financial creditor, (holding 53.36% voting share), countered that the application was barred by —similar refund pleas had been dismissed earlier in . They emphasised that the homebuyers as a class, holding 22.66% voting share, had voted for the plan through their Authorised Representative, and that the four applicants collectively held only 0.22% voting share. The , they argued, could not be judicially reviewed beyond the limited parameters of .
Legal Analysis: IBC Overrides RERA
The NCLT firmly held that the SRA could not be equated to the promoter at this stage, as the plan had not yet been approved. “The SRA is under no obligation to go by the terms of the Agreement for Sale executed by the erstwhile promoters and the Applicants,” the bench observed.
Applying , which gives the Code , the tribunal stated:
“The contention that the Resolution Plan ought to incorporate refund rights under also cannot be accepted in the manner canvassed by the Applicants. The insolvency resolution process under the Code proceeds on the basis of and balancing of stakeholder interests. By virtue of Section 238 of the Code, the provisions of the Code prevail in case of any inconsistency with other enactments.”
The tribunal further noted that the CoC had already considered the refund issue and found that cancellations would negatively impact cash flows. The majority decision of the homebuyers' class bound the individual applicants. “Once such a decision is taken, individual members of the class are bound by the collective majority decision,” the judgment read.
Key Observations from the Judgment
- “The SRA cannot be strictly bound by all the contractual terms entered into between the Applicants and the CD undergoing CIRP.”
- “The is paramount and… by the Tribunal is confined to examining compliance with Section 30(2) of the Code.”
- “The Applicants cannot insist upon a separate outside the framework of the insolvency process under the Code.”
Court's Decision and Implications
The NCLT dismissed the application with no order as to costs, finding no ground to interfere with the resolution plan or direct reconsideration. The decision reinforces the over sectoral statutes like RERA during the corporate insolvency process, and affirms that individual homebuyers cannot disrupt the collective resolution mechanism once a plan is approved by the majority of the CoC.
For the homebuyers, the judgment means their only recourse lies in the treatment accorded to them under the resolution plan, not in demanding a separate refund. The case also underscores the binding nature of the Authorised Representative's vote on all members of a creditor class under .
Appearances: For Applicants: i/b ; For Respondents: (RP in person) with and ; with i/b .
