Supreme Court Rules Homebuyers with Admitted Claims Entitled to Possession in Insolvency Resolution Process - 2025-09-09

Supreme Court Rules Homebuyers with Admitted Claims Entitled to Possession in Insolvency Resolution Process

In a significant ruling for thousands of homebuyers caught in real estate insolvency, the Supreme Court of India has held that allottees whose claims have been duly verified and admitted by a Resolution Professional cannot be relegated to the status of "belated claimants." Justice Satish Chandra Sharma, presiding over the appeal, overturned the decisions of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), affirming that verified creditors are entitled to the possession of their properties rather than a reduced refund under a resolution plan.

A Decade of Uncertainty

The dispute centers on a residential apartment in the "IREO Rise (Gardenia)" project in Mohali, developed by Puma Realtors Private Limited. The appellants, residents of Bengaluru, booked the apartment in 2010 and paid approximately ₹57.56 lakh of the total ₹60.06 lakh consideration. When the developer failed to deliver possession by the agreed 2013 deadline, the homebuyers initiated consumer proceedings. However, these were halted in 2018 when the company entered the Corporate Insolvency Resolution Process (CIRP).

Despite the appellants' claim being verified, admitted, and recorded at Serial No. 636 in the list of financial creditors, the NCLT and NCLAT later denied them possession. The lower tribunals relied on Clause 18.4(xi) of the approved Resolution Plan, which treats "belated" or "unverified" claims as eligible only for a 50% refund of the principal amount.

Legal Arguments and Resolution

The appellants argued that their claim was not only filed but explicitly acknowledged and verified by the Resolution Professional. They contended that applying the "belated claim" clause to an admitted creditor was a misapplication of the resolution plan and worked to penalize bona fide homebuyers who had already fulfilled their financial obligations.

Conversely, the respondents argued that the appellants had missed initial filing deadlines and that any attempt to claim possession was an afterthought, asserting that the Resolution Plan’s restrictive refund policy should apply strictly to maintain the plan's sanctity.

Key Observations

The Supreme Court emphasized the sanctity of the verified creditor list, noting:

• "The publication of the list of financial creditors is an act in discharge of a statutory duty by the Resolution Professional. It cannot be reduced to a meaningless formality."
• "Once such verification and incorporation occurred, the claim acquired full legal recognition within the CIRP process."
• "To disregard such an admitted claim and confine the Appellants to the limited benefit under Clause 18.4(xi) is not to preserve the binding effect of the plan but to misapply it."

Restoring Homebuyer Rights

The Apex Court’s decision provides much-needed relief by reinforcing that insolvency resolution must be equitable. By setting aside the orders of the NCLT and NCLAT, the Court directed that the Conveyance Deed be executed and possession handed over to the appellants within two months.

This judgment serves as a vital precedent for future insolvency cases, confirming that where a homebuyer's claim is officially recognized, the resolution process cannot arbitrarily strip them of their contractual right to property in favor of a diminished financial payout. It ensures that the goal of the Insolvency and Bankruptcy Code remains the preservation of value and the protection of legitimate stakeholders.