NCLAT Quashes Admission of Homebuyers’ Insolvency Plea, Holds Section 7 Application Deemed Withdrawn Under Amended IBC [Read Order]
NCLAT held that the Section 7 application filed by the homebuyers has to be treated as withdrawn by the third proviso of Section 7, subsection (1).
![NCLAT Quashes Admission of Homebuyers’ Insolvency Plea, Holds Section 7 Application Deemed Withdrawn Under Amended IBC [Read Order]](https://images.taxscan.in/h-upload/2025/07/19/2065648-nclat-home-buyer-insolvency-plea-exclusion-taxscan.webp "NCLAT Quashes Admission of Homebuyers’ Insolvency Plea, Holds Section 7 Application Deemed Withdrawn Under Amended IBC [Read Order]")
The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) quashed the admission of home buyer’s admission plea, noted that the application under Section 7 of the Insolvency and Bankruptcy Code 2016 was "deemed withdrawn" under the updated Insolvency and Bankruptcy Code (IBC). In this case, the bench had set aside the admission of a Section 7 insolvency application...
The Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) quashed the admission of home buyer’s admission plea, noted that the application under Section 7 of the Insolvency and Bankruptcy Code 2016 was "deemed withdrawn" under the updated Insolvency and Bankruptcy Code (IBC).
In this case, the bench had set aside the admission of a Section 7 insolvency application filed by homebuyers against M/s Gayatri Hospitality and Realcon Ltd.
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The appeal has been filed by the suspended director of the corporate debtor (CD), M/s Gayatri Hospitality and Realcon Ltd., challenging the order passed by the National Company Law Tribunal (NCLT).
The case started with a petition from eight homebuyers on January 11, 2019. They sought the initiation of a Corporate Insolvency Resolution Process (CIRP) against the corporate debtor due to delays in delivering flats in the 'Gayatri Aura' project in Greater Noida. However, the IBC was amended in December 2019. The amendment required real estate allottees to file such applications jointly by either 100 homebuyers or 10% of the total allottees, whichever was lower. It also requires any pending applications to be modified within 30 days to meet these standards, or they will be deemed withdrawn.
Despite this amendment, the homebuyers filed their first application to join additional allottees only on 15-7-2021, well after the 30-day window had closed. The NCLAT pointed out that this delay activated the "deemed withdrawal" clause under the third proviso to Section 7(1) of the IBC. The tribunal clarified that the law intended for any non-compliance with the updated rules to automatically invalidate the application, without needing a court order.
The corporate debtor claimed that the application was premature. The debtor mentioned a "zero period" declared by the Uttar Pradesh government from February 14, 2011, to September 1, 2017, due to farmer encroachments. The debtor argued that the 40-month construction timeline under the builder-buyer agreement had not run out by the time the Section 7 application was filed. Although the tribunal did not make a ruling on this point, it noted the debtor's offer to refund dissenting homebuyers at State Bank of India (SBI) fixed deposit interest rates and reinstate cancelled allotments.
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The NCLAT supported this proposal, instructing the debtor to fulfil its promises within 60 days.
NCLAT held that the Section 7 application filed by the homebuyers has to be treated as withdrawn by the third proviso of Section 7, subsection (1) of IBC.
Justice Ashok Bhushan and Member (Technical) Barun Mitra disposed of the appeal.
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