Non-Delivery of Plots & Failure to Refund Allottees Amount to Financial Debt Default: NCLT Initiates CIRP Against Primezone Developers [Read Order]
NCLT held that a developer cannot evade insolvency proceedings after accepting homebuyers’ funds and failing to deliver possession or refund the amounts collected.
![Non-Delivery of Plots & Failure to Refund Allottees Amount to Financial Debt Default: NCLT Initiates CIRP Against Primezone Developers [Read Order]](https://images.taxscan.in/h-upload/2026/06/19/2140790-nclt-initiates-cirp-against-primezone-developers-by-taxscan.webp "Non-Delivery of Plots & Failure to Refund Allottees Amount to Financial Debt Default: NCLT Initiates CIRP Against Primezone Developers [Read Order]")
The National Company Law Tribunal (NCLT) Chandigarh Bench has initiated the Corporate Insolvency Resolution Process (CIRP) against Primezone Developers Private Limited after holding that the company’s failure to hand over possession of plots or refund the money received from allottees constituted a financial debt default under the Insolvency andBankruptcy Code, 2016 (IBC). Further,...
The National Company Law Tribunal (NCLT) Chandigarh Bench has initiated the Corporate Insolvency Resolution Process (CIRP) against Primezone Developers Private Limited after holding that the company’s failure to hand over possession of plots or refund the money received from allottees constituted a financial debt default under the Insolvency andBankruptcy Code, 2016 (IBC).
Further, the insolvency petition was moved under Section 7 of the IBC by 33 plot allottees who had invested in the company’s “Prime City-Assandh” project located in Karnal, Haryana. The applicants alleged that despite making payments in accordance with the allotment terms, the project remained largely undeveloped and possession of the plots was never delivered.
The homebuyers submitted that the developer had issued allotment letters acknowledging receipt of consideration and had undertaken to execute sale deeds after completion of payments. However, years after booking the plots, the project failed to materialise, forcing the allottees to initiate consumer proceedings before the Haryana State Consumer Disputes Redressal Commission and pursue remedies before other authorities.
The Corporate Debtor opposed the petition, arguing that the project suffered setbacks due to enforcement proceedings under the Prevention of Money Laundering Act (PMLA), attachment of project land and its eventual auction. It was contended that these circumstances prevented completion of the development and that insolvency proceedings would serve no useful purpose.
The Tribunal rejected the contention, observing that external difficulties faced by the developer could not extinguish obligations owed to allottees. The Bench noted that the company had accepted substantial amounts from purchasers but had neither delivered possession of the plots nor refunded the money collected.
The Bench comprising Mr. Khetrabasi Biswal, (Judicial Member) and Mr. Shishir Agarwal (Technical Member) concluded that the applicants had successfully established the existence of debt and default amounting to ₹6.76 crore. Accordingly, the Tribunal admitted Primezone Developers Private Limited into CIRP, declared moratorium under Section 14 of the IBC, and appointed an Interim Resolution Professional to conduct the insolvency process.
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