Relief to Plight of individual homebuyers, who invest life savings to secure Home: Supreme Court allows appeal under IBC, Directs to hand over possession [Read Order]

The Supreme Court in ruling being a relief to the plight of individual homebuyers who invest life savings to secure a home, allowed the appeal under the Insolvency and Bankruptcy Code, 2016(IBC) and directed the respondents to hand over possession. It was observed that once a claim is verified and admitted by the Resolution Professional (RP), the claim acquired full legal recognition within the CIRP process.

A two judge bench of Justices Sanjay Kumar and Satish Chandra Sharma observed “the present case highlight the plight of individual homebuyers, who invest their life savings in the hope of securing a roof over their heads. The Appellants had paid nearly the entire sale consideration as far back as 2011. To deny them possession today, despite their claim having been duly verified and admitted, would inflict unfair and unwarranted prejudice.”

Amit Nehra & Anr, filed the civil appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (the “IBC”) is filed against the judgment and final order passed by the National Company Law Appellate Tribunal, New Delhi (the “NCLAT”) whereby the NCLAT affirmed the decision of the National Company Law Tribunal, Principal Bench, New Delhi (the “NCLT”) rejecting the Appellants claim for possession of their residential apartment in the real estate project of M/s Puma Realtors Private Limited (the “Corporate Debtor”).

The Corporate Debtor, M/s Puma Realtors Private Limited, an IREO Group company, undertook development of integrated residential townships in Punjab, including the project IREO Rise (Gardenia) situated in Sector 99, SAS Nagar, Mohali. The project, conceived as a modern residential complex, envisaged delivery of multiple residential blocks with allied amenities and facilities.

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The Appellants both residents of Bengaluru, booked an apartment in the said project in the year 2010. On 27.05.2011, they executed an Apartment Buyer’s Agreement with the Corporate Debtor for purchase of Apartment No. GBD-00-001 in Block D. Against the total sale consideration of Rs. 60,06,368/-, the Appellants paid Rs. 57,56,684/-, constituting almost the entirety of the contractual amount, the balance being agreed to be adjusted on account of delay in delivery of possession.

As per the buyer’s agreement, possession was to be handed over on or before 27.11.2013. The Corporate Debtor, however, failed to deliver possession within the agreed period, or thereafter. Left with no option, the Appellants instituted Consumer Complaint No. 279 of 2018 before the State Consumer Disputes Redressal Commission, Chandigarh, inter alia seeking refund of the amount paid along with interest and compensation.

While the aforesaid proceedings were pending, on 17.10.2018, the NCLT admitted an application under Section 7 of the IBC against the Corporate Debtor, thereby, commencing the Corporate Insolvency Resolution Process (the “CIRP”) in respect of M/s Puma Realtors Private Limited. Considering the foregoing, the State Consumer Disputes Redressal Commission, Chandigarh, vide order dated 13.12.2018, disposed of the complaint with liberty reserved to the Appellants to pursue their claim before the competent authority in the CIRP proceedings.

Despite the admitted inclusion of the Appellants claim in the list of financial creditors, possession of the allotted apartment was not delivered. Constrained thereby, the Appellants approached the Adjudicating Authority seeking directions to the Resolution Professional and the Successful Resolution Applicant for execution of the conveyance deed and handover of possession, which was rejected. Their appeal before the NCLAT met with the same fate and was dismissed, resulting in the impugned order now under challenge before us.

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The Appellants contends that the entire approach of the Adjudicating Authority and the NCLAT is vitiated by a fundamental misappreciation of facts and misapplication of the relevant clauses of the approved Resolution Plan. It is urged that the Appellants are bona fide homebuyers, who, having paid a sum of Rs. 57,56,684/- out of the total consideration of Rs. 60,06,368/-, have acquired a vested right in the apartment allotted to them in IREO Rise (Gardenia).

The claim of appellants was thereafter duly verified, admitted and incorporated in the list of financial creditors published on 30.04.2020 at Serial No. 636. The Respondent(s) have strenuously disputed the alleged filing of 11.01.2019, contending that no such claim was received at the notified address, and further that the Form-CA itself computes interest up to 07.02.2020.

The court found that the admitted and undisputed position remains that the Appellants claim was resubmitted on 07.02.2020; that it was duly verified by the Resolution Professional; and that it was incorporated in the published list of creditors dated 30.04.2020. Once such verification and incorporation occurred, the claim acquired full legal recognition within the CIRP process.

Clause 18.4 itself draws a clear distinction between verified claims and belated or unverified claims; to obliterate that distinction would render the scheme otiose. Relegating bona fide allottees, who have paid substantial consideration years in advance, to the status of mere refund claimants runs contrary to the very object of the legislative framework.

The court set aside the judgment of the NCLAT as well as the order of the NCLT and directed the respondent(s) shall execute the Conveyance Deed and hand over possession of Apartment to the Appellants within a period of two months.

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