Section 7 IBC Threshold of 100 or 10% Allottees Applies at Filing Stage: NCLAT allows Homebuyers’ Plea [Read Order]

In a recent ruling, the National Company Law Appellate Tribunal (NCLAT) Delhi allowed the appeal of 115 homebuyers, ruling that the threshold requirement under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) must be applied at the stage of filing.

The appeal arises from the order dated 21.10.2024 of the National Company Law Tribunal (nclt), which had dismissed the homebuyers' petition on the ground that the applicants did not meet the minimum threshold of 100 allottees.

The appellant argued that the petition ETIPL sold 220 units, so the Section 7 threshold was only 22 allottees with 66 petitioners, and the requirement was met. They also said that NCLT wrongly applied the threshold to the entire 1800‑unit project, ignoring ETIPL’s distinct liability as landowner and co‑party to agreements.

Also contented that the payment made to EIL was transferred to ETIPL, making it jointly responsible. Construction stopped in 2017, and possession promised by 31.12.2021 was never delivered, amounting to default. Filing claims in EIL’s CIRP did not bar parallel proceedings against ETIPL, supported by precedents (Manish Kumar, Anjani Kumar Prashar). They also cited the “Earth Iconic” case, where the landowner was admitted into CIRP despite overlapping claims.

The respondent did not appear before either the NCLT or NCLAT and was proceeded Ex parte.

The tribunal observed that the respondent never appeared before the tribunal and was proceeded ex parte, yet remained a necessary party since its name had been restored under the Companies Act. The tribunal also noted that the eligibility must be tested at filing based on ETIPL's 220 units, where 66 petitioners clearly exceed the 10% requirements.

NCLAT clarified that it was not expressing any view on the merits of the case and confined itself to the issue of threshold under Section 7 IBC and The Adjudicating Authority had wrongly applied the threshold of 100 allottees to the entire 1800‑unit project and further reduced the number by excluding those who had also filed claims in the CIRP of Earth Infrastructure Ltd., leaving only 66 petitioners.

The Appellate Tribunal held this approach to be erroneous, clarifying that the threshold must be tested at the stage of filing and with reference to the corporate debtor’s own share of units.

The bench of Justice Rakesh Kumar Jain ( judicial member ), Justice Mohammad Faiz Alam Khan(judicial member ), and Mr. Naresh Salecha( technical member ) directed that both parties appear on 26.09.2025. No costs were imposed, and all pending IAs were closed.

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