The National Company Law Appellate Tribunal (NCLAT) has rejected the petition filed by four unit buyers of Parsvnath Landmark Developers seeking to initiate insolvency proceedings against the subsidiary of Parsvnath Developer.
This decision upholds the orders of the Principal bench of the National Company Law Tribunal (NCLT), which on October 17, 2023, dismissed their plea on technical grounds. The NCLT rejected the plea due to the insufficient number of petitioners, as only four unit buyers were involved, while Parsvnath Landmark had a total of 488 allottees.
The case pertains to La Tropicana Khyber Pass, a project in Delhi by the realty firm.
Under Section 7(1) of the Insolvency and Bankruptcy Code (IBC), a petition on behalf of homebuyers as financial creditors is maintainable only if either 100 buyers or 10% of the allottees join the petition.
Additionally, the appellate tribunal also turned down the plea of the flat buyers, arguing they belong to a different class due to an order from Delhi RERA directing the developer to refund the amount with interest on October 22, 2022. Despite this order, the developer failed to refund Rs 24.14 crore, along with 10% interest to each petitioner, within the stipulated 45 days.
However, the NCLAT dismissed these submissions, referencing a Supreme Court decision that affirmed the status of allottees as ‘financial creditors,’ regardless of any orders or decrees from RERA.
“The appellants cannot be considered outside the definition of ‘allottees’ merely because they possess an order from RERA. Their plea to be treated as a different category, i.e., ‘Decree Holder,’ and exempt from compliance with Section 7(1), 2nd Proviso, cannot be entertained,” stated the NCLAT.
The NCLAT emphasized that homebuyers, whether with or without RERA orders or decrees, fall into the same category of allottees, and no distinction can be made on this basis.
The three-member NCLAT bench, chaired by Justice Ashok Bhushan, concluded, “There is no merit in the Appeal, the Appeal is dismissed.”
Previously, on February 11, 2019, the appellants had filed a petition against the realty firm, and the NCLT had directed compliance with the amended provisions under Section 7. However, they withdrew it on January 3, 2020.
Subsequently, upon the developer’s failure to complete the project within the agreed time, the buyers lodged five complaints with Delhi RERA, resulting in directives for refunds with interest.