The Supreme Court of India, in a significant ruling under the Insolvency and Bankruptcy Code, 2016 (IBC), has held that once a homebuyer’s claim is verified and admitted by the Resolution Professional and included in the list of creditors, it cannot be treated as a ‘belated claim’ subject to reduced benefits under a resolution plan. The Court directed the successful resolution applicant to hand over possession of the apartment to the homebuyers, setting aside the orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) which had relegated them to a 50% refund.
The judgment was delivered by a bench comprising Justice Sanjay Kumar and Justice Satish Chandra Sharma in the civil appeal of Amit Nehra & Anr. vs. Pawan Kumar Garg & Ors.
Background of the Case
The Appellants, Amit Nehra and another, booked a residential apartment in the ‘IREO Rise (Gardenia)’ project in Mohali, developed by M/s Puma Realtors Private Limited (the Corporate Debtor), in 2010. They executed an Apartment Buyer’s Agreement on May 27, 2011, and paid Rs. 57,56,684 out of the total consideration of Rs. 60,06,368.
The developer failed to deliver possession by the agreed date of November 27, 2013, prompting the Appellants to file a consumer complaint. While the complaint was pending, the NCLT initiated a Corporate Insolvency Resolution Process (CIRP) against the developer on October 17, 2018.
Following a public announcement by the Interim Resolution Professional (IRP), the Appellants submitted their claim. A key factual dispute arose regarding the date of this submission. The Appellants contended they first filed a physical claim on January 11, 2019. The Resolution Professional (RP), however, disputed this. It was undisputed that on January 31, 2020, the RP sent an email inviting creditors to resubmit claims due to incomplete records of the Corporate Debtor. The Appellants then resubmitted their claim via email on February 7, 2020.
Subsequently, the RP published a list of financial creditors on April 30, 2020, in which the Appellants’ claim was formally admitted for the full amount of Rs. 57,56,684. Meanwhile, a Resolution Plan submitted by One City Infrastructure Pvt. Ltd. and APM Infrastructure Pvt. Ltd. (the Successful Resolution Applicant) had been approved by the Committee of Creditors (CoC) on August 23, 2019, and was later approved by the NCLT on June 1, 2021.
When the Appellants were denied possession, they approached the NCLT, which rejected their plea, holding that their claim was filed only on February 7, 2020, after the CoC had already approved the plan. The NCLT ruled their claim was belated and governed by Clause 18.4(xi) of the plan, entitling them only to a refund of 50% of the principal amount. The NCLAT upheld this decision, leading to the present appeal before the Supreme Court.
Arguments of the Parties
Learned Counsel for the Appellants argued that they were bona fide homebuyers who had paid nearly the entire consideration. They contended that their claim was duly verified and admitted by the RP and included in the official list of financial creditors. Therefore, their case should be governed by Clause 18.4(vi)(a) of the Resolution Plan, which provides for delivery of possession to allottees with verified and admitted claims. Treating them under the residuary Clause 18.4(xi) for unverified or belated claims was a misapplication of the plan.
Per contra, Learned Counsel for the Respondents (RP and Successful Resolution Applicant) submitted that the Appellants failed to file their claim within the statutory timelines. They denied the receipt of any physical claim on January 11, 2019. They asserted that the only valid claim was filed on February 7, 2020, long after the CoC had approved the Resolution Plan. Consequently, the Appellants’ claim was correctly classified as belated, falling under Clause 18.4(xi), which limited their entitlement to a 50% refund.
Supreme Court’s Analysis and Reasoning
The Supreme Court found that the resolution of the appeal did not depend on the disputed filing date of January 11, 2019. The bench focused on the “admitted and undisputed position” that the Appellants’ claim was submitted on February 7, 2020, was subsequently verified by the RP, and was formally incorporated into the published list of creditors on April 30, 2020.
The Court observed, “Once such verification and incorporation occurred, the claim acquired full legal recognition within the CIRP process.”
The judgment criticized the approach of the lower tribunals, stating, “We are unable to countenance the approach of the NCLAT in brushing aside this admitted position, and in treating the Appellants as if they had not filed any claim at all. The publication of the list of financial creditors is an act in discharge of a statutory duty by the Resolution Professional. It cannot be reduced to a meaningless formality.”
The bench examined the structure of the Resolution Plan and noted a clear distinction between different categories of allottees. Clause 18.4(vi)(a) governed existing allottees with admitted claims, providing for handover of units. In contrast, Clause 18.4(xi) was a residuary clause for cases where no claim was filed, or if filed, was not verified.
The Court concluded that the Appellants’ case did not fall within the residuary clause. The judgment stated, “The Appellants case, on admitted facts, does not fall within Clause 18.4(xi). Their claim was filed, verified, and informed to the Successful Resolution Applicant, as is evidenced by the entry at Serial No. 636 in the list of creditors… Once so admitted, their case squarely falls within Clause 18.4(ii) read with Clause 18.4(vi)(a) of the Resolution Plan.”
The Court emphasized that misapplying the plan’s clauses would lead to injustice. “To disregard such an admitted claim and confine the Appellants to the limited benefit under Clause 18.4(xi) is not to preserve the binding effect of the plan but to misapply it,” the bench held.
Highlighting the difficult situation faced by homebuyers, the Court remarked, “The facts of 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.”
Decision
In its final decision, the Supreme Court allowed the appeal and set aside the NCLAT order dated January 10, 2025, and the NCLT order dated July 26, 2023.
The Court directed the Respondents to “execute the Conveyance Deed and hand over possession of Apartment No. GBD-00-001, Block D, IREO Rise (Gardenia), Mohali to the Appellants within a period of two months from today.”
