Home Buyers Cannot Invoke Insolvency Proceedings For Recovery Of RERA Award: NCLAT [Read Order]
4 years, 3 months ago

Home Buyers Cannot Invoke Insolvency Proceedings For Recovery Of RERA Award: NCLAT [Read Order]

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The National Company Law Appellate Tribunal allowed an appeal filed by Sushil Ansal, former Director and shareholder of Ansal Properties and Infrastructure Limited setting aside the National Company Law Tribunal, Delhi bench March 17 order for the initiation of insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016. Stressed Assets Stabilisation Fund and Ors.- MANU/NL/0092/2020 observed that a home buyer cannot file an application under IBC for the execution of a decree and held – "We are of the considered view that the impugned order dated 17th March,2020 initiating Corporate Insolvency Resolution Process against Corporate Debtor cannot be sustained The Adjudicating Authority has landed in grave error in admitting the application of Respondent Nos.1 and 2 under Section 7 who claimed to be the 'Financial Creditors' in their capacity as 'decree-holders' against the Corporate Debtor on account of non-payment of the amount due under the Recovery Certificate dated 10th August, 2019 issued by the 'UP RERA' while execution of decree/ recovery of amount due under Recovery Certificate would not justify triggering of Corporate Insolvency Resolution Process. 1 and 2 was moved for execution/ recovery of the amount due under the Recovery Certificate and not for insolvency resolution of the Corporate Debtor. "The answer to the question whether a decree-holder would fall within the definition of 'Financial Creditor' has to be an emphatic 'No' as the amount claimed under the decree is an adjudicated amount and not a debt disbursed against the consideration for the time value of money and does not fall within the ambit of any of the clauses enumerated under Section 5 of the 'I&B Code"" it stated.

History of this topic

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