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The National Company Law Appellate Tribunal (NCLAT) has rejected the plea filed by four homebuyers of Parsvnath Landmark Developers seeking to initiate insolvency proceedings against one of Parsvnath Developer's subsidiaries.
The NCLAT upheld the earlier order of the National Company Law Tribunal (NCLT) which had rejected the plea in October 2023 on technical grounds as only four petitioners had filed the plea, while the total number of allottees in the Parsvnath Landmark project was 488.
The case pertains to La Tropicana Khyber Pass, a real estate project in Delhi developed by Parsvnath Landmark Developers. As per Section 7(1) of the Insolvency and Bankruptcy Code (IBC), a petition by homebuyers (financial creditors) is valid only if at least 100 allottees or 10% of total allottees join the petition.
The flat buyers pleaded that they are financial creditors of a different class, having an order from Delhi RERA directing the developer to refund the amount with interest on October 22, 2022. The developer was under obligation to refund the amount within 45 days of the order, but no amount was paid. Thus, it had defaulted by not refunding INR 24.14 crore, along with 10% interest to each petitioner.
The homebuyers claimed they should be considered financial creditors in the category of decree holders, not real estate allottees. But the NCLAT rejected this, referring to a Supreme Court ruling that allottees' status as financial creditors does not change.
It said merely obtaining a RERA order does not change an allottee's category from 'allottee' to 'decree holder'. Homebuyers with or without RERA orders belong to the same category of allottees.
Earlier, the appellants had filed an insolvency petition against the developer in 2019, which was later withdrawn in 2020 when the IBC was amended to include the 100/10% criteria for homebuyers' petitions. Later, when the developer failed to develop the project and complete it within the agreed time, they filed five different complaints with Delhi RERA, which directed the refund of the amount with interest.
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