Decree-Holder is not covered by threshold of Home Buyers for IBC


Status as on- 31/03/2020

In the times when it is getting very hard for the homebuyers to recover their hard-earned monies from the unscrupulous & corrupt builders, due to the inadvertent changes/amendments in the law; it was held by NCLT in the case of Ashok Tripathi and Anr Vs. Ansal Properties and Infrastructure Ltd. that a decree-holder/homebuyer having refund order from RERA or other courts shall not be deemed as a homebuyer but a financial creditor. Accordingly, he shall be out of the condition of the threshold of 100 homebuyers to initiate the insolvency process. 

On 28/12/2019, Govt. of India brought an ordinance (later become the amendment) prescribing the threshold of 100 homebuyers or 10% of allottees in a project, whichever is later, to file the case against any builder, under IBC laws to initiate Insolvency process. Thereafter all the cases related to Homebuyers below threshold limit were either put on hold or new case not accepted. 

Now, the above judgment as given by the Hon’ble NCLT is one of its kinds wherein Decree Holder or RERA refund order holder who is also a creditor as per the Insolvency & Bankruptcy Code, 2016 has been acknowledged under a Section 7 petition. A money decree has been accepted as the claim and proof of debt, which was being defaulted by the Corporate Debtor/Builder. 

A brief analysis of Ashok Tripathi & ANR. VS. M/S Ansal Properties & Infrastructure Ltd.


The Financial Creditors had purchased two units from M/s Ansal Properties & Infrastructure Ltd. [Hereinafter referred to as the Corporate Debtor] in their project being developed in Sushant Golf City, Lucknow. However, the Corporate Debtor despite assurances vides the builder buyer agreement failed to hand over the possession of the units as per the assured dates. The Financial Creditors aggrieved by the same approached Hon’ble Uttar Pradesh Real Estate Regulatory Authority, Lucknow Bench [Hereinafter referred to as RERA] for the redressal of their grievances, wherein after the trial, the Hon’ble RERA decided the matter in the favor of the Financial Creditors and directed the corporate debtor to refund the principal amount paid by them with delay penalty interest to the tune of MCLR+1%. But the Corporate debtor/builder yet again defaulted in the refund, even after the Recovery certificate was issued. 

The Financial Creditors having no other recourse filed Section 7 petition before the Hon’ble NCLT against the default of the decreed amount by the corporate debtor. The matter was contested by the Corporate Debtor, wherein it was submitted that the case of the Financial Creditors is barred by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, which is now Insolvency and Bankruptcy Code (Amendment) Bill, 2020.


The Hon’ble NCLT after hearing the arguments from both the parties agreed with the submissions of the Financial Creditors that they are not covered by the amendment since they have approached the Hon’ble Tribunal in the Capacity of a decree-holder, who is also considered to be a creditor under Section 3(10) of the Insolvency & Bankruptcy Code, 2016 [Hereinafter referred to as the CODE]. The Hon’ble NCLT clarified the fact that after the order of refund was passed in the favor of the Financial Creditors, the builder buyer agreement which was the basis of their builder-buyer relation was rendered void by the Hon’ble RERA. Thus, the home buyer after obtaining a refund decree from RERA became Decree Holder of the Corporate Debtor and thus by the virtue of the same is not covered under the amendment, which applies only to the home buyers. The Hon’ble NCLT whilst further explaining also stated that as per the definition of Claim under Section 3(6) of the Code, a claim is a right to payment which may either be reduced to writing vide a judgment or otherwise, and in the present case the claim of the Financial Creditors has been reduced into writing vide the decree which has been adjudicated by a competent court of law after the trial between the parties. 


Although the Second Amendment bars an individual to approach NCLT against a builder, this judgment provides new rays of hope for the homebuyers who have obtained a refund order/decree from any competent court of law against the builder/corporate debtor. Given the fact that the Hon’ble NCLT is not a court for the recovery of money, but still, the grievance of the homebuyers is being adjudicated whereby the defaulting builder is being sent into the resolution process for a better revival. 

Disclaimer– The above article is based on the interpretation of related laws and related judicial pronouncements. The readers are expected to take expert advice before placing reliance on it. For any clarification, the writer can be reached at

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