How an individual Home-Buyer can now proceed before NCLT?


Status as on 11/01/2020


A single allottee of the Real Estate project cannot initiate a corporate insolvency of real estate developer or a real estate company. The Ordinance dated 28 December, 2019 changed the dynamics of the real estate industry. As the said ordinance by amending Section 7 of the IBC, 2016 and ensuring that Corporate Insolvency Resolution Process (CIRP) application can only be filed jointly by 100 allottees or 10 % of the total number of allottees under the same real estate project, whichever is the less.

Alternatives for Individual Homebuyers:

The amendment howsoever harsh it may seem towards an aggrieved individual homebuyer shouldn’t discourage them before other forums or even NCLT bearing certain precautionary steps. As already been adjudged by the Delhi High Court in a landmark judgement that RERA, NCLT and NCDRC is concurrent forum for an individual homebuyer. Now let us come to the alternatives that an individual homebuyer has in cases when the priority is refund and how they can proceed before NCLT or in other words exploit a long standing loophole.

Step 1. File a Complaint with RERA
Step 2. Get an Order for Refund
Step 3. Proceed before NCLT under Section 7 as a decree holder.

Clarifications Regarding the Step 3 – Well there’s no ambiguity in regards to the first two steps. However, when it comes third step the first question that arises is How as a Decree Holder? And would it stand before NCLT?

To answer that, first let me enlighten you that till now every home-buyer being an allottee was entitled to proceed before NCLT and make an application for CIRP directly under Section 7.

However as of now the amendment has added a threshold limit. But that can be avoided as till now the Home-buyers used to proceed as an ‘Allottee’ in terms of Section 5 (8) (f). As for instance Rule 27 of Haryana Real Estate (Regulation and Development) Rules, 2017 in clear words provides that every order passed by the authority shall be executed as a decree of the civil court. Similar provisions have also been incorporated in other state regulations as well. Thus the other option of proceeding as a decree holder is yet to be utilized. Further in this regard the Supreme Court has already observed in the landmark case of Pioneer Urban Land & Infrastructure Ltd. that the Scope of the term ‘Financial Debt’ under Section 5 (8) is too wide to cover anything which is not covered under any other category.


Therefore, once an individual homebuyer gets an order for refund can proceed before NCLT under section 7 without triggering the threshold recently incorporated under Section 7 by the amendment through ordinance. This can prove to a more efficient process as Order passed from the authority will have more persuasive effect and a better stand in NCLT.


Disclaimer – the above article is based on interpretation of the related judicial pronouncement and related laws which may differ person to person. The readers are expected to take expert opinion before placing reliance on it. For more information, please reach us at

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