Individual homebuyers who have paid money, can not be denied possession - Fair treatment in Insolvency and Bankruptcy Code Proceedings
Ensuring Equitable Treatment in Insolvency and Bankruptcy Code Proceedings
In a significant judgment delivered by the Supreme Court of India in the case of Amit Nehra v. Pawan Kumar Garg, the apex court reinforced the rights of homebuyers under the Insolvency and Bankruptcy Code, 2016 (IBC), marking a crucial development in the interpretation of resolution plans concerning real estate projects. This decision not only reaffirms the equitable treatment of homebuyers' claims but also sets a precedent for similar cases under the IBC, providing clarity on the categorization of claims within resolution plans.
Background:
The case originated from a dispute between the appellants, Amit Nehra and another, and the respondents, Pawan Kumar Garg and others, regarding possession of an apartment in the IREO Rise (Gardenia) project developed by the erstwhile corporate debtor, M/s Puma Realtors Pvt. Ltd. The appellants, having paid a substantial amount towards the purchase of the apartment, were denied possession despite their claim being verified and admitted by the resolution professional during the Corporate Insolvency Resolution Process (CIRP).
Key Issues and Arguments:
The central issue revolved around whether the appellants' verified and admitted claim entitled them to possession of the apartment or merely to a reduced refund under Clause 18.4 of the Resolution Plan. The appellants argued that their claim was duly verified and incorporated in the list of financial creditors, thus should be treated as a verified claim under Clause 18.4(ii) and 18.4(vi)(a), entitling them to possession. The respondents contended that the appellants' claim was belated and should fall under Clause 18.4(xi), which provides only for a refund.
Supreme Court's Analysis:
The Supreme Court meticulously analyzed the facts, placing significant emphasis on the verified status of the appellants' claim. The court noted that once a claim is verified and included in the list of financial creditors, it acquires full legal recognition within the CIRP process. Ignoring such verified claims contradicts the legislative intent of equitable treatment under the IBC.
The court also scrutinized the structure of Clause 18.4 of the Resolution Plan, which differentiates between verified claims and belated or unverified claims. The court concluded that the appellants' case fell squarely within the provisions for verified claims, thereby entitling them to possession of the apartment.
Judgment and Implications:
The Supreme Court set aside the judgments of the NCLT and NCLAT, directing the respondents to execute the conveyance deed and hand over possession of the apartment to the appellants. This decision underscores the importance of equitable treatment for homebuyers and reinforces the legal framework governing resolution plans under the IBC.
The ruling has far-reaching implications for homebuyers and stakeholders in insolvency proceedings, ensuring that verified claims are honored in accordance with the resolution plan, safeguarding the interests of those who have invested in real estate projects.
Conclusion:
The judgment in Amit Nehra v. Pawan Kumar Garg serves as a landmark decision, highlighting the Supreme Court's commitment to upholding the rights of homebuyers and promoting fairness in insolvency proceedings. By ensuring that verified claims are treated with due recognition, the court has paved the way for more transparent and equitable resolutions in cases involving real estate projects under the IBC. This ruling is a step forward in protecting the interests of individual homebuyers, providing them with the justice they deserve.
Amit Nehra v. Pawan Kumar Garg, (SC) : Law Finder Doc id # 2775949
