National Company Law Tribunal Admits Insolvency Petition Against Alka Ventures Pvt. Ltd.

Homebuyers Deemed Financial Creditors; Corporate Insolvency Resolution Process Initiated Due to Developer's Financial Distress and Persistent Defaults

The National Company Law Tribunal (NCLT), Kochi Bench, has admitted a petition filed by homebuyers of the SKYWINGS Township Project against M/s Alka Ventures Pvt. Ltd., marking a significant development in the ongoing struggle between real estate developers and homebuyers. The petition, filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeks the initiation of the Corporate Insolvency Resolution Process (CIRP) against the developer due to its inability to complete the project and fulfill financial obligations.

The case was presided over by Shri Vinay Goel, Member (Judicial), and Smt. Madhu Sinha, Member (Technical), who delivered the order on November 19, 2025. The homebuyers, who have collectively contributed over Rs. 11.85 crores, alleged persistent delays and financial incapacity on the part of Alka Ventures. The project, originally launched in 2007, has faced multiple setbacks, with promised completion dates repeatedly missed.

In a detailed judgment, the tribunal held that homebuyers qualify as "Financial Creditors" under the Insolvency and Bankruptcy Code due to their financial contributions to the project. The tribunal further observed that the developer's repeated non-performance and failure to meet construction deadlines constituted a "default" under the Code.

Despite the developer's contention that the matter was already under the jurisdiction of the Real Estate Regulatory Authority (RERA) and that the Insolvency and Bankruptcy Code should not be used as a recovery mechanism, the tribunal found sufficient grounds to admit the petition. The tribunal emphasized that both RERA and the Insolvency and Bankruptcy Code provide concurrent remedies, and the latter could be invoked in genuine cases of insolvency.

The tribunal ordered a moratorium under Section 14 of the Code, preventing any further legal proceedings against the developer until the resolution process is completed. Additionally, an interim resolution professional has been appointed to manage the affairs of the company during the CIRP.

This decision highlights the tribunal's recognition of the financial distress faced by homebuyers in stalled real estate projects and underscores the legal framework available for seeking redressal. The case sets a precedent for homebuyers seeking to use insolvency proceedings to resolve disputes with developers who fail to honor their commitments.

Bottom Line:

Homebuyers in a real estate project are deemed "Financial Creditors" under the Insolvency and Bankruptcy Code, 2016, as per Section 5(8)(f) and its Explanation. Persistent non-performance and financial incapacity of a developer can constitute "default" enabling initiation of Corporate Insolvency Resolution Process.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 5(8)(f), 7, 3(12), 14, 31, 33; Real Estate (Regulation and Development) Act, 2016; Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations 2016; Kerala Municipality Building Rules, 2019.

Jacob P P v. M/s. Alka Ventures Pvt Ltd., (NCLT)(Kochi Bench) : Law Finder Doc Id # 2822528