Real Estate Sector - The Legal Chamber

This Supreme Court judgment clarifies the distinction between genuine homebuyers and speculative investors under the Insolvency and Bankruptcy Code, 2016. It holds that allottees with agreements structured for assured returns or buy-back clauses, without a genuine intent to possess the property, are speculative investors. Such investors are barred from initiating Corporate Insolvency Resolution Process under Section 7 of the IBC, as the Code is not a recovery mechanism for speculative investments. Facts Of The Case: This case consolidates four civil appeals concerning the initiation of Corporate Insolvency Resolution Process (CIRP) against real estate developers by individual allottees. The primary appellant, Mansi Brar Fernandes, entered into a Memorandum of Understanding (MoU) with Gay...

The Supreme Court held that a homebuyer's claim, once verified and admitted by the Resolution Professional and reflected in the list of creditors, must be honoured as per the plan's provisions for verified claims. It cannot be relegated to a residuary clause meant for belated or unverified claims, as this would misapply the approved resolution plan. Facts Of The Case: The appellants, residents of Bengaluru, booked an apartment in 2010 in the 'IREO Rise (Gardenia)' project developed by M/s Puma Realtors Private Limited. They executed an Apartment Buyer’s Agreement in 2011 and paid Rs. 57,56,684 out of the total consideration of Rs. 60,06,368. The Corporate Debtor failed to deliver possession by the agreed date of November 2013. The appellants initially filed a consumer complaint, which wa...

Tag: Real Estate Sector

Homebuyer Alert: Supreme Court Clarifies When a Real Estate Investment Becomes “Speculative”