Homebuyers Cannot Claim RERA Refund when it conflicts with an insolvency resolution plan approved under the Insolvency and Bankruptcy Code, the NCLT Mumbai bench has ruled.
The decision clarifies how individual buyer rights are treated once a real estate project enters insolvency proceedings.
The tribunal passed the order on September 9 while hearing a case involving four homebuyers of the Spenta Enclave Altavista project.
The buyers had sought refunds after the developer failed to provide possession and argued that their rights under RERA should be protected.
Homebuyers Cannot Claim RERA Refund Under IBC Plan
The NCLT held that individual homebuyers cannot seek a refund under Section 18 of RERA if the request conflicts with a resolution plan approved by the required majority under the IBC.
The tribunal relied on Section 238 of the IBC, which gives the insolvency law overriding effect when its provisions are inconsistent with another law.
As a result, an approved resolution plan can take precedence over conflicting individual claims under RERA.
Majority Decision Will Bind Individual Buyers
Homebuyers were recognised as financial creditors under the IBC in 2018, giving them a formal role in insolvency proceedings. They participate in the Committee of Creditors through an authorised representative.
In the case before the Mumbai bench, the homebuyers as a class had a 22.66% voting share in the Committee of Creditors and voted in favour of the resolution plan.
The four buyers seeking refunds represented only 0.22% of the voting share.
The tribunal held that the majority decision of the homebuyers’ class binds individual buyers, even when an individual buyer’s contractual position or circumstances are different.
What the NCLT Ruling Means for Homebuyers
The ruling also clarified that a new developer taking over an insolvent real estate project is not automatically required to honour every contractual term agreed between the original developer and buyers.
For homebuyers, this means that entering an insolvency process can change how individual contractual and RERA claims are treated.
Once a resolution plan is approved, buyers may have to follow the terms of that plan rather than pursue a separate remedy that conflicts with it.
The decision specifically concerns the interaction between RERA and the IBC in an insolvency resolution.
It does not mean that homebuyers generally lose all rights under RERA, but that conflicting claims can be overridden by the applicable IBC resolution framework.
