SC rules flat buyers’ claims under IBC must be honoured, orders possession within 2 months

The Supreme Court on Tuesday ruled that once a flat buyer’s claim is admitted and included in the list of financial creditors under the Insolvency and Bankruptcy Code, it holds full legal recognition.

New Delhi: The Supreme Court on Tuesday held that once a flat buyer’s claim is incorporated in the list of financial creditors, it acquires full legal recognition under the Corporate Insolvency Resolution Process governed by the Insolvency and Bankruptcy Code (IBC).

A bench of Justices Sanjay Kumar and Satish Chandra Sharma observed that denying possession of the flat, despite the claim being duly verified and admitted, would result in unfair and unwarranted prejudice to the buyer.

The court further emphasized that the publication of the list of financial creditors under the IBC is a statutory duty of the resolution professional and must not be treated as a mere formality.

The ruling came on an appeal by Amit Nehra and another from Bengaluru, which challenged the National Company Law Appellate Tribunal’s (NCLAT) order of January 10, 2025. The NCLAT had upheld the rejection of their claim for possession of a residential apartment in the real estate project of M/s Puma Realtors Private Limited, the corporate debtor.

“We are unable to countenance the approach of the NCLAT in brushing aside this admitted position and treating the appellants as if they had not filed any claim at all,” the bench said.

The Supreme Court ordered that possession of the apartment be handed over to the appellants within two months, underlining the plight of individual homebuyers who invest their life savings hoping to secure a home.

The court noted that the appellants, allottees of an apartment in the IREO Rise (Gardenia) project in Mohali developed by the corporate debtor, had paid Rs 57,56,684 out of the total consideration of Rs 60,06,368 back in 2010.

Their claim was initially submitted in physical form on January 11, 2019, at the project office in Mohali and resubmitted via email on February 7, 2020. The claim was duly verified, admitted, and incorporated in the list of financial creditors published on April 30, 2020.