Jacob P P Vs Alka Ventures Pvt Ltd (NCLT Kochi)
Homebuyers in the SKYWINGS Township Project filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process (CIRP), moratorium, and appointment of an Interim Resolution Professional (IRP) against the corporate debtor. The petitioners represented 98 allottees and claimed a default of ₹11,85,65,284.
The SKYWINGS project was launched in 2007 with five residential towers and a commercial complex, with a promised completion date of September 2009. The original developer failed to complete the project, citing the 2008 financial crisis, while continuing other developments. Between 2012 and 2014, following meetings held in Dubai, Doha, and Bahrain, it was agreed that the corporate debtor would take over and complete the project. A Memorandum of Understanding dated 28.02.2013, multiple addenda, quadripartite agreements, and a final takeover agreement dated 29.11.2014 obligated completion of two towers by 2015 and the entire project by 2018. Despite these commitments and substantial payments, meaningful progress was not achieved.
In 2018, the homebuyers approached the Non-Resident Keralites Commission, where the corporate debtor undertook to complete the towers and obtain occupancy certificate by March 2020 and the clubhouse by July 2020, with a plan to raise ₹42 crores. The defaults continued even after the COVID-19 lockdown. The homebuyers’ society filed a complaint before RERA seeking completion and possession. RERA directed completion by June 2023, later extended to 31.08.2024 and then to 30.12.2024, yet the project remained incomplete. The homebuyers also alleged that the final extension up to 30.12.2024 was granted without hearing them.
Parallelly, an erstwhile joint venture partner obtained an arbitral award of about ₹32 crores with accrued interest, leading to execution proceedings and attachment of the project property. The corporate debtor acknowledged the attachment but did not take corrective action. Homebuyers issued repeated demands and a final legal notice in March 2025, but the corporate debtor failed to either complete construction or refund monies. It was also noted that the building permit had expired and renewal required more than ₹1.92 crores in fees, and the corporate debtor took no steps to renew it despite municipal notices.
Homebuyers asserted that over ₹36.83 crores (over 75% of apartment value) had been paid for two towers, and petitioners alone contributed ₹11.85 crores. Despite more than a decade after takeover, the towers remained incomplete and the larger township work had not commenced.
The corporate debtor objected, arguing the petition was not maintainable since petitioners were not financial creditors, the dispute was only delay-related and pending before RERA, and that IBC cannot be used once RERA remedy was chosen. It also claimed construction was nearly complete and that petitioners themselves were in default of payment. Based on a valuation report dated 23.09.2020, it contended project value was ₹553,67,36,699 and petitioners paid only about 60% on average.
The Tribunal held that it must assess: (i) whether petitioners qualify as financial creditors and (ii) whether default exists. It noted the statutory position under Section 5(8)(f) and its 2018 Explanation deeming amounts raised from allottees as having the commercial effect of borrowing. Relying on Pioneer Urban, it held that allottees are included as financial creditors. The Tribunal found that obligations under takeover agreements and multiple undertakings remained unfulfilled, and repeated RERA deadlines were not complied with, establishing default under Section 3(12).
On the overlap between RERA and IBC, the Tribunal referred to Mansi Brar Fernandes (2025) stating RERA is the primary forum for delay disputes and IBC should not be used as coercive recovery or specific performance, but homebuyers may invoke Section 7 in genuine insolvency cases. Considering repeated defaults, expiry of permits, admitted attachment of land, and lack of funds to renew permits, it found prima facie financial distress and inability to complete the project. Since financial debt and default were established and the petition met threshold requirements, the Tribunal admitted the petition, imposed moratorium, and initiated CIRP.
While petitioners proposed one IRP, the Tribunal appointed another from the IBBI panel due to multiple assignments of the proposed professional, and directed deposit of ₹2,00,000 toward CIRP expenses.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
