Case Law Details
Rahul Gyanchandani Vs Parsvnath Landmark Developers Pvt. Ltd. (NCLT Delhi)
In a recent ruling by the National Company Law Tribunal (NCLT) Delhi, a significant clarification has been made regarding the classification of homebuyers under the Real Estate (Regulation and Development) Act, 2016 (RERA) in relation to the Insolvency and Bankruptcy Code, 2016 (IBC). The case of Rahul Gyanchandani vs. Parsvnath Landmark Developers Pvt. Ltd. sheds light on the status of homebuyers seeking relief under the IBC, particularly concerning the initiation of Corporate Insolvency Resolution Process (CIRP).
Background of the Case: The dispute arose when the Appellant, Rahul Gyanchandani, and others, who had purchased units in a project developed by Parsvnath Landmark Developers Pvt. Ltd., sought refunds due to the developer’s failure to complete the project within the agreed timeframe. Despite orders from the Delhi Real Estate Regulatory Authority (RERA) directing the developer to refund the amounts along with interest, the developer failed to comply. Consequently, the Appellants filed a petition under Section 7 of the IBC seeking initiation of CIRP against the developer for defaulting on the refund.
Key Arguments and Ruling: The central issue revolved around whether the Appellants, who had obtained RERA decrees for refund, could be considered as allottees under the IBC and thus eligible to file for CIRP. The Adjudicating Authority initially rejected the petition, citing non-compliance with Section 7(1) of the IBC, which requires a minimum number of allottees to join the petition.
The Appellants argued that they should be categorized as Decree Holders rather than allottees, exempting them from the threshold requirements under Section 7(1). They contended that their status changed from allottees to Decree Holders upon obtaining the RERA decrees.
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