Insolvency and Bankruptcy Code, 2016, experts say, emanated from the noble hearts of the rulers who decided to help those who gave their life savings/assumption of unlimited liabilities based on the beautiful pictures and glib lectures of mostly young kids on flats, villas or dream like palaces but on a razor thin margin of reality. I feel sad but also remorseful that these financial creditors as the courts would start calling them, just got jinxed and most of them did not even file claims as per laid down procedures in above code. News items splashed for attention informing us that in one case not more than 2000 creditors (yes, you booked by paying huge money with a builder) out of 11000 filed claims with Insolvency resolution professional to have any say in the Committee of Creditors which is the brain behind the recovery process carrying substantial powers.

Let us directly submerge in above code to clearly understand what are the powers of those so-called financial creditors, a title which was recently won by people who booked houses/flats/villas with builders over the last decade. For some of them virtually a deep hole was made by the builders in their properties, calling it as foundation adding insults to their sulky minds. But what actions did these investors initiate to safeguard their interests?

Committee of Creditors

It is worth recalling section 21(1) and 21(2) for clear understanding.


The interim resolution professional shall after collation of all claims received against corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors.


“The committee of creditors shall comprise all financial creditors of the corporate debtor.”

The words highlighted in above paras proclaim collation of claims as the basis for consideration of claims. Perhaps, a further analysis is also required to have a deeper understanding.

What is the simple process of Corporate Insolvency Resolution Process?

Under section 13(1),” The adjudicating authority, after admission of application under section7 or section 9 or section 10, shall by an order –

(b)cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims under section 15- “

As per schedule Form C, the financial creditors shall submit their proof of claims by electronic means only.

The format for claiming their claims for financial creditors is given as Form C.

I have enclosed the format as an annexure.

Form C: a study

It is prescribed under Regulation 8 of Insolvency and Bankruptcy Bank of India (IBBI) (IRP for Corporate Persons) Regulations, 2016.

I have tried to explain this basic form which is one of the essential of the I&B Code, 2016 which is known to any one dealing with insolvency. Now that, unfortunately, investors in flats/houses/villas have been forced to become financial creditors for safeguarding their interest, it is their duty to have some basic knowledge and right to claim their dues. Simply, one needs to know the bare facts.

This form is addressed to IRP/RP (Please do write the name and address as set out in the advertisement)



The name and address of the financial creditor.

It claims submission of proof of claims in connection with corporate insolvency resolution process in case of corporate debtor.

The investor can give full details of drafts, electronic submission of instalments, capital, interest submitted to the builder towards purchase of flats along with every thing which would substantiate their claims. In case of loans availed, full details of the sanction from banks/other institutions/claims from provident funds/employer sources, if any. Obviously, copies of pan cards, Aadhar card, office identification cards may also be submitted. An affidavit duly verified by a Notary/Oath commissioner is also required which may be obtained through any lawyer who is handling the case of a large number of investors who booked the flats/houses/villas against any builder who failed to deliver the properties.

I am bit surprised how did a large number of investors for purchase of flats/villas failed to act. Though it is very easy to get in touch with the lawyer dealing with the case or groups of lawyers helping them, the process of claim has to be done individually. It is very important to buy the I&B Code, 2016 and study the forms being mentioned in this discussion. The formats are a reality and need to be followed thoroughly and claims are to be submitted separately by electronic means only. Instructions in the Code are verbatim to be followed. It is not any intellectual exercise but a life and death problem for the huge investments already made. This is a prime requisite to become a member of Committee of Creditors (CoC). Proof of submission of claim is to be retained for ever till the real estate is handed over by the builder. NCLT, the court dealing with insolvency proceedings against the builder who miserably failed to deliver may need it any time.

Now let us grasp what it means to be a member of Committee of Creditors

Let us focus our attention towards a circular issued by IBBI dated 14th September 2018. It is also enclosed as annexure 2, with this write up.

This is one of the most narrative and instructive circulars ever written by any regulatory agency and is totally committed towards maximization of the assets of the debtor to meet the dues of financial creditors/operational creditors/governmental authorities/employees. Let us learn together its basic tenets.

  • RP can’t take any decision listed without any approval of RoC: voting plan has to be approved by 66% of the voting shares assessed by the quantum of the dues.
  • Dissenting creditor is one who has not registered with RP as per laid down procedures and does not attend the meeting either personally or through his representative
  • Claims to be lodges with RP or IRP within the date mentioned in the public announcement or 90 days within the date of commencement of insolvency commencement date.
  • Your claim as a creditor shall be registered only from the date of submission and approval of the claim by RP. Obviously, you stand to lose enormously as a witness to the whole transaction in spite of paying a huge sum as booking advance or total advance for your flats/villas, etc.
  • “So, what if my claims were not submitted and approved by RP? I have the proof that I paid the money. You know, my official project gets delayed and my foreign client is after my job and the whole future depends on my work.” Yes, your claim is agreed but who will repay the loans undertaken and got released by you. You even gave a huge party to celebrate booking of the flat whose photo was inscribed in the cake. Your claims would automatically pass on to the lender who will decide its fate accordingly.
  • “Yes, I lodge me claims, get it verified and get a confirmation from RP and even then, I have no time to attend the meetings. Can I nominate a representative to attend the meetings and brief me?” Most of the busiest leaders of the industry who booked the flats and got the claims registered got their representative elected and nominated him to attend the meetings of the CoC as per the present instructions which permit even 10 persons to have a representative to do the technical job, mostly a lawyer.
  • In reality, those 2000 persons who booked their flats and paid a huge advance or total payment, in essence, attended a combined meeting, left their egos at home and went with the current which was controlled by an illuminated and passionate lawyer who agreed to look after their interests. But, I again insist that you have to submit your papers alone and get it registered with IRP or RP and also a confirmation.
  • “Thus, a person, who is not a member of the CoC, does not have voting right in the CoC. A person, who is not a member of the CoC, cannot be regarded as one who has voted against a resolution plan or abstained from voting.” Says IBBI.
  • This was issued in exercise of the powers under clauses (aa) and (p) of sub-section (1) of section 196 of the Insolvency and Bankruptcy Code, 2016 by IBBI to educate and motivate the buyers of flats to act immediately.

I made a study of the information released by IBBI on Corporate Insolvency Resolution Processes Ending with Order of Liquidation:

 As on 30th June, 2018 and only 43 cases in seriatim were studied (I was so depressed as a banker and would be insolvency professional having passed the exams recently, I did not read the whole list of136 cases) and it is crystallized as under:

Total Admitted Claims During CIRP: Rs in Crores: 30224

Liquidation Value: Rs in Crores: 1650 which works out to be 5.45%

Nearly 94% of the claims emerged from the financial creditors.

This indicates that nearly 95% of dues involved may not get realized and this would happen only when 14 of the Resolution Plans are approved by the financial creditors who only own the right to approve them.

In your case as a would be owner of the flats gladly booked and financed by you, luckily there is likely property value for the land, construction value of the flats if some work has been done on the plot purchased and likely hood of completion of the project provided you associate yourself as a financial creditor by registering yourself with RP and ensure timely participation either personally or through registered representative who would vote and take action only in your interest and also brief you regularly provided you spare time to look into this urgent financial matter.


The whole purpose of my writing this article is to reinforce the obvious fact that most of the educated and high net worth, middle class or lower middle-class investors in flats/villas/shops have failed to register themselves with IRP or RP as per the required time schedule and enforce their rights as financial creditors. Merely assembling in a common place, engaging a good and committed lawyer and winning the right as a financial creditor is only the beginning unless it is exercised and also in a legal way. Just imagination as an investor may give mental satisfaction but legal realization as a financial creditor requires legal action. This is urgently required to safeguard interest of your family and also to make sure the real happiness as an owner comes through. Please do inform your spouse about this requirement so that you are forced to act on a timely scale by their motivation and persuasion.


♠ Insolvency &Bankruptcy Code, 2016 and its regulations issued from time to time.

♠ IBBI circular dated 14th September 2018:

♠ Form C

Author Bio

Qualification: Post Graduate
Company: subramanian natarajan cpa firm
Location: NEW DELHI, Delhi, India
Member Since: 09 May 2017 | Total Posts: 181
A banker with 27 years of experience, a CPA from USA with specialization in US taxation, individual, partnership, S corporation or LLC taxation etc View Full Profile

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September 2021