Summary
The Supreme Court held that home buyers do not lose their status as financial creditors merely because they obtained RERA refund orders. The decree crystallised the underlying allotment claim without changing its nature. Giving those buyers inferior resolution-plan terms solely for having pursued that remedy was an impermissible classification. They were entitled to treatment alongside other home buyers in the pending resolution plan.
Issues
- Whether obtaining a RERA refund order changed an allottee’s financial-creditor status under the IBC.
- Whether a resolution plan could discriminate against such allottees solely because they held refund decrees.
Provisions considered
- Sections 5(7) and 5(8)(f), Explanation, Insolvency and Bankruptcy Code, 2016Amounts raised from real-estate allottees constitute financial debt; crystallisation into a refund decree does not remove the allottee from the home-buyer financial-creditor class. (¶¶ 5, 6, 8, 9)
- Section 18, Real Estate (Regulation and Development) Act, 2016Pursuit of the statutory refund remedy did not deprive the appellants of their underlying status as allottees and financial creditors. (¶¶ 7, 8)
- Section 238, Insolvency and Bankruptcy Code, 2016The IBC’s overriding provision precluded subordinating its creditor classification to the exercise of RERA remedies. (¶ 8)
- Article 14, Constitution of IndiaInferior treatment solely because some home buyers obtained RERA refund orders was artificial hyper-classification. (¶ 8)
Held
- A decree or order crystallises the underlying claim; it does not by itself change the nature of the debt or the creditor’s status. These refund-order holders remained home-buyer financial creditors. (¶¶ 6, 8)
- Distinguishing these appellants from other home buyers solely because they elected the RERA refund remedy was inequitable and artificial. The IBC’s overriding operation and Article 14 did not permit that classification. (¶ 8)
- The appellants were entitled to be treated with the other home buyers and financial creditors for the resolution plan still awaiting final adjudication. (¶ 9)
Result
Appeal allowed; impugned order set aside. Appellants declared financial creditors under Section 5(8)(f), Explanation, entitled to treatment alongside other home buyers for the pending resolution plan.