Homebuyer possession delay treated as default under insolvency law; RERA timelines and force majeure did not block CIRP admission.

Failure to deliver possession within the contractually agreed period in a housing project was treated as default for section 7 of the Insolvency and Bankruptcy Code, 2016, where the homebuyers had paid substantial amounts and the possession date, including grace period, had expired without delivery or refund. The Tribunal found the application complied with the formal requirements for initiation of CIRP and held that later RERA timelines did not override the contractual obligation or the Code, given section 238. The force majeure defence was also rejected. The insolvency application was therefore admitted, with appointment of the interim resolution professional and consequential moratorium.

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Issues: (i) Whether the homebuyers' claim arising from delay in handing over possession constituted financial debt and default so as to justify admission of the application under section 7 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the alleged delay, including reliance on RERA-related timelines and force majeure, barred initiation of the corporate insolvency resolution process.

Issue (i): Whether the homebuyers' claim arising from delay in handing over possession constituted financial debt and default so as to justify admission of the application under section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The application was supported by the booking documents, apartment buyer agreements, allotment letter, additional agreement, and payment records showing substantial remittance by the applicants. The contractual possession date, even with the grace period, had expired long before the filing of the application, while the corporate debtor had not delivered possession or refunded the amounts. The Tribunal treated the failure to hand over possession within the agreed period as evidence of non-payment of debt when due, and therefore as default within the meaning of the Code. It also found that the application satisfied the formal requirements for initiation under section 7 and the accompanying rules, including the proposed interim resolution professional's consent.

Conclusion: The existence of financial debt and default was established, and the application was fit for admission.

Issue (ii): Whether the alleged delay, including reliance on RERA-related timelines and force majeure, barred initiation of the corporate insolvency resolution process.

Analysis: The Tribunal held that the later timeline shown in the RERA record did not displace the contractual obligation owed to the applicants for the purposes of the insolvency proceedings. It relied on the non-obstante effect of section 238 of the Insolvency and Bankruptcy Code, 2016, and held that the Code operated independently of RERA. The force majeure defence was not accepted as a basis to defeat the claim for default, and the Tribunal reiterated that where time is stipulated for completion and possession in a construction contract, the builder remains bound by that commitment unless legally excused.

Conclusion: The objections based on RERA and force majeure were rejected, and they did not prevent admission of the insolvency application.

Final Conclusion: The corporate debtor was admitted to CIRP, the interim resolution professional was appointed, and moratorium and other statutory consequences followed.

Ratio Decidendi: Failure to deliver possession within the contractually agreed period in a housing project can constitute default for section 7 of the Insolvency and Bankruptcy Code, 2016, and RERA-based timelines do not override the Code's insolvency jurisdiction by virtue of section 238.

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