Real estate booking advances treated as financial debt, so a section 9 insolvency claim based on operational debt fails.

Amounts advanced by apartment allottees in a real estate project are treated as having the commercial effect of borrowing and therefore fall within financial debt, not operational debt. On that basis, a section 9 insolvency application cannot be maintained on such a claim, because operational debt requires a due and payable unpaid liability that is not subject to a qualifying dispute. The Tribunal also noted that the petition on the record was incomplete and did not satisfy the statutory requirements for invoking the insolvency process, so the section 9 petition was rejected as not maintainable.

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Issues: Whether the amount advanced towards booking of apartments in a real estate project constituted operational debt so as to sustain a petition under section 9 of the Insolvency and Bankruptcy Code, 2016, and whether such petition was liable to be rejected as incomplete and not maintainable.

Analysis: The Tribunal applied the settled test that a section 9 application can proceed only where an operational debt is shown to be due and payable, unpaid, and not subject to a qualifying dispute. It further considered the statutory scheme under which amounts raised from allottees in a real estate project are deemed to have the commercial effect of borrowing and are therefore treated as financial debt. On that footing, the amount paid for booking apartments could not be categorised as operational debt. The Tribunal also found that the petition, on the facts and materials placed, was incomplete and did not satisfy the requirements for invoking the insolvency process under section 9.

Conclusion: The petition under section 9 was not maintainable and was rejected.

Final Conclusion: The claim was held to lie outside the scope of operational debt under the insolvency framework, leaving the petitioner to seek any other available remedy.

Ratio Decidendi: Amounts raised from allottees in a real estate project have the commercial effect of borrowing and constitute financial debt, not operational debt; therefore, a section 9 insolvency petition cannot be maintained on such claim.

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