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Issues: (i) Whether an allottee who obtains a decree under the Real Estate (Regulation and Development) Act, 2016 continues to fall within the class of home buyers and is therefore subject to the threshold requirement under the second proviso to Section 7(1) of the Insolvency and Bankruptcy Code, 2016; (ii) whether the Section 7 application was maintainable when the statutory threshold for home buyers was not met.
Issue (i): Whether an allottee who obtains a decree under the Real Estate (Regulation and Development) Act, 2016 continues to fall within the class of home buyers and is therefore subject to the threshold requirement under the second proviso to Section 7(1) of the Insolvency and Bankruptcy Code, 2016.
Analysis: The decree arose from the underlying real estate allotment transaction. The nature of the debt was held to depend on the original transaction from which the decretal liability crystallised. A decree obtained by an allottee in a real estate project does not alter the character of the creditor for the purpose of the Code. The allottee remains within the class of home buyers and continues to be governed by the collective threshold prescribed for that class.
Conclusion: Yes. The decree-holder allottee remains a home buyer/financial creditor and is subject to the second proviso to Section 7(1).
Issue (ii): Whether the Section 7 application was maintainable when the statutory threshold for home buyers was not met.
Analysis: The threshold prescribed for filing by financial creditors in the same class was not satisfied. Allowing the application through the decree route would permit indirect circumvention of the statutory restriction that would otherwise apply directly. The petition was therefore hit by the bar under the second proviso to Section 7(1).
Conclusion: No. The application was not maintainable.
Final Conclusion: The insolvency petition failed because a decree obtained by an allottee did not remove the matter from the home-buyer threshold regime, and the statutory minimum for initiating corporate insolvency resolution was not satisfied.
Ratio Decidendi: For purposes of Section 7 of the Insolvency and Bankruptcy Code, 2016, the character of the creditor and the applicable threshold are determined by the underlying transaction; a decree obtained on a real estate allotment claim does not defeat the collective threshold requirement for home buyers.
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