Contractual possession timelines tied to statutory approvals can defeat a default claim when the promoter is not responsible for delay.

Where contractual possession was linked to fulfilment of specified preconditions, including fire safety approval, the possession period was to be computed from the date that approval was obtained. Because the project could not commence until that statutory approval was in place, delay in handing over the unit was not attributable to the corporate debtor. On those facts, the allottee's termination did not establish default, and a section 7 insolvency trigger was not made out. The result was that the refusal to initiate corporate insolvency resolution process was upheld.

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Issues: Whether the corporate debtor had committed default in delivering possession of the allotted unit so as to justify initiation of corporate insolvency resolution process under section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The agreement contemplated delivery of possession within the stipulated period after approval of the building plan and fulfilment of the preconditions attached to that approval. The record showed that the project could not commence immediately because fire safety approval, a material precondition under the Haryana Fire Safety Act, 2009, was obtained later. The relevant possession period was therefore computed from the date of fire safety approval, not merely from the date of the initial building plan approval. On that basis, the time for handing over possession had not expired when the allottee terminated the agreement, and the corporate debtor had also offered possession within the contractual framework. In these circumstances, the delay was not established as a default attributable to the corporate debtor.

Conclusion: No default by the corporate debtor was proved, and the section 7 application was not sustainable.

Final Conclusion: The appeal failed because the order refusing initiation of insolvency proceedings was upheld on the finding that the contractual possession period had not been shown to have lapsed due to any default of the corporate debtor.

Ratio Decidendi: Where possession is contractually linked to fulfilment of specified preconditions and the delay results from pending statutory approvals rather than any failure of the promoter, default under section 7 of the Insolvency and Bankruptcy Code, 2016 is not made out.

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