Insolvency cannot be used as a debt-recovery route where a real estate allottee is itself in default and refund remedies exist.

A real estate allottee's right to seek refund or possession under the real estate regulatory framework does not justify using Section 7 of the Insolvency and Bankruptcy Code as a debt-recovery tool. The text states that an allottee must comply with payment obligations, delayed-payment interest, possession timelines after the occupancy certificate, and conveyance registration requirements, while refund with interest may arise if the promoter fails to deliver possession as agreed. Where the allottee itself is in default and the proceeding is aimed at recovering money already paid, the insolvency trigger is not appropriate, and available real estate remedies weigh against admission of the application.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 by a real estate allottee, who had defaulted in payment and was pursuing refund-oriented relief, was maintainable.

Analysis: The allottee's statutory duties under the real estate regulatory framework were material to the controversy. An allottee is required to make payments in accordance with the agreement for sale, pay interest for delayed payment, take possession within the prescribed time after occupancy certificate, and participate in registration of the conveyance deed. At the same time, the allottee may claim refund with interest if the promoter fails to deliver possession in accordance with the agreement. On the facts, the record showed that the allottee had himself defaulted in making payments, that the project had faced interruptions asserted as force majeure, and that the Section 7 proceeding was invoked not for genuine insolvency resolution but for recovery of money already paid. The existence of remedies under the real estate regulatory process also weighed against acceptance of the insolvency trigger.

Conclusion: The Section 7 application was not fit to be admitted and the admission order was liable to be set aside; the appeal succeeded.

Ratio Decidendi: A real estate allottee cannot invoke Section 7 of the Insolvency and Bankruptcy Code, 2016 as a debt-recovery mechanism where the allottee is itself in default and the dispute is substantially one for refund or possession under the real estate regulatory regime.

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