Homebuyer insolvency threshold and no recovery forum under insolvency law for enforcing a regulatory refund order.

A section 7 insolvency petition by two homebuyers was found not maintainable because the statutory threshold for filing as a class of financial creditors was not met. The tribunal further noted that insolvency proceedings cannot be used as a recovery mechanism or to enforce a real estate regulatory refund order when the admission prerequisites under insolvency law are otherwise absent. The filing was therefore treated as an impermissible attempt to use the insolvency forum for recovery, and the petition was dismissed, leaving the petitioners to pursue other remedies available in law.

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Issues: (i) whether a section 7 insolvency petition by only two homebuyers was maintainable in view of the statutory threshold for homebuyer financial creditors; (ii) whether the insolvency process could be invoked as a recovery mechanism after obtaining relief under the real estate regulatory regime.

Issue (i): whether a section 7 insolvency petition by only two homebuyers was maintainable in view of the statutory threshold for homebuyer financial creditors.

Analysis: The petition was filed by homebuyers as financial creditors of a real estate project. The applicable insolvency framework for such homebuyers requires joint filing only where the requisite minimum threshold of allottees in the same class is satisfied. The petitioners were only two in number and did not meet the threshold prescribed for initiating the proceeding on behalf of the class.

Conclusion: The petition was not maintainable and failed at the threshold.

Issue (ii): whether the insolvency process could be invoked as a recovery mechanism after obtaining relief under the real estate regulatory regime.

Analysis: The petitioners had already obtained an order from the real estate regulatory authority directing refund and related consequential reliefs. The insolvency code is intended for resolution of insolvency and not as a substitute for recovery proceedings. A proceeding under the insolvency law cannot be used to enforce an unpaid regulatory order where the statutory prerequisites for admission are otherwise absent.

Conclusion: The proceeding could not be used as a recovery forum, and the request was rejected as an attempt at forum shopping.

Final Conclusion: The insolvency petition was held to be not maintainable and was dismissed, leaving the petitioners to pursue other remedies available in law.

Ratio Decidendi: A homebuyer petition under section 7 must satisfy the statutory class threshold, and the insolvency code cannot be invoked merely to recover dues or enforce an existing regulatory refund order.

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