Financial debt through a marketing agent and project-specific insolvency confined to the concerned real estate project.

Project documents showed that the developer retained substantive rights, authorised its marketing arm to market, sell and collect payments on its behalf, and remained responsible for completion and conveyance. On that basis, amounts paid by a home buyer through the marketing arm were treated as financial debt with the commercial effect of borrowing, making the home buyer a financial creditor and the developer the corporate debtor. The insolvency process was also found maintainable against the developer because the project remained incomplete and possession had not been delivered; in a real estate matter, the process was confined to the specific project and its assets.

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Issues: (i) Whether the home buyer was a financial creditor vis-a -vis the real estate developer and whether the developer could be treated as the corporate debtor despite payments being routed through its marketing arm; (ii) Whether the insolvency process could be maintained against the developer and confined to the subject project.

Issue (i): Whether the home buyer was a financial creditor vis-a -vis the real estate developer and whether the developer could be treated as the corporate debtor despite payments being routed through its marketing arm.

Analysis: The agreements showed that the developer retained the rights in the project, had authorised its marketing arm to market, sell, collect money, and execute related documents on its behalf, and remained responsible for execution of conveyance and completion of the project. The marketing arm functioned as an agent and front of the developer. The payment arrangement through the marketing arm did not alter the underlying relationship created by the collaboration, assignment, marketing, and apartment buyer agreements. The amount advanced by the home buyer for the flat had the commercial effect of borrowing and fell within the statutory definition of financial debt, while the home buyer fell within the definition of financial creditor.

Conclusion: The home buyer was correctly treated as a financial creditor and the developer as the corporate debtor; this issue was answered against the appellant.

Issue (ii): Whether the insolvency process could be maintained against the developer and confined to the subject project.

Analysis: The default in handing over possession had occurred, the project remained incomplete, and the force majeure defence was not accepted on the facts. The prior proceedings against the marketing arm did not bar the present proceeding, since the claim against the marketing arm had been withdrawn and the present case concerned the developer's own liability on the project documents. At the same time, the insolvency resolution process in a real estate matter was directed to be project-specific so that the process remained confined to the subject project and its assets.

Conclusion: The insolvency application was maintainable against the developer, and the process was confined to the subject project; this issue was also answered against the appellant.

Final Conclusion: The admission of the insolvency application against the developer was upheld, and the resolution process was directed to remain limited to the concerned real estate project.

Ratio Decidendi: Where the project documents show that the developer retains the substantive rights and authorises an agent to market and collect payments on its behalf, amounts paid by home buyers through that agent may constitute financial debt owed by the developer, and the resulting insolvency process in a real estate dispute may be confined to the particular project.

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