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Issues: (i) Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable at the instance of only two homebuyers in view of the amended threshold requirement. (ii) Whether a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 could be used to execute a recovery order obtained under the Real Estate (Regulation & Development) Act, 2016.
Issue (i): Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable at the instance of only two homebuyers in view of the amended threshold requirement.
Analysis: The amended regime permits homebuyers to initiate proceedings only collectively, subject to the minimum threshold prescribed for such a class of financial creditors. The petition was filed by only two homebuyers and did not satisfy the requisite numerical threshold applicable to a class of homebuyers.
Conclusion: The issue was decided against the petitioners. The petition was not maintainable for failure to satisfy the threshold requirement.
Issue (ii): Whether a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 could be used to execute a recovery order obtained under the Real Estate (Regulation & Development) Act, 2016.
Analysis: The Code is not a recovery forum. A decree or adjudicated claim obtained from another forum does not, by itself, convert the claimant into a financial creditor entitled to invoke section 7 for execution. The proper remedy lies in execution before the forum that passed the order, and using insolvency proceedings for that purpose amounts to an impermissible substitution of the recovery mechanism.
Conclusion: The issue was decided against the petitioners. Section 7 could not be invoked to execute the RERA order.
Final Conclusion: The insolvency petition failed on maintainability as well as on the impermissible attempt to use insolvency proceedings as a recovery mechanism, and dismissal of the petition followed.
Ratio Decidendi: A homebuyer petition under section 7 must satisfy the statutory class threshold, and insolvency proceedings cannot be invoked merely to execute an adjudicated recovery claim or decree from another forum.
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