2023 (10) TMI 949 - SC - IBC

Supreme Court Confirms All Home Buyers as Financial Creditors Under IBC, Superseding RERA for Equal Treatment.

VISHAL CHELANI & ORS. Versus DEBASHIS NANDA

VISHAL CHELANI & ORS. Versus DEBASHIS NANDA - (2023) 10 SCC 395 Issues Involved:The judgment addresses the challenge to a decision of the National Company Law Appellate Tribunal regarding the treatment of home buyers as financial creditors under the Insolvency and Bankruptcy Code, 2016.Summary:Issue 1: Treatment of Home Buyers as Financial CreditorsThe appellants, home buyers in a real estate project, challenged a decision by the NCLAT which allowed a resolution professional to treat them differently from other home buyers. The resolution plan made a distinction between home buyers who approached authorities under RERA and those who did not. The appellants argued that all home buyers should be treated equally as financial creditors under Section 5(8)(f) of the IBC. The court agreed, citing a previous NCLT decision and the explanation added to Section 5(8)(f) in 2018, which included home buyers as financial creditors without distinction.Issue 2: Interpretation of Section 18 of RERAThe resolution professional contended that home buyers who sought remedies under RERA and received refunds should not be considered as financial creditors. However, the court disagreed, stating that only home buyers can seek remedies under RERA, and receiving a refund does not change their status as financial creditors. The court emphasized that the IBC provisions take precedence over RERA, and any distinction made by the resolution professional was deemed unfair and against Article 14 of the Constitution.Conclusion:The court set aside the NCLAT's decision and declared the appellants as financial creditors under Section 5(8)(f) of the IBC. The appellants are entitled to be treated equally with other home buyers/financial creditors in the pending resolution plan before the adjudicating authority. The appeal was allowed in favor of the appellants.